ASB Securities Morning Brief for Saturday, 29 August 2015
Saturday, 29 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. TheS&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 likely to feel the impact of a slowdown in China, say economists. The People's Republic, by far the biggest recipient of New Zealand dairy produce, sheepmeat, logs and wool, and a highly significant market for a raft of other commodities, this week sent shockwaves around the world as economic uncertainty drove its share markets sharply lower... Read more

Anti-dumping consumer welfare test unfair to NZ businesses, lobby group says... 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

There are question marks over the extent to which petrol companies are passing on rock-bottom oil prices to consumers at the pump. Petrol companies have increased their margins since this time last year, when oil prices were double what they are now. The amount they charged over and the above their costs – taxes, import and refining costs – rose to 38.5 NZ cents per litre (cL) over the week ended August 21. This was while the price of Dubai crude oil sunk to US$48 a barrel (it’s since fallen further)... 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

Property Institute of New Zealand Chief Executive, Ashley Church, has welcomed a recent policy change, by the Reserve Bank calling it ‘a game changer’ and ‘a massive step in the right direction’. Up until recently, an exemption from the Reserve Bank’s policy of requiring a minimum 20% deposit on a property purchase was available where the purpose of the loan was to build a new home – but the exemption was only available to those who were purchasing the property as their own home... Read more

Chinese buyers flock to Auckland apartment auctions as sales surge... 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

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

Dairy downturn gives dispute mediators scope for bigger role in farmer and bank relationships... 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 has reported a annual loss of $5.2 million as it continues developing the world’s first commercial jetpack, due out next year... Read more

Cavalier Corp reported the worst loss in its history as the carpet maker foregoes dividends and sells assets in a bid to restructure its business and return to profitability. The Auckland-based company posted a loss of $25.7 million, or 37.4 cents per share, in the 12 months ended June 30, from a profit of $5.8 million, or 8.5 cents, the year earlier, it said in a statement... Read more

Mighty River Power has become the latest electricity generator-retailer to announce a special dividend in the current earnings season, at the same time as announcing a 22 per cent fall in underlying earnings after tax for the year to June 30, of $145 million... Read more

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

Veteran corporate investor Ron Brierley is sniffing out opportunities in Christchurch-based retail chain Smiths City, which has started closing down unprofitable stores to eke out a lift in earnings. Brierley’s Mercantile Investment Co and Sandon Capital, whose principal Gabriel Radzyminski also sits on the board of Mercantile, have built up a combined 7.2 percent stake in the retail chain, and will “act in concert in relation to their conduct as shareholders” of Smiths City, according to a substantial shareholder notice filed to the ASX and NZX... 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... Read more

Kiwibank posts $127 million annual profit as net interest margin surges with lending up 7% and deposits up 8%... Read more

Kiwibank says its focus for the future is transforming into a digital business, with fewer branches and digitally-enabled sales supported by staff... Read more

New Zealand Post Group lifted annual profit 34%, booking a one-off gain from the sale of its Australian business, Couriers Please, while at home its Kiwibank unit boosted earnings... Read more

Higher future power prices loom as generators cut gas and coal plants... Read more

10,000 tourists set to pedal the West Coast cycle trail this year.... Read more

Two advisers investigated. FMA began investigations into two potential referrals to the Financial Advisers Disciplinary Committee in the past year.... Read more

Mobile truck shops investigated by Commerce Commission... Read more

A Christchurch family is fighting insurer IAG over an imposed repair strategy that was questioned in a government investigation. Six out of seven IAG-managed repairs were found to be deficient in a Ministry of Business, Innovation and Employment (MBIE) survey of 90 Canterbury homes. Most of the faulty work in the survey was linked to unconsented foundation repairs... Read more

An innocuous-sounding New Zealand company based on a quiet Albany Street has emerged as a key enabler of a spectacular $350m heist that's been described as "if Oceans 11 had been masterminded by a Bond villain". The United States' Department of Homeland Security has secured freezing orders against a number Manhattan properties and bank accounts connected to the scam involving corrupt Russian police and tax officials and a dead lawyer... Read more

