ASB Securities Morning Brief for Monday, 12 October 2015
Monday, 12 October 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, led by A2 Milk Co after it raised $40 million in an oversubscribed placement. Contact Energy, Meridian Energy and MightyRiverPower advanced. The S&P/NZX 50 Index rose 13.01 points, or 0.2 percent, to 5638.79. Within the index, 23 stocks rose, 19 fell and eight were unchanged. Turnover was $190 million... Read more

The New Zealand dollar is heading for a 3.7 percent gain this week as investors reassess their bets on when the Federal Reserve will start hiking interest rates, and calmer global markets stoke demand for riskier assets such as equities and commodities. The kiwi rose to 66.74 US cents at 5pm in Wellington from 64.34 cents on Friday in New York last week. It was little changed from 66.61 cents at 8am, and up from 66.05 cents yesterday. The trade-weighted index advanced to 71.52 from 71.04 yesterday, and is heading for a 2.5 percent weekly gain... Read more

New Zealand retail spending on electronic cards rose for a fifth month in September, led by an increase in expenditure on durable goods and following recent improvements in retailers' business confidence... Read more

Economist warns RBNZ may not be able to stoke inflation by cutting interest rates. The Reserve Bank is being urged not to bother cutting interest rates, with BNZ warning cheaper borrowing costs may not "solve" the problem of low inflation.... Read more

More home loan rate reductions. ASB cuts more rates to offer the lowest set of mortgage rates across the whole term curve. It is market leading for 6 months, 1 year, 18 months and 5 years... Read more

A Shanghai Pengxin-controlled company is pulling out of a $42.7 million deal to buy a cluster of Bay of Islands farms saying it will not put the sellers through the "frustration and pain" of a Lochinver Station-type experience. Dakang New Zealand Farm Group, 55 per cent owned by Pengxin, applied to the Overseas Investment Office in April this year for consent to buy 3300 hectares of land from Northland's Pinny family... Read more

Silver Fern Farms has accused opponents of the Shanghai Maling deal of "playing a very dangerous and irresponsible game" but the opposition has said it is muzzled legally over how much it can reveal. SFF chairman Rob Hewett and chief executive Dean Hamilton have released a lengthy attack on Otago farmer and SFF shareholder John Cochrane and his fellow opponents, who have floated a counter-proposal to the Shanghai Maling offer... Read more

Silver Fern could stay NZ-owned for as little as $25k per farmer, says Chinese deal opponent. Silver Fern Farms could be kept in cooperative ownership for as little as $25,000 per farmer and the meat company's board would be irresponsible not to consider a "plan B" if it fails to garner support for its proposal to sell half the business to Shanghai Maling Aquarius, says an opponent of the deal... Read more

Alliance Group will offer loyalty payments this season to farmer shareholders in what some observers are saying are the first shots in a procurement war. The offer comes with the caveat that farmers have to supply 100 per cent of all their livestock or 100 per cent of one species... Read more

Final TPPA intellectual property chapter leaked... Read more

TPP allows for a tax on foreign buyers — Groser... Read more

Andrew Little: Bigger gains for dairy in India and Indonesia, than TPPA... Read more

TPP meets none of Labour's bottom lines — Little. None of the bottom lines marked out by Labour have been met in the TPP including the right for future Government's to ban the sale of land to foreign buyers, Andrew Little says. However, his party isn't ruling out support for the document until they look at the final deal, the Labour leader says... Read more

Angel funds have been slashing their investments in New Zealand companies amidst uncertain economic conditions. The latest Young Company Finance Index showed New Zealand angel funds invested $20.6 million in the first six months of 2015, which was $5m lower than the same period in 2014. Angel Association chairman Marcel van den Assum said the index was calculated using data from the "formal, visible and measured angel activity" of about 700 angel investors in New Zealand... Read more

