ASB Securities Morning Brief for Friday, 22 July 2016
Friday, 22 July 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares gained as investors were buoyed by potential interest rate cuts, with Steel & Tube Holdings, Xero and Westpac Banking Corp gaining, while New Zealand Refining Co fell. The S&P/NZX 50 Index rose 41.38 points, or 0.6 percent, to 7,214.05, another record high. Within the index, 32 stocks rose, nine fell and 10 were unchanged. Turnover was $155.4 million... Read more

The New Zealand dollar fell dropped below 70 US cents and weakened against most all the major currencies following a Reserve Bank update that signalled further interest rate cuts are looming. The kiwi traded at 69.88 US cents at 5pm in Wellington, up from 70.56 late yesterday. The Trade Weighted Index fell to 74.97 from 75.68 yesterday... Read more

New Zealand's booming migration extended its run of posting new records in June, though economists say it may have peaked, while tourism numbers also continued their strong growth. Annual net migration reached a new record 69,100 in June, rising from 68,400 in the year through May, and marking the 23rd month in a row that the annual net gain in migrants has set a new record, Statistics New Zealand said. At the same time, overseas short-term visitor arrivals reached 3.31 million in the year ended June 30, up 11 percent on the year earlier... Read more

Three top technology bosses have slammed a claim that migrants are causing salaries in the information technology industry to fall. Technology recruitment firm Absolute IT said on Wednesday that migration seemed to explain why IT pay had slipped 2 per cent in its latest July survey and had not broken out of a band between $80,000 to $82,500 for two years despite strong demand for skills... Read more

New Zealand invoice payment times have maintained their record-low momentum, averaging approximately 35 days for the last four quarters, despite increasing slightly over the second quarter of 2016... Read more

Reserve Bank signals more OCR cuts. The Reserve Bank says more official cash rate cuts are likely as it fights to get inflation into its target range. The Reserve Bank’s statement indicated its concern over the impact of a range of factors on the economy. These factors included ongoing low inflation expectations, the high New Zealand dollar and global uncertainties... Read more

RBNZ signals OCR cut for August... Read more

All five leading retail banks require 40% deposit from property lenders... Read more

Warning: Rents will rise. Landlords are asking: How much longer will officials penalise investors before realizing the tactic isn’t working?... Read more

No let-up in migration pressure on housing. Migration may have peaked but the latest data indicates it won’t make an immediate difference to the ongoing pressure on the housing market. New Zealand’s unadjusted annual net gain of migrants reached a new high of 69,100 in the June 2016 year, according to the latest Statistics New Zealand migration data... Read more

New Zealand Wool Services International Limited’s CEO, Mr John Dawson reports that the North Island Wool Auction received revived support this week with an improved 81 percent of the 5700 bales selling. The weakening NZ dollar across the board saw the weighted currency indicator fall 4.22 percent. Despite these positive factors, local prices were still below last week’s South Island auction, but only marginally under the last more comparative North Island selection... Read more

Meat exporters facing foreign exchange headwinds. Meat Industry Association Chief Executive Tim Ritchie says uncertainty in the EU as a result of Brexit is one of the causes of a higher exchange rate, which will significantly affect prices our exporters receive in the European market. This, in turn, affects the prices meat processors can pay farmers for their livestock. Volatility in exchange rates has already had a significant impact on meat exporters, which led to eroded margins in the last season... Read more

Justice Kit Toogood and the Meat Industry Association survived challenges from the New Zealand Meat Workers Union to grace Affco Holdings' Court of Appeal hearing today, where it sought to reclaim the notion that seasonal workers aren't in permanent employment... Read more

Livestock Improvement Corp, the farmer-owned dairy herd genetics, farm software and automation cooperative, dipped into the red in 2016 as farmers scaled back spending because of the dairy downturn, which weighed on the value of the company's elite breeding herd. LIC posted a loss of $4 million, or 13.6 cents per share, in the 12 months ended May 31, compared to a profit of $13.7 million, or 46.3 cents per share, a year earlier, it said in a statement... Read more

A new proposal to share water between rural landowners could lead to people cashing in on their water-short neighbours. The enhanced water transfer proposal would allow for the free transfer of water between Marlborough farmers and grapegrowers without having to apply for a lengthy and costly resource consent process... Read more

OECD-FAO report suggests only gradual improvements in global dairy prices over next 10 years; Labour's finance spokesperson says dairy farmers won't see breakeven till 2019 at earliest... Read more

Tougher admission rules to hit NZ companies with ASX listing plans. New admissions rules by the Australian Stock Exchange represent a new hurdle for the accelerating number of New Zealand companies listing across the Tasman... Read more