Keeping business data secure in the digital age. With an estimated 22,000 Kiwis caught up in the Ashley Madison hacking, the latest high profile cyber attack is an extreme example of why online security is critical for businesses in the digital age. According to Netsafe's records, almost $8 million was lost by individuals and organisations from online fraud and scams in 2014... Read more

Opinion - Fran O'Sullivan: Stealthy CEO leaves mayor on the sidelines. Auckland Council chief executive Stephen Town is displaying all the hallmarks of a bureaucratic stealth bomber. Town's planning moves have been almost invisible in recent months as he carefully manoeuvred to get two signature missions launched without being derailed by Auckland Mayor Len Brown... Read more

Opinion - Stephen Franks: Leave Fonterra to sort itself (or not)... Read more

Opinion - Gareth Morgan: We need to start thinking quickly about the effects on New Zealand of China’s economy.... Read more

Opinion - Brian Gaynor: Why world catches cold when China sneezes. Emerging market economies hit by downturn in commodity prices... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has ended the week in stronger territory, despite the bourse’s 4 per cent slide on Monday, as energy and materials stocks lifted on the back of surging oil prices. At the official 4.15pm (AEST) close, the benchmark S&P/ASX200 had risen 30.3 points, or 0.58 per cent, to 5263.6, while the broader All Ordinaries had gained 32.1 points, or 0.61 per cent, to 5274.7. The benchmark close put the index 49 points higher for the week.... Read more

The Australian dollar is powering higher, propelled upward by rising commodity prices and gains on China’s stockmarket. At noon (AEST), the currency was trading at US71.92c, up from US71.13c yesterday... Read more

The TPP is still alive and Australia will likely sign... Read more

China FTA won't be revisited: Robb. The government has vowed the China-Australia free trade agreement won't be revisited and any attempt to at the behest of unions and Labor would scupper the deal. Trade Minister Andrew Robb said it was the biggest agreement China had ever signed with any developed country and is now under threat from a "corrupt" union... Read more

Mining downturn leads bigger than forecast fall in business investment... Read more

With the sugar market entering its fifth consecutive year of global surplus, the outlook for Queensland sugarcane growers this harvest season is anything but sweet. World sugar prices are now experiencing seven-year lows, dropping to a around US11¢ a pound, compared to US18¢/lb this time last year... Read more

Australian dairy farmers getting too much for milk: Fonterra boss... Read more

Bega Cheese defends investment in extra production after global dairy crash hits yearly profit... Read more

A joint venture between French company Neoen and the Australian Capital Territory Government will inject $250 million into the South Australian economy and deliver clean energy to the capital. Neoen bought the Hornsdale wind project outside Jamestown, in South Australia's mid-north, from corporate bank Investec 18 months ago... Read more

Aussie miners turn to tech firms in tough times. Australian mining and exploration companies are turning to acquisitions and reverse-takeovers of technology firms in a bid to diversify into new areas as traditional revenue taps run dry.... 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... Read more

BHP's growing pains give Rio edge in a buyer's market. Constant comparison is the lifeblood of the rivalry between BHP Billiton and Rio Tinto. Ever since BHP failed to take over its smaller rival, the two big miners have moved in something akin to lockstep, challenging investors to tell them apart... 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. Total value for the contract will be subject to the final rehabilitation area and materials supplied with contract completion scheduled for December 2017... Read more

Kingston Resources raising $1.3M to fund IOCG drilling in South Australia... Read more

Gold miner Ramelius Resources has swung back into the black with a $20.5 million full-year profit. The result contrasts with the miner’s $102.6 million loss the previous year... Read more

Arc Exploration has raised $106,000 from its share purchase plan priced at $0.0018 to fund work on its existing projects in Australia and Indonesia... Read more

Qantas chief executive Alan Joyce's annual pay packet has swelled to $11.9 million due to the airline's cost cutting fuelled turnaround. The main reason for the huge increase from last year's $2 million in pay was $6.9 million in shares awarded as a long-term incentive... Read more

Casino group Echo Entertainment unveils plans to rebrand as The Star Entertainment Group... Read more

