ASB Securities Morning Brief for Tuesday, 04 August 2015
Tuesday, 04 August 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, pushing the S&P/NZX 50 Index to a record, as MightyRiverPower and Meridian Energy gained on the decision to keep the Tiwai Point aluminium smelter open until at least 2017. Trilogy International soared after forecasting a jump in first-half sales and profit. The S&P/NZX 50 index advanced 36.89 points, or 0.6%, to 5957.85. Within the index, 27 stocks rose, 18 fell and five were unchanged. Turnover was $72 million... Read more

The New Zealand dollar jumped higher after weak data on US employment costs prompted traders to pull back expectations for US interest rate hikes. The kiwi touched a high of 66.73USc over the weekend, and was trading at 65.88USc at 8am in Wellington, from 65.82USc at the New York close and 65.87USc at 5pm on Friday. The trade-weighted index was little changed at 70.28 from 70.31 on Friday... Read more

The conclusion of the Trans-Pacific Partnership negotiations needs to occur before the Oct. 19 Canadian federal elections, says Prime Minister John Key, who is tipping the likelihood a further negotiating round "in the next two or three weeks" after last week's talks in Hawaii failed to land agreement on the contentious trade and investment pact... Read more

Maori Council ditches Donna Hall's law firm over TPP claim... Read more

Tax on internet buys gets closer. Consumers appear set to pay 15 per cent more for nearly all foreign products bought online after the Government hinted it could follow Australia's proposed changes to internet shopping... Read more

Chinese buyers not big part of market: Data. New data from shows that property prices are stabilising nationwide - and East Asian buyers, including Chinese, are far less active than some reports have indicated. Less than 3% of’s online traffic comes from East Asia*, according to an analysis of the website’s viewers... Read more

Call to tackle tax rules on seismic work. The head of a listed landlord with $2.2 billion of property investments has called for tax issues on seismic building strengthening to be addressed. Chris Gudgeon, Kiwi Property chief executive, said owners would be penalised by a building strengthening law due to be passed soon.... Read more

Super Fund sticks with growth assets. The New Zealand Superannuation Fund’s passive Reference Portfolio, the basis on which the majority of the Fund is invested, will remain strongly weighted to equity ownership, the Guardians of New Zealand Superannuation, the manager of the Fund, say.... Read more

Attitudes to advice cost must change. New Zealanders will need an attitude change to accept they will have to pay for financial advice as part of safe decumulation, Auckland University researchers say. The Retirement Policy and Research Centre has released a working paper: "Options for dis-saving safely."... Read more

Futures pricing points to 10% fall at dairy auction... Read more

New Zealand fruit trade has become a heavy hitter as an export, helping to at least partly offset weakness in the dairy and forest products sectors. Data out from Statistics NZ showed the value of fruit exports reached an all time high of $2 billion in the year to June, up almost 20 per cent from a year earlier. Wine was another strong performer, up 7.3 per cent to $1.4 billion in the June year... Read more

A revised contract between Meridian Energy and the owners of the Tiwai Pt aluminium smelter extends the smelter's operating life for at least another year from the start of 2017. And from that date the smelter will pay a higher average price for power... Read more

Meridian, power company stocks up as smelter remains open... Read more

Liquidation of state-owned coal company Solid Energy "cannot be ruled out" but is "not the number one preferred option of the government," says Prime Minister John Key, who confirmed the beleaguered company was discussed today at Cabinet as its banking syndicate grapples with its commercially dire prospects... Read more

Trilogy International, the skincare products and scented candle maker, said first-half revenue is likely to exceed $23 million, a year-on-year increase of more than 50 per cent, following strong growth across all three of its brands... Read more

Kirkcaldie & Stains’ shareholders today overwhelmingly voted to sell the Kirkcaldies brand and assign the store lease to David Jones. “Today’s decision by shareholders at a special meeting will bring to a close the 152 year old much-loved Kirkcaldie & Stains store on Lambton Quay and end Kirkcaldies as we know it today,” said Chairman Falcon Clouston... Read more

Xero invests more in staff and marketing... Read more

Commission wool scouring conference deferred. Yesterday the Commerce Commission was provided with new confidential information in relation to the property valuations involved in Cavalier Wool Holdings Limited’s application to acquire 100% of New Zealand Wool Services International’s wool scouring business and assets.... Read more

Cavalier plans to sell assets, outsource operations to boost earnings; shares jump... Read more

Tainui Group Holdings (TGH), the investment arm of the Waikato tribe, plans to sell as much as 50 percent of its The Base shopping centre in Te Rapa, northwest Hamilton, using the funds to repay debt and for other investments... Read more