Spitfire Square, Dakota add to Christchurch Airport business. Christchurch Airport is looking to open more facilities for corporate travellers and a wider offering for shoppers at its retail-based Spitfire Square. At the main terminal the company is looking to add to its "Flying South" theatre and events meeting space... Read more

National Maintenance Engineering Conference Announces Major Package for Students and Apprentices... Read more

AIA is unlikely to have to pay out many claims that reach the full extent of its new $500,000 medical cover.... Read more

Air New Zealand awarded Longhaul Airline of the Year... Read more

NZ Film Commission Announces Recipients of Boost Fund... Read more

Childcare firms admit overbilling. Two home-based childcare businesses have been caught overcharging the Government for thousands of dollars of taxpayer subsidies. Oak Tree Care and Lighthouse At-Home, both in Auckland, were each found to be claiming more than they were entitled to after the Ministry of Education placed them under strict monitoring this year... Read more

A $3 million test case between a motelier and Westpac over interest rate swaps was called off before a judge had the chance to decide the dispute. Despite having already been argued at a two-week hearing in July, the case was discontinued before both sides were due to give their closing submissions in the High Court at Auckland... Read more

Analysis/Opinion - Martin Hawes: Debt in retirement... Read more

Opinion - Bernard Hickey: The consensus is broken. Bernard Hickey argues the TPP's proponents should not be surprised by the ungrateful response, but that luckily, it was a bullet dodged rather than the free trade triumph... Read more

Opinion - Rodney Dickens: Rodeny Dickens says the risk isn't that economic and employment growth will deteriorate but rather low rates and high migration will drive growth in spending, GDP and jobs.... Read more

Opinion - Grant Robertson: TPP adds to housing problem. Labour MP Grant Robertson says not enough was done to protect New Zealand land and housing during TPP negotiations... Read more

Opinion/Analysis - Geoff Simmons: Top five questions over TPP... Read more

Opinion - Bloomberg: Clinton is wrong on the Trans-Pacific Partnership... Read more

Australian Headlines

Australian Market Report: The prospect of cheaper credit for longer has sent the Australian sharemarket on a five-day rally, as investor confidence is boosted by further dovish signs from the US Federal Reserve. The market posted its best weekly performance in almost four years, and first five consecutive sessions of gains since June, thanks to a resurgence of resources stocks on the local exchange At the 4.15pm (AEDT) official market close, the benchmark S & P/ASX200 added 69.3 points, or 1.33 per cent, to 5279.7, while the broader All Ordinaries rose 67.8 points, or 1.29 per cent, to 5309.2.... Read more

The Australian dollar traded at its highest levels since late August after the US Federal Reserve said it held off on raising interest rates in September because of low inflation. At 4.25pm (AEDT), the dollar was trading at US72.85c, up from US71.74 late yesterday... Read more

The big four banks claimed a third of the estimated $30 billion in fees generated out of the nation’s growing superannuation sector in the 2014-15 financial year, research commissioned by Industry Super Australia (ISA) suggests... Read more

Trust Liberals on super: Morrison... Read more

How Aussies are saving thousands. A rapidly growing number of Australians are turning to the online ‘grey market’ to stick it to overpriced traditional retailers and avoid paying the dreaded Australia Tax imposed by overseas companies.... Read more

Home loans to owner-occupiers are accelerating at the same time as lending to property investors eases off. The Bureau of Statistics housing finance data for August show the value of loan approvals for owner-occupiers grew 6.1 per cent over the month, while the value of loans to investors fell 0.4 per cent... Read more

ANZ Banking Group will seek to grow by selling more home loans in Australia after years of touting its growth opportunities in Asia, with incoming chief executive Shayne Elliott flagging a more aggressive push into mortgages in NSW and a period of consolidation in Asia in an effort to lift shareholder returns... Read more

Energy companies gouging households 'because they can'. The government faces calls to overhaul the nation's energy markets after the removal of all price controls has resulted in soaring retail margins for energy retailers... Read more