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

Macmahon Holdings has signed off on a year of radical restructuring with an impairment-fuelled $217.9 million full-year loss. The Perth contractor said this morning it had emerged as a smaller company with a "healthy balance sheet", no debt, an order book of $1.2 billion and renewed optimism. Macmahon shares closed up 0.6 cents, or 8 per cent, at 8.1 cents.... Read more

Listed telco Inabox Group has lifted top line revenue by 37% to $64.3 million assisted by the Anittel acquisition for the year ended year ended 30 June 2015. Overall EBITDA was down 22% to $1.8 million as a result of the Anittel acquisition which posted (EBITDA) losses in the first 4 months of 2HFY15... Read more

Law firm Slater & Gordon has defended its controversial Quindell acquisition in the UK as it unveiled a number of changes to appease the corporate regulator. The company - the world's first publicly listed law firm - has come under heavily scrutiny in recent months over problems with Quindell, which it acquired for $1.3 billion in March, as well as confusion about its own accounting practices... Read more

Woolworths posts a fall in full-year profits as Gordon Cairns appointed chairman... Read more

Why supermarket giant Woolworths is now a tour de farce. Watching Woolworths is increasingly the corporate equivalent of car crash TV. There’s the sudden departure of Big W boss Alistair McGeorge after complaints about his “workplace behaviour”, the ongoing “leadership” of lame duck CEO Grant O’Brien and a series of PR disasters (the “Fresh in our Memories” Anzac social media campaign, anyone?) just for starters... Read more

The strong housing market has helped boost homewares retailer Harvey Norman's annual profit, and the retailer expects that support to continue over the medium term. Harvey Norman's annual net profit for fiscal 2015 has risen 26.6 per cent to $268.1 million, from $211.70 million last year. Excluding property revaluations, annual net profit was up 19 per cent to $261.84 million, from $220.1 million. Shares in Harvey Norman were 10 cents lower at $4.42.... 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. The company's market value is nudging $1.9 billion after its shares soared 20 per cent this week, passing the $100 milestone and now touching $109.21... Read more

Cash Converters has slumped to a $22 million annual loss on the back of its class action settlement and the termination of its agency agreement. Its shares were off 5.5 cents, or 11 per cent, to 44.5 cents at the close.... Read more

Telstra mulling wireless joint venture with San Miguel... Read more

Nine Entertainment logs $598 million full-year loss, tips slide in ratings share... Read more

Invion Limited has been granted an ASX trading halt in relation to a proposed capital raising. The halt will last until the earlier of the announcement being made or the start of trade on Tuesday, 1st September... Read more

Seafolly cuts ties with Megan Gale's Isola swimwear label... Read more

Opinion/Analysis - James Kirby: Bank stocks: big, bruised and back in value (video only)... Read more

Opinion - Malcolm Maiden: Woolworths: the only way from here might be up. Woolies is down, but change is coming. Its shares might be worth a punt... Read more

Opinion - Peter Wells: Dragging Australia's financial reporting regieme into the 21st century... Read more

Opinion - Lyndall Bryant: Inefficient tax slugs all homebuyers. Housing affordability is more than just house prices. It also includes ready access to public transport, schools, good road networks, and of course access to all the basic utilities. However, local governments don’t have the money to build all the infrastructure new housing estates need... Read more

Opinion - Ross Gittens: Consensus worth a try to fix the budget... Read more

International Headlines

U.S. Market Report: U.S. stocks ended little changed, with the Standard & Poor’s 500 Index on track for its worst month since May 2012, as equities found some respite from the wide swings prevalent earlier this week. The S&P 500 rose 0.1 percent to 1,988.65 at 4 p.m. in New York, after earlier climbing as much as 0.3 percent. The gauge on Thursday posted its best back-to-back advance since March 2009... Read more

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 FTSE 100 gained 0.90% and the CAC 40 rose 0.36%. The DAX lost 0.17%.... 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

Oil Caps Biggest Two-Day Gain Since 2009 as Volatility Climbs... Read more

Why Saudi Arabia won't cut oil production. Nine months after OPEC decided to leave its production target unchanged and pursue market share instead of trying to prop up prices, the group is facing a set of complex problems and decisions going forward... Read more