Advisers represent less than half of insurance market. Relatively few life insurance products are sold via advisers earning high upfront commissions, new research suggests... Read more

Fletcher Building has dumped its Australian head of distribution and will merge the business with its New Zealand counterpart, while separately announcing the departure of chief information officer Carl Powell. Fletcher shares rose 0.4 percent to $7.95 and have fallen 4.6 percent this year.... Read more

Jetpack flying machine company Martin Aircraft will have its flying machines produced in China for that market in the future. The company, listed on the Australian sharemarket, has formed a joint venture with its Chinese cornerstone shareholders KuangChi Science... Read more

Vice Chair of the IPCC to visit Wellington... Read more

FMA enforcement boss Belinda Moffatt is leaving the regulator.... Read more

Blis Technologies chief executive Barry Richardson will leave the probiotic manufacturer at the end of the current financial year after nine years in charge of the company... Read more

A Christchurch anchor project has been hit with further construction delays after contractors discovered an ancient waterway. The Avon River precinct was due to be finished by the end of this year but the Government extended that timeline to the end of 2016, sparking fears rebuild delays could threaten the city's international appeal... Read more

The Commerce Commission has filed High Court proceedings against the country’s two major rural services companies, PGG Wrightson and Elders New Zealand, along with five former or current employees... Read more

Former high-flying property developer Dave Henderson has been accused of misrepresenting his personal financial position in documents supporting loan applications. Henderson, 60, is under public examination in the High Court in Christchurch before Associate Judge Rob Osborne to decide if he can be discharged from bankruptcy and, if so, under what conditions... Read more

Kim Dotcom claims deal offered. Did the United States try to cut a deal with Kim Dotcom? He claims it did - and New Zealand's Attorney General Chris Finlayson has not ruled it out... Read more

Former employee claims she was entitled to repayment in $1.4 million fraud trial... Read more

Opinion - Owen Scott: Lessons from chocolate-maker Whittaker's achievements. Whittaker's is an overnight success that's been over 100 years in the making... Read more

Opinion - Brian Fallow: Hard to assess risks in secret trade talks. Whether the content of what’s been provisionally agreed is as ambitious and progressive as TPP’s scope is anyone’s guess... Read more

Opinion - Caroline Courtney: NZ needs to face up to the impact of money laundering on Auckland housing... Read more

Opinion - David Hargreaves: Fonterra cuts product available in global auction ahead of key decisions on prices for farmers... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has again failed to challenge the 5700 point level, with manufacturing data from China ensuring the benchmark fell back from its 5699 Friday close. At the 4.15pm (AEST) official market close, the benchmark S & P/ASX200 was 19.9 points, or 0.35 per cent, down to 5679.3, while the broader All Ordinaries index had fallen 17.4 points, or 0.31 per cent, to 5664.3.... Read more

The Australian dollar lifted slightly as traders paused ahead of the Reserve Bank of Australia’s interest rate announcement tomorrow. At 4pm (AEST), the currency was trading at US72.94c, up from US72.84c on Friday.... Read more

Investment firm Argo Investments expects the recent fall in the Australian dollar will help the local economy in the 2015/16 financial year. Argo also expects the housing market to stay strong. Managing director Jason Beddow says expectations the Federal Reserve will raise its interest rate has prompted the US dollar to strengthen against several currencies, including the Australian dollar... Read more

Matter of time until RBA cuts rates again... Read more

Sales expectations have rebounded sharply, reaching their highest level for more than a decade in a strong signal the business community has a more optimistic outlook, Dun & Bradstreet has found... Read more

There has been a recovery in Australia's manufacturing sector in July, with sales growing for the first time in more than a year. The Performance of Manufacturing Index (PMI) by the Australian Industry Group rose by 6.2 points to 50.4 last month... Read more

A slowing trend in job advertisements warns of dwindling jobs growth, according to an ANZ economist. The number of jobs advertised on the internet and in newspapers has fallen, the ANZ's monthly data shows... Read more

Interest rate gap between investors and owner-occupiers to widen... Read more

Aussies fear lack of retirement funds. More than half of Australians fear they won't have enough money to fund their retirement, a survey shows.... Read more

Former top economic advisor to US President Barack Obama Gene Sperling says the medium term outlook for the Australian resource industry is rosy, despite the doom and gloom engulfing the sector this year.... Read more

Metro Mining substantial shareholder Balanced Property Pty Ltd has increased its stake in the company to 17.2% from 14.4%. The fund acquired 12.25 million shares priced at $1 million under the recent placement priced at $0.08 that raised $2 million... Read more