Glencore to cut zinc output, jobs... Read more

Alcoa trims China business outlook as earnings fall. Alcoa reported lower third-quarter earnings Thursday due to falling aluminum prices as it trimmed its outlook for key Chinese businesses. Earnings for the quarter ending September 30 were $44 million, down 70.4 percent from the year-ago period. Revenues fell 10.7 percent to $5.57 billion... Read more

PNG chiefs talk of civil war over unpopular Australian bank deal... Read more

The lowest-hanging fruit in Santos’ part-or-all-of auction is its (broadly) 45 per cent stake in a WA domestic gas business run by Quadrant Energy. Quadrant is the front-runner to add to its 55 per cent stake in assets trunk-lined by the Devil Creek and Varanus Island processing hubs and is finalising a bid to put to Santos... Read more

Ironbark Zinc have appointed Jason Dunning as the replacement nominee of Nyrstar NV as a non-executive director. Ironbark is focussed on the wholly-owned Citronen Zinc Project in Greenland which hosts more than 13.1 billion pounds of zinc and lead... Read more

One of the world’s largest construction engineering companies is looking at becoming a partner in the proposed $12 billion Melbourne to Brisbane ­inland railway. US-based Bechtel is in preliminary talks with Brisbane-based National Trunk Rail (NTR) about becoming an engineering, procurement and construction management partner for the project first mooted a century ago.... Read more

Crowd Mobile has been granted a trading halt by the ASX, with its shares placed in pre-open.... Read more

Turnbull vows $95 million for light rail. Malcolm Turnbull has announced a $95 million grant to help deliver the extension of the Gold Coast light rail line in time for the 2018 Commonwealth Games.... Read more

Bauer's global ambitions lead to hunt to buy Murdoch's Nova. Bauer Media Group is eyeing an entry into Australia's $1 billion radio market after making repeated efforts to buy Lachlan Murdoch's Nova Entertainment, operator of the Nova and Smooth FM networks... Read more

Australia Post creates dedicated e-commerce unit... Read more

Tables will turn on Woolworths, Coles says Jeff Kennett... Read more

Aldi sells the weirdest things, and with 120 new stores rolling out there will be a lot more of it... Read more

Ex-CIOs appointed to Australian e-health records committee. Madden, Walsh to ovesee My Health Record 'reboot'... Read more

The Telecommunications Industry Ombudsman (TIO) has recorded a sharp increase in the number of complaints about the National Broadband Network (NBN). The Ombudsman's annual report for 2014 to 2015 shows the total number of complaints has fallen for the fourth year in a row, dropping 12.4 per cent last year to stand at more than 124,000... Read more

Troubled carmaker Volkswagen will launch a mass recall of almost 100,000 cars as its emissions scandal in Australia widens to include thousands more dodgy vehicles. Volkswagen Australia announced a voluntary recall on Friday, two days after it admitted to the existence of emissions-cheating software in its Australian diesel vehicles... Read more

The former owner-operators of a 7-Eleven store in the Melbourne suburb of Parkville could be hit with fines after allegedly falsifying payroll records and underpaying 12 employees more than $84,000 for a year, including one staff member who was paid $6.25 an hour for some shifts... Read more

Opinion - Ross Gittens: Trade pact is no big deal. Think you know a bit about economics? Try this quick quiz: what's your impression of the Trans-Pacific Partnership Agreement reached between the United States and 11 other Pacific Rim countries, including Australia, this week?... Read more

Opinion/Analysis - Victoria Thieberger & Eric George: Why Australian retailers should fear 'China's Amazon' (video only)... Read more

International Headlines

U.S. Market Report: S&P 500 Index Caps Best Week This Year While Energy Rally Ends. The S&P 500 added 0.1 percent to 2,014.89 at 4 p.m. in New York, up 3.3 percent for the week, the most since December. The Dow Jones Industrial Average rose 33.74 points, or 0.2 percent, to 17,084.49. The Nasdaq Composite Index gained 0.4 percent. About 6.8 billion shares traded hands on U.S. exchanges, 8 percent below the three-month average... Read more