Copper futures closed slightly lower in London on Friday, struggling to build on strong gains made in the previous session as worries about demand returned to weigh on investors... Read more

U.S. prices largely ‘insulated’ from overseas currency shocks: Jackson Hole research paper... Read more

Consumer Spending in U.S. Rose in July as Wages Picked Up... Read more

China slowdown could hit startups like Uber. China's economy is at risk, which is triggering volatility in the U.S. stock market. And those private companies with sky-high valuations -- Uber is worth a whopping $50 billion -- well, they're at risk, too... Read more

Federal Reserve Vice Chairman Stanley Fischer left open the option of an interest-rate increase next month, walking a line between officials who want to delay due to market turmoil and those who say the economy is strong enough to handle a move... Read more

Apple Music exec quits two months after launch... Read more

Pentagon teams up with Apple, Boeing to develop wearable tech... Read more

Bank of America Corp. shareholders should force Chief Executive Officer Brian Moynihan to give up his chairman title, CtW Investment Group said. The bank is holding a Sept. 22 vote to approve bylaw changes that allowed Moynihan to add the chairman title last year. The Charlotte, North Carolina-based lender took a “big step backwards” when it replaced its independent chairman with a lead director, CtW said in a letter posted on its website Friday... Read more

Accused U.S. 'flash crash' trader fails to have UK extradition case postponed... Read more

The founder and chief executive of the Ashley Madison infidelity dating website, Noel Biderman, has stepped down. A statement released by the firm said his departure was "in the best interest of the company"... Read more

Carl Icahn discloses stake in Freeport McMoRan, may seek board seat... Read more

Prosecutor seeks to summon Murdoch in Deutsche Bank trial. Munich prosecutors requested that 30 additional witnesses including Rupert Murdoch, publisher Friede Springer and Axel Springer Chief Executive Mathias Doepfner be summoned in a trial against Deutsche Bank executives.... Read more

Rebekah Brooks will return to her old job heading Rupert Murdoch's British newspaper division, the Financial Times reported, just over a year after being cleared of criminal charges in a phone-hacking scandal. Her return to News Corp could be as soon as early September, the Financial Times said on Friday, citing people familiar with the matter... Read more

German Inflation Holds Near Zero as ECB Shows Concern... Read more

The weekly decline in German bunds halted Friday after a report showed consumer prices in Spain dropped at a faster pace than analysts forecast, bolstering speculation that the European Central Bank will extend its bond-buying program to stave off the risk of deflation in the euro area... Read more

HSBC error leaves thousands of Brits without pay... 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. As expected, the Office for National Statistics (ONS) on Friday made no change to the reading for the three months to June... Read more

Brazil is going bust. Its currency is plummeting, unemployment is rising, its stock market is down 20% from a year ago and its president, Dilma Rousseff, has an 8% approval rating -- the lowest since 1992 when Brazil's president was impeached. Once a major economic success story, Brazil sank into recession on Friday.... Read more

When it comes to Chinese knockoffs, the sky's the limit. Counterfeiters have already produced millions of fake handbags, along with knockoff iPhones, Apple Watches and even realistic-looking fake Apple and IKEA retail outlets. But now there's a new high-water mark: Somebody has set up a fake Goldman Sachs.... Read more

Japanese inflation fell back to zero in July while household spending dropped again, official data showed on Friday, as a slowdown in China threatens Japan's already precarious economic picture. The disappointing data are sure to stoke speculation that the central bank would be forced to unleash more stimulus later this year to counter a downturn in the world's number-three economy, which contracted in the April-June quarter... Read more

5 Charts That Explain India’s Luxury Market. International luxury brands have long desired to reach the portion of India’s rich dispersed across the country’s smaller industrial cities... Read more

India - we can take the economic lead as China stumbles... Read more

Nestlé Tries to Stir Up Indian Demand for Banned Noodles by Appealing to Single Men... Read more

Opinion - Brian Fallow: China pays the price of change. Slip-ups are no surprise, given the vast reforms that country is going through... Read more

Opinion - Rex Nutting: Why market correction makes a September rate hike more compelling... Read more

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