In its second attempt to backdoor list a Perth company, Perth’s Red Gum Resources has announced plans to list WA security companies MCS and Intiga in deal worth about $6.5 million. Red Gum, which last year unsuccessfully launched a bid to backdoor list Perth travel company Holiday Planet, yesterday revealed a deal to take the two companies on the back of a $4.5 million raising at 5¢ a share. Red Gum shares were down 0.9¢ today to 4.6¢.... Read more

Segue Resources joint ventures Fraser Range Project... Read more

Sirius Resources has named Zenith Pacific its preferred tenderer for a 16-megawatt power station at its Nova nickel project. Zenith Pacific will install a 20-megawatt diesel power station combined with a photovoltaic 6.7-megawatt solar power station, designed by German solar power company Solea... Read more

Childcare operator G8 Education has increased its takeover offer for rival Affinity Education to include almost $150 million in cash. But the target has urged its shareholders to resist the new offer for now, while it considers takeover interest from another party... Read more

Global Health to provide administration system for Pulse Health hospital... Read more

Shares in Cash Converters tumbled after it advised the market of a new class action against it. Investors were spooked by news of the $30 million action, despite the company insisting the legal challenge had “no prospects of success”. Cash Converters shares closed down 6.5 cents, or 9.29 per cent, at 63.5 cents, its low for the day... Read more

Dick Smith is aiming to snare more than 10 per cent of the $1.7 billion small appliances market ahead of a wave of new products that consumers will control through their mobile phones and computers... Read more

RNI Limited has been granted a trading halt by the ASX pending details of a capital raising.... Read more

Singapore-listed Bonvests Holdings has entered the Perth hotel market with the purchase of the 278-room Four Points by Sheraton Perth for $91.5 million. In Singapore, Bonvests owns Sheraton Towers Singapore Hotel in the Orchard Road shopping district and Cenizaro, an international hospitality company with a portfolio of independent luxury hotel properties... Read more

Heavy rains, hail storms and a cyclone are likely to feature when insurance giant Suncorp Group reports annual earnings on Tuesday.... Read more

Concerns Ten deal could give News Corp too much power over AFL, NRL. Foxtel's purchase of 15 per cent of the Ten Network could give Rupert Murdoch's global media conglomerate News Corporation too much power over Australian sport, opponents of the deal say.... Read more

Google donates $1m to Aussie STEM students... Read more

Dubber Corporation has entered into a reseller agreement with Gateway ICT that will provide access to the Cisco customer base, a priority in its business and enterprise strategy... Read more

Technology retailer JB Hi-Fi has lured Australia Post's head of retail technology to join the company as its first official chief information officer. JB Hi-Fi has been without a head of IT since its former technology director George Papadopoulos left the retailer in May to become a consultant... Read more

Commonwealth Bank at a loss, customers furious at Travel Money card outage... Read more

Opinion - Patrick Carvalho: The silver lining in Australia's youth unemployment data... Read more

Opinion - Ian Verrander: Why we should welcome TPP talks stalling. The last-second stumble for signing the Trans Pacific Partnership over the weekend should be celebrated. Maybe this break will steel the resolve of our negotiators to actually fight for our interests, writes Ian Verrender... Read more

Opinion - Jeff Oughton: Why households are feeling the squeeze... Read more

Opinion/Analysis - Michael Pascoe: Foreign students set to power housing... Read more

Analysis - Gavin Wood, Melek Cigdem-Bayram, Rachel Ong, Curtin University, and Susan Smith: Australians less likely to survive home ownership than Britons. Between 2001 and 2010 roughly 1.7 million Australians dropped out of home ownership and shifted back to renting. More than one-third did not return by 2010... Read more

International Headlines

North/South Americas Market Report: Markets were lower across the region as at most recent closing prices... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The CAC 40 gained 1.47% and the DAX rose 1.19%. The FTSE 100 lost 0.11%... Read more

Asian Market Report: Asian markets finished broadly lower today with shares in China leading the region. The Shanghai Composite is down 1.11% while Hong Kong's Hang Seng is off 0.87% and Japan's Nikkei 225 is lower by 0.18%... Read more

Oil prices fell in Asia Monday on persistent concerns about the global supply glut, after the OPEC cartel indicated that it will not budge from its current lofty output levels, analysts said. US benchmark West Texas Intermediate for September fell 37 cents to $46.75 while Brent crude for September eased 45 cents to $51.76 in afternoon trade.... Read more

