ASB Securities Morning Brief for Monday, 31 August 2015
Monday, 31 August 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose as investors sought dividend-paying equities in a low interest rate environment. Electricity companies Genesis Energy, Mighty River Power and Meridian Energy advanced. The S&P/NZX 50 Index rose 35.54 points, or 0.6 percent, to 5670.48. Within the index, 30 stocks rose, 14 fell and six were unchanged. Turnover was $193 million... Read more

The New Zealand dollar is heading for a 3.1 percent weekly drop after a slump in Chinese equity markets spooked investors on Monday and Tuesday before petering out later in the week, and ahead of the annual get-together of central bankers at Jackson Hole, Wyoming. The kiwi fell to 64.73 US cents at 5pm in Wellington from 66.82 cents on Friday in New York. It was unchanged from 8am and up from 64.35 US cents yesterday. The trade-weighted index is heading for a more muted 1.7 weekly decline as other risk-sensitive currencies were hit harder by the market meltdown, and rose to 69.94 from 69.67 yesterday... Read more

S&P affirms NZ credit rating on expectation govt will get books back in black... Read more

New Zealand is prepared to fight for "the principles of trade" in its beef battle with Indonesia, says our ambassador to the Southeast Asian nation. This year, NZ and the US requested that a World Trade Organisation dispute settlement panel assess the import restrictions that led to a collapse in Kiwi beef exports to the world's most populous Muslim nation... Read more

The government’s plans to introduce a consumer welfare test to anti-dumping laws will put local firms at a disadvantage to their foreign counterparts, according to Business New Zealand. Commerce and Consumer Affairs Minister Paul Goldsmith yesterday announced plans to write a test into legislation to weigh up the impact dumped goods have on a manufacturer against the wider effects on industries and consumers, before duties are imposed... Read more

This week’s shakeout in the world’s second-largest economy raises the heat on NZ. New Zealand is likely to feel the impact of a slowdown in China, say economists.... Read more

Foreign house buyers: voters want to see the evidence... Read more

Westpac cuts term deposit rates further. The Red Bank leads term depost rates down into new uncharted, low territory leaving their 'replicating portfolio' clients with record low returns... Read more

Will China’s share market meltdown impact on NZ’s property market? Impending doom might seem to be on the cards following China’s share market meltdown, but economists believe that, at this stage, prospects are not as dire as media coverage suggests.... Read more

Kiwibank boss claims some rivals' home loan rates are unprofitable.... Read more

New Zealand retirees are turning to rental property because there are not enough products to provide income in retirement, it has been claimed.... Read more

Kiwis Thinking Ahead About Managing Money. As Money Week begins, a majority of Kiwis are thinking about savings with retirement the top reason for saving money, according to the latest research from MasterCard. MasterCard’s biannual research on money management found 88% of New Zealanders plan to save more or the same in the next six months, at an average of 15% of their income. Retirement (40%), international travel (33%) and buying or renovating their home (31%) remain the top three reasons for saving, with buying or renovating home down 8% from the last survey... Read more

NZ wool prices unchanged at auction amid Chinese uncertainty... Read more

Christchurch Airport has cemented a deal that will give the South Island a permanent direct route to China for the first time. China Southern Airlines, the world’s third largest in passenger numbers, has been flying a summer schedule to Christchurch since 2013... Read more

Martin Aircraft has reported a annual loss of $5.2 million as it continues developing the world’s first commercial jetpack, due out next year. The Christchurch-based company raised $28 million in an initial public offering on the Australian Stock Exchange in February, which saw Chinese entrepreneurial investor KuangChi Science become the largest shareholder with 22.7 percent... Read more

Air NZ shares fall, analysts query capital return strategy... Read more

Food and beverage investor Veritas Investments posted a 23% drop in annual profit and will pay a smaller dividend as it wrestles with integrating its Nosh Food Market and Better Beer Co acquisitions. Net profit fell to $3.34 million, or 8.17c per share, from $4.35 million, or 11.72c, a year earlier... Read more

Martin Aircraft reports annual $5.2m loss... Read more

New Zealand Post has launched a new web-based app that lets customers book urgent parcel deliveries from their smart phones. The app, called At Pace, is specifically targeted at tradespeople who often need supplies delivered at short notice... Read more

Fliway, the transport and logistics company that listed on the NZX in April, will pay a special dividend after reporting annual profit 33% above its prospectus forecasts – mainly due to lower-than-expected listing costs. Net profit was $2.19 million compared to a prospectus forecast of $1.64 million, but still below last year's $4.7 million, as expected, due to the one-off listing costs and a number of non-cash accounting adjustments, the company said in a statement... Read more