The battle for customer loyalty between fuel retailers is heating up, with Z Energy dropping supermarket docket-based discounts for a new Fly Buys offer, while its primary rival, BP, is launching a phone app allowing petrol payment without leaving your car. While Z's newly acquired chain of Caltex service stations will still offer supermarket docket discounts through Progressive Enterprises' Countdown supermarkets, Z-branded service stations will drop that arrangement and let customers redeem Fly Buys points for special discounts that will vary from day to day, starting Aug. 1... Read more

Cloud software companies Vend and Xero have announced a joint marketing arrangement where they will become preferred providers to their customers. Vend says it and Xero will be able to formally unite under joint business and product development goals in key international markets... Read more

Big data and sophisticated analytics offer $4.5 billion in value across New Zealand business. As businesses increasing digitalise their operations large data sets can be collected. The data sets can be analysed to show trends and associations, which can be used to improve productivity... Read more

Global resins maker Nuplex Industries says the planned A$1 billion takeover by Allnex is now not likely to take place in August because of delays getting anti-trust clearance in the European Union. In a statement to the stock exchange, Nuplex says the phase 1 European Commission application is likely to be refiled by the private equity-backed Belgian company next week. It says it will provide further updates to shareholders when it is "in a position to advise further." Nuplex shares fell 0.8% to $5.25.... Read more

Serco Australia's citizen services division has kept its $1 million contract to provide interpretation services for a growing number of non-English speaking New Zealanders. The Department of Internal Affairs awarded the contract to provide the Office of Ethnic Communities' Language Line service for one year, with up to two yearly extensions, it said in a statement... Read more

NZME and Fairfax have walked away from negotiations with Sky over their access to footage of the Rio Olympics, which the pay TV operator has the exclusive New Zealand rights to. As a result, the two companies – currently seeking permission to merge from the Commerce Commission – have pulled their accreditation to the Games, which begin in 15 days... Read more

Star Media, the Christchurch-based publisher of giveaway local newspapers, says Fairfax Media uses its community paper for predatory advertising pricing and shuts The Star out of advertising deals. In its submission to the Commerce Commission critical of the proposed merger of Fairfax and NZME, Star Media says Fairfax is dominant in Canterbury and uses that position to undercut its competitor. Star publishes titles The Star, Nor'West News and Pegasus Post... Read more

New Zealand journalists would have had to agree not to criticise Sky TV commentators, under Olympic Games rules the pay-TV company wanted to impose on its news media rivals. Sky backed off that demand after protests from its competitors, but never backed down to the point where its demands complied with New Zealand copyright law... Read more

Auckland Council will raise up to $200 million through a 10-year retail bond issue, at a higher indicative margin than its last offer in March. Last month, the council deferred a planned offer, citing market volatility which followed the UK's referendum vote to exit the European Union... Read more

New Zealand’s leading independent fleet management company, Fleetwise, has appointed Ambrose Plaister to the role of Chief Executive Officer. Ambrose joins Fleetwise after 14 years in the finance industry, most recently leading the client servicing for a global investment manager in Sydney... Read more

After nearly a year of liquidator requests, bundles of documents disappearing and reappearing, claims of threats, imposters and perjury, people linked to the Masala Indian restaurant chain have been fined for contempt. The group is subject to a highly-publicised $34 million restraining order in a case which alleges “significant criminal activity” but the clean-up of four entities that went into liquidation in late 2014 has been just as messy... Read more

Fisher Funds defends 'super-salary'. The offer of a so-called “super-salary” to a former Diversified Investment Strategies’ director was not intended to justify a lower sale price for the business, the purchaser has told the High Court. Acrimonious disagreement over the circumstances surrounding the sale of DISL to Fisher Funds Management back in 2014 has left the two former directors battling it out in the High Court over the last week... Read more

Opinion - Brian Fallow: Sinking rates, swelling bubble. If the Reserve Bank cuts the official cash rate on August 11, as the financial markets expect, it will do more harm than good. It will make it more attractive to borrow at a time when household debt is already at a record high relative to incomes... Read more

Opinion - Janine Starks: No justification for interest-only mortgages. Seriously, what is the reason behind the interest-only mortgage? I'd like a banker to look me in the eye and attempt to answer that with a straight face... Read more

Opinion - Liam Dann: Wake up call Government can't ignore... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has struck a new 11-month peak despite paring gains in afternoon trade as the materials sector again failed to win much support. At the closing bell, the benchmark S&P/ASX 200 index lifted 23.7 points, or 0.43 per cent, to 5,512.4, while the broader All Ordinaries index climbed 22.8 points, or 0.41 per cent, to 5,588.7.... Read more

