ASB Securities Morning Brief for Tuesday, 24 February 2015
Tuesday, 24 February 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, paced by Chorus as its first-half earnings met with market expectations. Xero rose to a four-month high as a seller exited the stock. The NZX 50 Index rose 5.409 points, or 0.1 percent, to 5754.357. Within the index, 24 stocks rose, 18 fell, eight were unchanged. Turnover was $253 million, including $76 million of Fletcher Building... Read more

The New Zealand dollar fell from its highs against the Australian dollar, touching a week low, as some investors took advantage of the gains to sell the local currency. The kiwi touched 95.75 Australian cents and was trading at 95.85 cents at 8am in Wellington, from 96.43 cents at 5pm on Friday. The local currency was trading at 75.20 US cents from 75.18 cents at the New York close and 75.31 cents on Friday... Read more

Robust economy to remain. Canterbury Development Corporation (CDC) boss Tom Hooper called 2014 "the year of the golden economy" for the region, but he is more cautious about this year... Read more

Kiwibank back in low-deposit business. Kiwibank is seeing strong levels of first-home buyer activity despite restrictions limiting lending to borrowers with small deposits, its chief executive says... Read more

Kiwibank happy with loan growth... Read more

Auckland rents up. Rent for three-bedroom properties has increased 4.4% on average over the past year, Barfoot and Thompson says... Read more

AIA has today launched a policy designed to cover rent payments. Graeme Edwards said it was a response to how much the housing market had changed, particularly in Auckland. “If you look at the statistics, a third of people are long-term renters and there’s no cover for them.”... Read more

FSC hopeful of GST decision this year. It’s too early to worry that a change to GST rules could lead to heftier fees for investors, the Financial Services Council says... Read more

Harbour Asset Management has partnered with Baltimore-based global asset manager T. Rowe Price to bring a wholesale global equity PIE fund to New Zealand. ... Read more

Mood likely to be brighter at Fonterra's board meeting. Fonterra's board will have reason for cautious optimism when it meets tomorrow to review its farmgate milk price forecast for 2014/15, as evidence builds that the supply/demand imbalance that hammered the market last year has started to correct itself... Read more

Oceania Dairy's milk processing plant at Glenavy has declared a 9 per cent drop in production for February on its budget... Read more

Falling New Zealand dollar helps offset decline in export log prices... Read more

New Zealand is facing greater risks from an expanding Queensland fruit fly population across the Tasman, and has contacted major export markets in response to the latest discovery of the pest, says Prime Minister John Key... Read more

State-owned Kiwibank has posted a record interim profit of $71 million, and suggested it may commence dividend payments, but warns high levels of competition could put pressure on margins during the second half of the financial year... Read more

Heartland lifts 1H profit 41% as reverse mortgage unit adds income. Shares of Heartland last traded at $1.38 and have gained 22 percent since the start of the year. The stock is rated an average of 'hold' based on the consensus of three analysts surveyed by Reuters, with a median price target of $1.28... Read more

Sky Network Television, the country’s dominant pay TV operator, has reported increased profit and revenue for the first half despite a net loss of 8,707 subscribers. Sky shares are currently trading at $5.82, up 1.8 percent this year. ... Read more

Sky TV shares dip as investors react to loss of subscribers... Read more

Radio helps MediaWorks return to profit of $12m... Read more

Fletcher Building spent $57 million on land in the latest half year, well up on the $28 million it spent in the last full year. In last Wednesday's half-year result to December 31, Fletcher announced how much it had spent... Read more

Freightways first-half profit jumps 21% as sales, margins grow from couriers, data management... Read more

Chorus says the rollout of ultra-fast broadband and rural broadband initiatives are on schedule, but growth in fibre connections is putting pressure on its capital expenditure. Chorus yesterday reported an 18 per cent drop in first-half profit. Shares closed up 3c at $2.86.... Read more

Chorus to look at dividends once copper price set; narrows UFB build cost. Chorus will move "relatively quickly" to resume paying dividends once the Commerce Commission sets the price for what the telecommunications network operator can charge for access to its copper line network... Read more