North/South Americas Market Report: North and South American markets finished mixed as of their recent closing prices. The Bovespa gained 0.47% while the S&P 500 was higher by 0.07%. The IPC was even... Read more

European Market Report: European markets finished broadly higher on Friday with shares in Germany leading the region. The DAX is up 1.04% while London's FTSE 100 is up 0.65% and France's CAC 40 is up 0.54%... Read more

Asian Market Report: Asian markets finished broadly higher on Friday with shares in Japan leading the region. The Nikkei 225 is up 1.64% while China's Shanghai Composite is up 1.27% and Hong Kong's Hang Seng is up 0.46%... Read more

Oil prices extended their recent rally in Asia Friday on hopes that increasing demand and a decline in US crude production would ease a supply glut that has depressed the market for more than a year. The two main crude contracts hit a six-year low during the April-September quarter owing to a fears about an oversupply, China's economic crisis and expectations for a US interest rate rise... Read more

3 reasons why oil is back above $50... Read more

Dollar Braces for Inflation Test After Worst Week Since June. A rough stretch for the dollar may be about to get worse. Data due Oct. 15 are forecast to show U.S. consumer prices fell for a second straight month in September. A decline may cast further doubt on Federal Reserve plans to raise interest rates this year and undermine the U.S. currency, which fell the most in four months this week, paring a 2015 advance... Read more

Federal Reserve officials now seem open to deploying negative interest rates to combat the next serious recession even though they rejected that option during the darkest days of the financial crisis in 2009 and 2010. “Some of the experiences in Europe suggest maybe can we use negative interest rates and the costs aren’t as great as you anticipate,” said William Dudley, the president of the New York Fed, in an interview on CNBC on Friday... Read more

The global economic slowdown remains a major concern for the Federal Reserve. Fed Vice Chairman Stanley Fischer reiterated Friday that China's economic slowdown -- and its ripple effect -- is pushing back the Fed's decision to raise rates. The question is just how long the Fed will wait... Read more

Fed's Fischer says 2015 U.S. rate rise 'an expectation, not a commitment'... Read more

Bond Funds Have Been Borrowing to Boost Returns. The objective: equity-like returns on fixed-income investments... Read more

How Tesla leaves its rivals playing catch up. When Elon Musk rolled out the new Tesla Model X at the end of September, some grumbled that the Silicon Valley car maker’s all-electric luxury crossover was coming to market two years too late. It depends on who you ask. The Big Three German auto makers only wish they could catch the tail of Mr. Musk’s rocket... Read more

What to look for in Netflix’s earnings.... Read more

Worldwide shipments of personal computers sank in the recently ended quarter with a strong US dollar weighing down sales, market tracker Gartner reported on Thursday. A total of 73.7 million personal computers were shipped during the third quarter of this year, down 7.7 percent from the same period last year, according to Gartner figures... Read more

Brewer Anheuser-Busch InBev (ABI.BR) may raise its takeover offer for SABMiller ahead of Wednesday's bid deadline, a source close to the matter said on Sunday. An offer in the range of 43 to 44 pounds per share is a possibility, the source said, adding that AB InBev was unlikely to go as high as 45 to 46 pounds, as some analysts have suggested... Read more

Twitter is preparing for company-wide layoffs next week, according to a report in Recode, citing anonymous sources. The struggling internet company is expected to cut staff across virtually all departments, Recode reported, though it said the exact number of layoffs was not clear... Read more

IMF: keep interest rates low or risk another crash. Lender warns on last day at Lima of the need for ‘continued accommodative monetary policies’ amid rising opposition from critics of ultra-low interest... Read more

European Bond Bulls Set for Fresh Encouragement After Retreat. Investors in euro-area bonds may feel bolder next week. A report is forecast to confirm consumer prices fell in September, which would help turn the tables after fixed-income was pushed aside by a stock-market rally... Read more