Cavalier posts worst ever annual loss amid restructure... Read more

KiwiRail had a much better 12 months to June 30 than a year earlier, improving its earnings before interest, tax,depreciation and asset impairments to $91 million, 17 percent ahead of the previous financial year, which was marred by several one-off costs. The result was achieved on total revenues of $721 million, down 3 percent for the year, with freight revenues falling 6 percent to $434 million in an environment where coal deliveries by Solid Energy fell, offset somewhat by higher levels of dairy production... Read more

Serco is looking at new opportunities in New Zealand, particularly in operating rail services chief executive Rupert Soames says. The Serco boss does acknowledged recent controversy over his company's running of Mt Eden prison — where Corrections staff have stepped in to take over management — and an extended inquiry have to be worked through first... Read more

Midwives drop bombshell with court action over pay discrimination. A High Court action to be filed Monday will have 'global ramifications' for women's pay.... Read more

The union for employed midwives applauds the test case over gender pay equality... Read more

Auckland's newest mall is a third of a kilometre long and at 2.7ha, will be the size of four rugby fields. DNZ Property Fund chief executive Peter Alexander said the 100-shop NorthWest Shopping Centre would be bigger than Newmarket's 277 but slightly smaller than LynnMall, built on the city's northwestern outskirts, across Fred Taylor Drive from the existing Westgate shopping centre... Read more

The Financial Markets Authority's top seven strategic priorities were a common theme for the regulator's enforcement activity over the past year, with governance, culture and conflicted conduct the agency's biggest problem. The regulator's enforcement team was involved in 51 inquiries and investigations and 28 litigation matters in the year ended June 30, it said in its annual investigations and enforcement report... Read more

Napier insurance broker David McGuffie now will not face court until November.... Read more

A failed property developer gave his fiancee a diamond engagement ring while staying at a $1500-a-night Italian hotel only months before his company collapsed owing millions of dollars. Hamish Clarke has 'disappeared' since his company Valiant Homes went into liquidation in March, owing around $6m to investors, suppliers, tradies and the tax man... Read more

New Zealand Herald Editorial: Bill to simplify Easter trading full of flaws. Michael Woodhouse is right. The rules governing shop trading on Easter Sunday are complex and relatively arbitrary... Read more

Opinion - Susan Guthrie: Susan Guthrie claims we need to start thinking quickly about the effects on New Zealand of China’s economy... Read more

Opinion - Bernard Hickey: Bernard Hickey surveys a financial landscape full of morally hazardous trades based on 0% interest rates forever and finds inflation is the key... Read more

Opinion - Bernard Hickey: Don't get too comfy. This week's turmoil in global markets has reminded us all that we live in financially turbulent times. They are also morally hazardous times... Read more

Opinion - Andrew Bascand: Earnings takeaways: some spark but not much fire. Set against a background of increasing equity volatility, more than 25 New Zealand companies have reported earnings in the last few weeks. At the end of the day economic growth, company sales, earnings and dividends are more important for investors than daily noise from overseas markets... Read more





Australian Headlines

Australian Market Report: Bargain hunters are being enticed out of their bunkers after the massive volatility that has rocked world markets in recent weeks. On Friday, the benchmark S&P/ASX200 index closed 30.3 points, or 0.6 per cent, higher at 5,263.6 points. The broader All Ordinaries index was up 32.1 points, or 0.6 per cent, at 5,274.7... Read more

The Reserve Bank of Australia is expected to look through recent market turmoil and keep the cash rate unchanged for the foreseeable future. All 16 economists surveyed by AAP expect the RBA to keep the cash rate unchanged at its September meeting tomorrow, and only three expect another cut before the middle of next year... Read more

With economic growth figures and the RBA's interest rate decision due within a week, the quarterly survey of business investment plans came into sharp focus for economists this week. The survey from the Australian Bureau of Statistics (ABS) offers the most comprehensive looks at the economy's medium-term outlook.... Read more

Australia as China's Canary Means World Watching RBA Heartbeat... Read more

Finance Minister Mathias Cormann believes Labor Leader Bill Shorten will eventually support the free trade agreement with China. But the opposition leader insists that while Labor is prepared to work with the government on the FTA, it doesn't turn up to parliament just to rubber stamp its policies... Read more

Shorten mocks Hockey's tax promise.... Read more

The Australian Tax Office is cracking down on people claiming excessive deductions on their rental properties. Assistant deputy commissioner Adam Kendrick said some taxpayers are claiming rental deductions for holiday homes that appear higher than expected when compared to the rental income being reported... Read more

Abbott Government considers allowing families to keep welfare payments if they return to work... Read more

The federal health minister has welcomed the end of a dispute between Australia's largest private health insurer Medibank and Calvary Health Care. After months of negotiations the pair has declared a truce, announcing on Sunday they've signed a new three year agreement... Read more