Spark New Zealand concludes sale of its interest in Telecom Cook Islands... Read more

AWF Group, the contract labour firm, plans to raise up $14 million in a rights issue to repay bank debt used to buy white-collar recruitment agency Madison last year, and named Madison boss Simon Bennett to take over as chief executive in July... Read more

At first blush Air New Zealand’s fuel hedging position filed with NZX on February 13 and showing unrealised losses of US$70 million (NZ$93m) for the six months to June, might look alarming when compared with filings a year ago - when consecutive gains in hedging compensation were the order of the day... Read more

Xero's price jumps amid speculation. Shares in Xero have jumped 24 per cent in the past week, amid speculation a large seller has left the market... Read more

Health insurer nib is focused on building its brand and the direct-to-consumer channel in New Zealand, its managing director says. It today announced a consolidated operating profit for the group of A$42.1 million for the six months to December 31, up 1.7% from A$41.4 million in the first half of the year... Read more

Investors are lining up to get a stake in the Christchurch City Council's key commercial assets even though a final decision on whether to partially sell them is months away. On Thursday, the Christchurch City Council is scheduled to put the finishing touches on its proposed financial strategy for addressing the $1.2 billion budget shortfall... Read more

FMA keeps eye on adviser advertising. The Financial Markets Authority says it is addressing issues of financial advisers promoting services beyond what they are allowed to offer as part of its monitoring activity.... Read more

The Government's earthquake authority has welcomed an insurer's call for a system overhaul after the Canterbury earthquakes... Read more

Maori land panel make-up criticised. A Northland regional councillor is criticising the latest stage in plans to change the law surrounding Māori land.... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has closed half-a-percentage point higher after gains by the big banks offset a mixed bag of company earnings. At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was up 26.5 points, or 0.45 per cent, at 5,908 points, while the broader All Ordinaries index had gained 26.8 points, or 0.46 per cent, at 5,872.4... Read more

THE Australian dollar is higher as fears ease about a breakdown in the debt bailout talks between Greece and its European partners. At 4pm (AEDT), the local unit was trading at US78.33 cents, up from US78.06 cents on Friday... Read more

Government jobs scheme being 'rorted'. Private employment agencies are reportedly ripping off a taxpayer-funded program designed to find jobs for unemployed people.... Read more

Treasurer Joe Hockey has warned Australia must not fall into a position like Greece where it would be subservient to global bankers. He was responding to Palmer United Party leader Clive Palmer in parliamentary question time who asked him why the government was destroying living standards with austerity when Australia’s debt was less than the OECD average... Read more

Australia's GST red tape is among the most complicated in the world, stifling small business and hampering the economy, a new report says... Read more

The housing boom will continue to drive earnings in the medium term, says global construction group Lend Lease. Strong demand for apartments, particularly in Australia, has helped the company lift its profit 25 per cent... Read more

Woodside's decision to shelve its Sunrise LNG project has not dented East Timor's desire for the resource to be developed.... Read more

Shares in Macmahon Holdings have plunged after the struggling contractor announced the loss of $780 million of work at a Fortescue Metals Group mine late on Friday... Read more

Troubled mining services giant Boart Longyear is confident demand for its services will pick up ... eventually... Read more

GVK Hancock’s megamine in the Galilee Basin is facing seven legal challenges... Read more

Caltex shareholders are set for a windfall after the company almost tripled dividends, lifted its payout ratio and flagged more capital returns. Shares in Caltex, whose biggest shareholder is Chevron with a 50 per cent stake, fell six cents to $36.61 but are up 75 per cent from a year ago.... Read more

Crowd Mobile has been granted a trading halt by the ASX pending capital raising details... Read more

The nation’s property boom, new housing construction and product innovation around chemical-free cleaning products as well as the fad for robot vacuum cleaners should help propel specialist Godfreys to its full-year revenue and profit prospectus targets. The stock closed down 14c at $3.20 yesterday.... Read more