David Drumm: Former Anglo Irish Bank CEO arrested in US... Read more

TalkTalk calls on Ofcom to break-up BT. In its submission to the regulator's ten yearly review of the telecoms market, challenger calls for Openreach to be spun out of BT... Read more

U.K. Harvests Bumper Wheat Crop as EU Hunts for Export Markets... Read more

Berlin protest against TTIP trade deal draws thousands. Thousands have protested in the German capital Berlin against a planned free-trade deal between the EU and US. Organisers said 250,000 people took part in the rally; police put the figure at around 100,000... Read more

Merkel's deputy expects Germany to get over a million refugees in 2015... Read more

German Chancellor Angela Merkel on Sunday ruled out tax increases to help deal with the biggest influx of refugees since World War Two. "We can be glad that our economy has been well managed for years and that our economic situation is currently good," Merkel said in an advance preview of an interview to be published in the daily Bild on Monday... Read more

Deutsche Bank AG, Germany’s largest bank, is considering the sale of a unit that helps pension funds protect themselves against the risk of their members living longer than expected, according to people familiar with the discussions. No decision has been taken on the potential sale of the Abbey Life unit, said the people, who spoke on condition of anonymity because the matter is private. The Bournemouth, U.K.-based business may fetch as much as 3 billion pounds ($4.6 billion), one person said... Read more

'Top-up' scheme allows pensioners to boost retirement income. The new scheme, launching in the UK on Monday, has been criticised for the amount of time it will take pensioners to benefit... Read more

Tax on tobacco should be raised to persuade more smokers to quit, a parliamentary group has said. The tax rate currently goes up by 2% above inflation each year, but the All-Party Parliamentary Group on Smoking and Health wants that increased to 5%.... Read more

Grangemouth operator Ineos buys North Sea fields. Twelve North Sea gas fields have been sold by the Russian oligarch who bought them earlier this year but was forced by the UK Government to sell them. Ineos, the chemicals giant that controls Grangemouth refinery and petro-chemicals plant, has taken them on... Read more

Credit Suisse Group AG has “well advanced” plans to cut costs by 7 percent to 10 percent, which would translate into an annual reduction of as much as 2 billion Swiss francs ($2.1 billion) for the group, Schweiz am Sonntag reported, citing several managers of sub-units in the bank... Read more

Norway Junk Bond Investors Set Sight on Attractive Oil Debt... Read more

Personal bonds vital for business success in Russia- French leadership guru. Pierre Casse, professor of leadership at the Moscow School of Management Skolkovo, shares the keys to become a successful businessperson in Russia.... Read more

Left outside the U.S.-backed Trans-Pacific Partnership (TPP) trade pact struck last week, China and India approach this week's talks for a huge Asia-wide equivalent with fresh urgency, lest competitor nations steal a march on export access. Beijing is a key driver of the Regional Comprehensive Economic Partnership (RCEP), a proposed 16-nation free-trade area that would be the world's biggest such bloc, encompassing 3.4 billion people... Read more

China has drafted a plan to ban the use of private cars in online taxi-hailing services, potentially dealing a setback to Didi Kuaidi and rival Uber in their efforts to expand in the world’s most populous nation... Read more

Investors in Japanese shares will likely be optimistic next week as speculation for the Fed rate hike is receding and as commodity prices pick up, analysts say. In the mid-week, Tokyo stocks ended six straight days of gains as data showing machine orders - a key indicator of the economy's strength - unexpectedly shrank in August... Read more

Opinion - Liam Halligan: Prime Minister 'squandered' chance to tackle Brexit. The real issues of the day were debated on the fringes of the Conservative party conference not in the hall... Read more

Opinion - Jeff Reeves: Apple is better served by Tim Cook than it would be by Steve Jobs... Read more

Opinion - Jonathan Burgess: This Analyst Says China's Stock Rally-to-Rout Is About to Repeat... Read more

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