BHP trims its forecast for China’s steel production by 15 per cent... Read more

Shares in Atlas Iron rose after the embattled iron ore miner said it had lowered its operating costs and was generating positive cashflows... Read more

SubZero Group has been awarded a contract worth more than $10 million from Glencore for the provision of mine rehabilitation works at the Bulga Open Cut in the Hunter Valley, New South Wales... Read more

Rio Tinto executives have rejected allegations the miner misled receivers and financiers of the failed Forge Group over the seizure of $100 million in security bonds. Three executives were examined in the Supreme Court for the first time yesterday as part of efforts by receivers KordaMentha to retrieve funds for creditors caught up in last year’s $800 million Forge collapse... Read more

Labor is calling on the Western Australian government to hold a parliamentary inquiry into the royalty payments of major resource projects.... Read more

Billionaire Solomon Lew has skated off with a $2 million-plus payday in the short term, from his stake in skateboard and street fashion company Globe International. Globe, which is controlled by the three Hill brothers with a combined stake of about 68.5 per cent, has engineered a strong turnaround in its financial performance, with each of its major divisions delivering sales revenue growth of 20 per cent or more, while its fast-growing workwear business F.X.D has been a standout as its sales doubled in a year... Read more

Visiting international wine judge and celebrated author Stephen Brook believes there is a strong future for specific wine styles and varieties from the Swan Valley but the key is marketing. “The Swan Valley does certain things very well, but in some cases these are varieties and styles which are not in huge demand, so the challenge for winemakers and marketers is to create markets for them,” he said... Read more

Falling passenger numbers due to a downturn in the mining sector has caused a 14 per cent profit fall for airline Regional Express. Passenger numbers in the year to June were down 0.8 per cent from the previous year, even though the company added five new routes in Queensland under a new government contract. Rex shares were down 4.5 cents, or 4.8 per cent, at 90 cents.... Read more

Retailer Harvey Norman boosts profits on rising sales, while troubled firms Slater and Gordon and IOOF post positive profit results. Harvey Norman has posted a strong 27 per cent rise in profit despite what it describes as a challenging environment in retailing. The company posted a $266.1 million profit, with sales up 4.6 per cent to $6.02 billion... Read more

A surge in Blackmores' share price could continue well past the recently hit $100 milestone, with China's voracious appetite for vitamins and supplements far from satisfied... Read more

Weak Woolies result claims chairman. Woolworths' outgoing chairman Ralph Waters says he is stepping down to share the responsibility for a disappointing performance by the nation's biggest retailer.... Read more

Outgoing Fairfax Media chairman, Roger Corbett has thrown a parting grenade at what he describes as the outdated media ownership laws in Australia, at Rupert Murdoch's News Corp for flouting the current laws and at the policy vacuum in Canberra that is retarding moves to remove them... Read more

Echo Resources worth an extra 63% says mystery bidder... Read more

A WA dairy backed by Gina Rinehart will become a “grass-to-gate” agritourism facility under a $22 million overhaul that will open the dairy’s robotic milking operations to the public. Taking inspiration from the South West’s popular wineries and breweries, which similarly combine working agricultural businesses with tourist facilities, Bannister Downs plans to milk, process, bottle and package its products in one building... Read more

7-Eleven staff work twice as long at half pay rate, investigation reveals. Australian retail giant 7-Eleven has been found to be systematically paying its workers about half the minimum wage at stores around the country.... Read more

7-Eleven: wage fraud cover-up from head office... Read more

Three former United Petroleum franchisees are launching legal action against the service station giant, claiming they have been unfairly forced out of their businesses... Read more

Opinion - Ross Gittens: Well paid men hijack tax reform. It's difficult to get a man to understand something when his after-tax salary depends on him not understanding it, to misquote Upton Sinclair... Read more

Analysis/Opinion - Michael West: Where next for troubled Santos?... Read more





International Headlines

North/South Americas Market Report: North and South American markets finished mixed as of the most recent closing prices. The Bovespa gained 2.42% and the S&P 500 rose 0.06%. The IPC lost 0.37%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The CAC 40 gained 0.36%, while Germany's DAX was off 0.17%. Shares in London were unchanged with the FTSE 100 at 6,247.94... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 4.82% and the Nikkei 225 rose 3.03%. The Hang Seng lost 1.05%... Read more

Crude oil prices have scored big gains for a second straight day, capping a wild week as traders seemed to view the recent nose-dive as overdone. US benchmark West Texas Intermediate (WTI) crude for October delivery jumped $US2.66 (6.3 per cent) to finish at $US45.22 a barrel on the New York Mercantile Exchange on Friday. Brent North Sea crude for October, the European benchmark, closed at $US50.05 a barrel in London, a leap of $US2.49 (5.2 per cent) from Thursday's settlement.... Read more