The Australian dollar was little changed late on Thursday, with investors focussed squarely on a meeting of the European Central Bank overnight. At 5.45pm (AEST), the Australian dollar was trading at US74.96 cents, up from US74.79c late on Wednesday.... Read more

Industry super funds have continued to outperform their for-profit rivals, with data from SuperRatings showing a 1.72 percentage point gap in returns last financial year. The data, released by Industry Super Australia (ISA), show that the not-for-profit sector beat bank-owned super funds over one, three, five, seven and ten years... Read more

If there's one thing worse than being unemployed, it's being unemployed and old. Unemployment goes up and down, but one thing never seems to change: the older you are, the longer it will take to find a job.... Read more

Newly listed BidEnergy Ltd has soared after clinching an agreement to supply its cloud-based energy management platform to BP plc's Australian and New Zealand businesses for electricity supplies. BidEnergy had just completed a backdoor listing on the ASX earlier this week through Cove Resources Ltd after raising $7 million in new capital... Read more

ASX-listed gold explorers MacPhersons Resources and Torian Resources appear headed for the Warden’s Court in a battle over prospective ground in the shadows of Kalgoorlie-Boulder’s Super Pit. WestBusiness can reveal both companies sent representatives into bushland at midnight on July 8 to peg the tenements, 7km east of the Golden Mile which has produced more than 56Moz... Read more

LNG boom turns to bust as falling oil price hits exports... Read more

Chevron has signed a five-year LNG supply deal with privately-owned Chinese company JOVO for 500,000 tonnes of gas a year. The deal, through JOVO’s subsidiary Singapore Carbon Hydrogen Energy, is expected to begin in 2018... Read more

Venturex Resources Ltd is heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare... Read more

Shares in Mark Bennett’s S2 Resources have surged on high-grade gold hits at the company’s Polar Bear project north of Norseman. S2 said the results from the Monsoon prospect included 66 metres at 11.4 grams per tonne gold (uncut) or 66 metres at 4.2 grams per tonne gold (when high grades are cut to 30 grams per tonne)... Read more

Rox Resources Ltd has been granted a trading halt by the ASX this morning, pending details of a capital raising.... Read more

Under pressure to find growth, Woodside Petroleum yesterday declared its flagship Pluto LNG plant near Karratha was freezing gas at more than 16 per cent above its installed capacity. The 5mtpa run rate achieved in the June quarter compares with Pluto’s 4.3mtpa design and continues the outperformance of Woodside’s 90 per cent-owned asset since first LNG output in 2012... Read more

Base Resources Ltd's managing director, Tim Carstens, said that the company has built an absolutely first rate operation at its flagship asset, the Kwale mineral sands mine in Kenya. “We’ve got the place absolutely humming.”... Read more

Investors have failed to applaud news from debt-laden Paladin Energy that it had struck almost $US200 million worth of deals, including offloading a big slice of its flagship Langer Heinrich uranium mine. The news also includes a plan to sell 75 per cent of the undeveloped Manyingee uranium project east of Onslow to Chinese-backed, ASX listed tin miner MGT Resources for up to $US30 million. The Manyingee deal does not include the Carley Bore deposit... Read more

Independence breaks out the Bollinger at Nova. Independence shares were off five cents, or 1.26 per cent, to $3.92 at the close.... Read more

Venturex Resources Ltd gets ready to raise... Read more

Energy giant Woodside Petroleum has posted a drop in second-quarter revenue and production, hurt by lower oil prices and a planned shut-down at its North West Shelf gas facility. Sales revenue dropped 16 per cent to $US825 million ($A1.1 billion) for the three months to June 30 from $US982 million in the first quarter of 2016. Its shares gained 26 cents to $27.60.... Read more

New Talisman Gold Mines Ltd will offer investors the right to participate in the remaining shortfall shares from the recently completed rights issue. Shares are priced at A$0.005 or NZ$0.005, which represents a discount to the current trading price on the ASX... Read more

Arrium's overseas bankers baulk at Whyalla loan... Read more

Indian sandalwood grower TFS has secured a $US250 million refinancing deal which comes with a more favourable interest rate. Perth-based TFS said the deal lowered the cost of debt from 11 per cent to 8.75 per cent and provided an extra $US50 million in working capital. TFS shares were up three cents, or 1.99 per cent, to $1.54 at 9.50am.... Read more