Treasury yields fall near two-month low on weak data... Read more

U.S. factory activity dips; consumer spending cools... Read more

President Barack Obama will unveil on Monday the final version of his plan to tackle greenhouse gases from coal-fired power plants, kicking off what is expected to be a tumultuous legal battle between federal environmental regulators and coal industry supporters... Read more

Shares of Twitter Inc. fell Monday to its all-time low since the company's initial public offering in November 2013... Read more

Puerto Rico is hours away from going into default for the first time in its history. The commonwealth is not expected to pay $58 million in debt due by the end of today to its Public Finance Corporation. This will hurt the island's residents, not Wall Street. The debt is mostly owned by ordinary Puerto Ricans through credit unions... Read more

Puerto Rico's crisis ... in 2 minutes... Read more

New York Regulator Moves to Suspend Promontory Financial. The Promontory Financial Group occupies a position of trust in the global financial system, acting as a consultant to big banks, foreign nations and the Vatican... Read more

America's 12 biggest companies now. In the past 6 years, giants like Exxon and Walmart have slid while tech companies have soared.... Read more

What raising the minimum wage to $15 would actually mean in every state. $15 dollars goes a lot further in rural Georgia than it does in metropolitan New York... Read more

Shares in Greek banks crashed 30% Monday as trading resumed on the Athens stock exchange for the first time since the country was nearly forced to abandon the euro last month... Read more

A jury convicted Tom Hayes, a former trader at UBS and Citigroup, with fraudulently trying to rig the London interbank offered rate, or Libor, the first criminal conviction of an individual for manipulating the widely used benchmark. Mr Hayes, a mildly autistic mathematician whose quirky personality earned him the nickname "Rain Man" among bank colleagues, was sentenced by a judge Monday to 14 years in jail. He faced up to 10 years for each of the eight counts he was charged with... Read more

UK asks austerity-weary workers to suggest new budget cuts. Imagine your pay has been frozen for years and thousands of colleagues have been let go. Then your boss asks you for ideas on how to save even more money. That's exactly what the British government is doing to millions of workers in healthcare, education and administration... Read more

Luxury European automakers Audi, BMW and Daimler have teamed up to acquire Nokia's mapping and location services business for 2.8 billion euros ($3.1 billion).... Read more

Commerzbank's Q2 profits close to triple... Read more

Chancellor pushes button on £2bn Royal Bank of Scotland share sale. UK Financial Investments to sell 5.2pc stake in RBS in overnight placing at 330p-a-share... Read more

HSBC announced Monday that net profit fell 3.8 percent in the three months to June, as the company agreed to sell its Brazilian business for $5.2 billion to Brazil's Banco Bradesco. Europe's biggest bank announced in June that it would cut its global workforce by up to 50,000 as it exits Brazil and Turkey... Read more

Western sanctions are hitting Russia harder than anyone realised. IMF predicts Russia will lose 9pc of its GDP because of sanctions imposed amid the Ukraine crisis... Read more

Russian Central Bank steps in to cut key interest rate again. The Russian Central Bank has lowered the key interest rate to 11 percent. By doing so the Russian government is trying to improve the investment climate in the country. However, experts believe the move is a compromise – a drastic slashing of the rate would result in a spike in inflation, which has already reached 15.8 percent... Read more

China's factories hit an unexpected speed bump in July, hiking concerns about slower growth in the world's second-largest economy. The government's official purchasing managers' index hit 50.0 in July, according to the National Bureau of Statistics, down from 50.2 the previous month. Any number below 50 represents a deceleration in the manufacturing sector... Read more

Bitcoin trading is the hottest game in China. The digital currency has been embraced by Chinese users who like to take a gamble: It's all "about trading, about volatility, about making a profit -- buy low, sell high," said Bobby Lee, CEO of BTCChina, the world's largest Bitcoin exchange... Read more

Two Chinese smartphone makers pushed US technology giant Apple into third place in the world's biggest market in the second quarter, an independent analyst firm said Monday. Upstart Xiaomi, known for delivering high-performance products at cheap prices, was the largest smartphone vendor in China based on shipments with a 15.9 percent market share in the April-June period, Canalys said in a press release... Read more

India’s Kumbh Mela Is Used as an Incubator for Smart City Startup Ideas. Can India’s Kumbh Mela–a religious pilgrimage that at its peak is expected to attract around 30 million people to the western city of Nashik this year–provide ideas for Prime Minister Narendra Modi, who plans to build 100 smart cities in the country? Technology experts from Massachusetts Institute of Technology and their associates think it can... Read more

Opinion - William Pesek: China's market intervention just another method of QE. It's time to call Beijing's stock-market intervention what it really is: quantitative easing, Chinese style... Read more

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