Middle Eastern Stocks Rally Led by Oman After Oil-Price Rebound... Read more

Italian energy group Eni says it has found one of the world's largest natural gas fields off Egypt's coast. The company said the area was 1,450m (4,757 feet) beneath the surface and covered 100 sq km (39 sq miles). It could hold as much as 30 trillion cubic feet of gas, or 5.5 billion barrels of oil equivalent, Eni said... Read more

Gold futures settled higher on Friday but suffered a 2.2% loss for the week, their biggest weekly decline since the week ended July 24... Read more

US Federal Reserve vice-chair Stanley Fischer has warned the US central bank will not wait for inflation to hit two per cent before raising interest rates. In a speech on Saturday the Fed's number two said: "We should not wait until inflation is back to two per cent to begin tightening."... Read more

The international trade union movement believes the world's richest nations are falling behind in their aim to lift global growth. The centrepiece of last year's Group of 20 activities under Australia's presidency was to raise world growth by more than two per cent over the coming five years and above what was then projected... Read more

Facebook has a billion users in a single day, says Mark Zuckerberg... Read more

Apple will double the cost of next Apple TV. Executives at Apple Inc. are debating a starting price of either $149 or $199 for the next generation of Apple TV, according to 9to5Mac.com, citing sources. That would be more than double the cost of the $69 Apple now charges for Apple TV... Read more

The recent market rout caught some star Wall Street traders by surprise. But not a hedge fund affiliated with “The Black Swan” author Nassim Nicholas Taleb that seeks to profit from extreme events in the financial markets. Universa Investments LP gained roughly 20% last Monday, according to a person familiar with the matter, a day when the market collapsed more than 1,000 points in its largest ever intraday point decline... Read more

Challenger banks get chance to fight for tax cut. Britain's small lenders are going to meet top Treasury officials next week to argue for the latest tax hike to be reversed - but a letter from George Osborne shows they have a tough fight on their hands... Read more

UK economic growth for the second quarter of the year was unrevised at 0.7%, official figures have shown. The initial figure released in July was boosted by a sharp rise in oil and gas production... Read more

Russian pension funds invest $2.7 billion in infrastructure projects... Read more

The Ukrainian government says it has reached a debt restructuring deal with its creditors including a write-off of up to $3.8bn (£2.5bn; €3.4bn). Finance Minister Natalia Yaresko said Ukraine's sovereign debt, estimated at $19bn, would be cut by 20% and the repayment period extended... Read more

Chinese investors help Russia develop sanctions-hit gas plant. Russia’s gas producer Novatek has decided to sell 9.9 percent of its Yamal LNG project to a Chinese investment fund, helping the sanctions-hit company to replace western financing. However, experts believe that the U.S. sanctions may still impede the realization of LNG projects in Russia... Read more

Commodities trading firm Trafigura Beheer BV plans to buy iron-ore assets from former billionaire Eike Batista as a port it controls with Mubadala Development Co. in Rio de Janeiro starts shipments. Trafigura will acquire two mining and iron-ore processing plants from Batista’s MMX Sudeste Mineracao SA after creditors accepted an offer as part of the Brazilian company’s bankruptcy protection plan, the company said in an e-mail... Read more

Brazil must reduce public spending to combat its economic challenges and to become more efficient, Finance Minister Joaquim Levy said on Saturday. “We can’t stand still, waiting for the loss of investment grade,” Levy said at an event in Campos do Jordao, Sao Paulo state. “We need to implement a quality shock to public spending.”... Read more

Energy-rich Qatar's exports plunged more than 40 percent in value in the year up until July 2015, on the back of a slump in petrol and hydrocarbon sales, official figures showed Sunday... Read more

China billionaire Wang Jianlin says drop growth targets... Read more

Chinese Premier Li Keqiang has issued assurances over his country's economy after global markets were unsettled by concerns over its slowing growth. Top global markets ended the week largely recovered from China-induced panic selling, but market watchers remain worried the turmoil in the world's number two economy will drag down global growth... Read more

Chinese official defends intervention: 'We must take action'... Read more

Hedge Funds Dump Alibaba for Smaller Rival Growing Twice as Fast... Read more

Ageas SA agreed to sell its life insurance unit in Hong Kong to JD Capital in its largest divestiture since the collapse of predecessor Fortis in 2008 as the Belgian insurer targets faster-growing markets in Asia. JD Capital, also known as Beijing Tongchuang Jiuding Investment Management Co., will pay 10.7 billion Hong Kong dollars ($1.38 billion) for the local life insurance business, Brussels-based Ageas said in a statement on Sunday... Read more

Suzuki Plans to Go It Alone After Ending Four-Year VW Dispute... Read more

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