Freight rail operator Aurizon has written off its investment in Aquila Resources and said it was shedding about 300 jobs in response to weak coal prices. The company plans to cut approximately 180 workers in train crews, yard operations, maintenance and infrastructure production, plus about 120 middle and senior managers... Read more

Shares in Ruralco have fallen after the agribusiness was ordered to halt live cattle exports to Vietnam. The federal government has raised concerns over animal control and traceability in Vietnam. Meanwhile, shares in Wellard, another exporter of feeder and slaughter cattle to Vietnam were one cent, or 2.2 per cent, lower at 44.5 cents.... Read more

Gina Rinehart has expanded her cattle empire with the purchase of two stations covering about 550,000 hectares in the Northern Territory. Mrs Rinehart’s Hancock Prospecting has added Riveren and Inverway to recent investments in Fossils Downs, Liveringa and Nerrima stations near Fitzroy Crossing in the Kimberley... Read more

The competition watchdog won't oppose Metcash's bid for Woolworths' Home Timber and Hardware business after the supermarket wholesaler promised to let stores buy products from other sources... Read more

iQ3Corp Ltd’s fully owned subsidiary, iQ Capital, has obtained a license to operate an investment banking business in New York, after registration by the Securities & Exchanges Commission. The operation will focus on life sciences and biotechnology sector... Read more

Accounting software developer Reckon will facilitate loans through an agreement with small business online lender Prospa, as the company continues to develop a suite of financial services accessible to its customers. The introduction of business loans adds to recent news flow, with Reckon partnering with OFX to provide low-cost international payments and PayPal to unlock online credit card payments for companies without card processing facilities... Read more

The break-up of Australian logistics giant Asciano between local and international suitors cleared a key hurdle Thursday after the nation's corporate regulator approved their Aus$9.05 billion (US$6.78 billion) bid. The takeover announced in March will see the rail, freight and ports operator's assets split between Canada's Brookfield Infrastructure Group, Australia's Qube and other consortium members, including a Chinese sovereign wealth fund... Read more

Cokal Ltd has been granted a trading halt by the ASX this morning, pending details in relation to debt restructuring... Read more

One of the pioneers of genetically modified canola in WA has backed the Productivity Commission call for all States to scrap laws restricting use of the technology in farming. Cunderdin farmer David Fulwood said Australian agriculture could not afford to turn its back on GM crops approved by Commonwealth’s Office of Gene Technology Regulator... Read more

The Australian Competition and Consumer Commission (ACCC) has given its final blessings to how voice and broadband services will switch over from Telstra to the National Broadband Network (NBN), with retails service providers set to get a longer lead time to migrate their customers. The regulator has approved Telstra’s tweaked migration plan, which asked for additional time for all premises to be connected before mandatory disconnection takes place and for “special services” to be given an additional 12 months prior to mandatory disconnection when they are moved to a separate access technology under the multi-technology mix (MTM) NBN... Read more

Telstra is recruiting a pack of network experts to work on its troubled $1.1 billion communications replacement for the Department of Defence. The telco has a range of roles up for grabs in its Defence engagement business unit (DEBU), from senior cyber security managers down to the frontline technical specialists with boots on the ground at Defence’s network sites... Read more

The federal government has flagged possible upgrades to supercomputing, network and big data infrastructure to meet Australia's research priorities over the next decade. An issues paper PDF released yesterday seeks input on the research domains Australia should prioritise... Read more

Medibank customer complaints have sky-rocketed since its privatisation... Read more

Eagle Boys has attracted a number of interested buyers, administrators of the troubled pizza chain says. SV Partners were appointed as administrators a week ago by the head franchisor of the business, which was established in Albury, NSW in 1987 and now has over 100 stores... Read more

Opinion/Analysis - Colin Kruger: Is the Rupert Murdoch era finally coming to an end?... Read more

Opinion - Harold Mitchell: Australia should look forward to new trade partners, not its old ones. While visiting London and Paris this week I had the opportunity to talk with friends and business associates on the ground about what Brexit might really mean... Read more

International Headlines

U.S. Market Report: Wall Street cooled off on Thursday as disappointing results from tech stalwart Intel and from transportation companies stalled momentum in a U.S. corporate reporting season that has been better than feared. The S&P 500 and Dow industrials pulled back from record highs and the Dow was set to snap a nine-session streak of gains.... Read more

North/South Americas Market Report: North and South American markets are lower today with shares in Brazil off the most. The Bovespa is down 0.63% while U.S.'s S&P 500 is off 0.48% and Mexico's IPC is lower by 0.21%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The DAX gained 0.14%, while the FTSE 100 led the CAC 40 lower. They fell 0.43% and 0.08% respectively... Read more

Asian Market Report: Asian markets finished higher today with shares in Japan leading the region. The Nikkei 225 is up 0.77% while Hong Kong's Hang Seng is up 0.54% and China's Shanghai Composite is up 0.37%... Read more

Strong U.S. home sales, low layoffs highlight economy's strength... Read more

General Mills Inc. disclosed Thursday that it could cut over 1,400 jobs as a result of its plans to close and sell plants in the U.S. and overseas. The job cuts could represent up to 3.6% of the company’s workforce, which totaled 39,000 as of May 29... Read more

Show me the money! Dividends are all the rage. When a big company like Starbucks, McDonald's or Coca-Cola earns a huge (yuuge?) profit, investors benefit because the stock goes up. But you don't actually get a cut of what these companies make. It's different when these companies pay a dividend though. That's a tangible (and often quarterly) reward from a company that is prospering. It's the proverbial case of cold, hard cash money... Read more

U.S. antitrust officials on Thursday moved to block an unprecedented consolidation of the national health insurance market, filing suit against Anthem Inc's (ANTM.N) proposed purchase of Cigna Corp (CI.N) and Aetna Inc's (AET.N) planned acquisition of Humana Inc (HUM.N). The U.S. Department of Justice said the two multi-billion dollar mergers would reduce competition, raise prices for consumers and stifle innovation if the number of large, national insurers were to fall from five to three... Read more

Elon Musk's grand plan for Tesla: tiny buses, electric semis and self-driving taxis. Tesla chief executive Elon Musk isn't happy just selling cars. In a "master plan" published Wednesday night, Musk revealed plans to sell electric buses, pick-up trucks, semis and a small SUV. He also envisioned allowing Tesla owners to turn their cars into self-driving taxis... Read more

Elon Musk’s master plan for Tesla is drawing concerns... Read more

Apple Inc. may rake in $3 billion in additional revenue over the next two years because of the runaway success of Pokémon Go, according to a new report from Needham analyst Laura Martin. The company, which charges a fee to host apps on its App Store and pays itself a portion of the revenue spent on and within iOS apps, keeps roughly 30% of the money spent by users on Pokémon Go, she said... Read more

Facebook worth $1 trillion? Not so crazy... Read more

GM's profit more than doubles on strong U.S. sales... Read more

It's so close you can almost taste it! Anheuser-Busch InBev's $107 billion takeover of SABMiller is nearly complete. The U.S. Department of Justice gave its stamp of approval for the massive deal on Wednesday. Now the brewers are waiting for final approval from Chinese regulators and global shareholders... Read more

The business that controls Britain's cash points has been sold, in the second major UK company takeover by an overseas buyer this week. Vocalink is being bought by America's Mastercard for up to £869m.... Read more

The European Central Bank kept interest rates unchanged on Thursday but left the door open to more policy stimulus, highlighting "great" uncertainty and abundant risks to the economic outlook. Signalling a readiness to act, ECB President Mario Draghi argued that Britain's decision to leave the European Union and weak emerging market growth both dampen the euro zone's own outlook, leaving the balance of risks tilted firmly to the downside and possibly requiring action... Read more

Post-Brexit sterling slump costs Easyjet £40m, says boss... Read more

Unilever warns shoppers of rising prices after Brexit vote. Firms could be forced to hike cost of goods to offset falling pound, says CEO of Flora margarine and Dove soap maker... Read more

Swedish energy firm Vattenfall has confirmed that it will press ahead with a £300m 11-turbine wind farm off the coast of Aberdeen. Onshore construction for the European Offshore Wind Deployment Centre (EOWDC) is due to start later this year. Work offshore is due to commence in late 2017, with the project scheduled to generate its first power in 2018... Read more

Lufthansa has cut its full-year profit target following a sharp decline in long-haul bookings to Europe. Germany's biggest airline blamed "terrorist attacks in Europe" and "greater political and economic uncertainty"... Read more

Iran is holding negotiations with Russia to sell the country around 40 tons of heavy water, Kommersant cited the country’s Deputy Foreign Minister Abbas Araghchi as saying on July 16. The minister said during a press conference in Tehran that consultations were still ongoing. “I don’t know when an agreement will be reached – these are commercial negotiations, and they are still in progress,” Araghchi said, according to the Kommersant report. He also stated that there are other potential buyers willing to make the purchase... Read more

Singapore seizes $177m as part of Malaysia corruption probe... Read more

Latest reports

Latest reports