Imugene shares rose 33.3% on Friday to $0.012 with more than 13 million shares traded, well above the average daily trading volume of around 855,000 shares as investors twig to milestones ahead for the biotech company... Read more

Shares in petcare group Greencross rose more than 10 per cent on Monday after the company posted a record first half performance – helped by resilient demand for its products, and reconfirmed its earnings guidance for the 2015 financial year. Greencross said revenue for the six months ended December 31 rose to $307.5 million, up 43 per cent from a year ago,... Read more

Australia Post Monday forecast its first annual loss in more than 30 years and warned it would lose Aus$6.6 billion (US$5.2 billion) over the next decade without urgent regulatory reform. The government-owned company said its net profit fell 56 percent to Aus$98 million in the latter half of 2014 due to a slump in demand for letters... Read more

Investors sent BlueScope Steel shares plunging even as the manufacturer delivered its best result since 2010 and announced­ its first dividend in four years. The 8 per cent-plus fall in the stock was thought to be a reaction to concerns about diving steel prices which BlueScope warned of in its commentary... Read more

Health insurers have to develop ways of mitigating rising costs of medical claims that are eating into earnings, the head of nib says. The health insurer will lift premiums from April 1 after making a net profit of $41.4 million in the six months to December 31, up four per cent from the same period a year ago. Shares in nib closed one cent higher at $3.68.... Read more

Shares in the education and training services business Vocation Limited slumped more than 70 per cent on its return to the market after a five-week voluntary suspension, although they have since recovered much of that lost ground... Read more

Telstra to build 22 new WA mobile towers. Telstra will build 22 new mobile phone towers across regional Western Australia after the state government announced it would invest $45 million into boosting mobile coverage.... Read more

NAB outlines plans to counter poor advice... Read more

Senate to grill top NAB executives over financial planning misconduct. NAB chief executive Andrew Thorburn will have to face questions at a Senate inquiry as soon as next week following revelations of misconduct in the bank's financial planning division, and the sacking of 37 of its financial advisers... Read more

Finance industry watchdog wants new CIO. Australia's banking, insurance and superannuation industry watchdog is on the lookout for a new head of IT to spearhead its technology strategy... Read more

South Korean car maker Kia has been forced to offer customer refunds after an investigation into its capped price service charges. The probe by the Australian Competition and Consumer Commission (ACCC) was launched in response to concerns about the claimed fixed service pricing offered by Kia since 2012... Read more

Opinion - Ian Verrander: Debt has robbed Glenn Stevens of his mojo. Australians have huge debts, so rate cuts won't spark consumption.... Read more

Opinion - Surendranath Jory: Why scandals aren't necessarily bad for business... Read more

International Headlines

U.S. Market Report: U.S. stocks edged lower in morning trading Monday amid weakness in oil prices, after a conditional agreement by euro zone finance ministers to extend Greece's bailout sent the Dow and S&P to record levels last week. Oil prices fell, with Brent LCOc1 down 0.9 percent to $59.68 and WTI crude off 2.4 percent at $49.61 a barrel on oversupply concerns and a stronger dollar, pulling the S&P energy index .SPNY down 0.5 percent... Read more

North/South Americas Market Report: North and South American markets are lower today with shares in U.S. off the most. The S&P 500 is down 0.24% while Brazil's Bovespa is off 0.10% and Mexico's IPC is lower by 0.02%.... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The DAX gained 0.73% and the CAC 40 rose 0.65%. The FTSE 100 lost 0.04%.... Read more

Asian Market Report: Asian markets finished higher today with shares in China leading the region. The Shanghai Composite is up 0.76% while Japan's Nikkei 225 is up 0.73% and Hong Kong's Hang Seng is up 0.02%.... Read more

Gold prices have fallen as a deal between Greece and its creditors took shape, easing worries about the eurozone and driving investors out of the haven metal. Gold for April delivery, the most actively traded contract, closed down $US2.70, or 0.2 per cent, at $US1,204.90 a troy ounce on the Comex division of the New York Mercantile Exchange on Friday. Prices had hit $US1,215.30 an ounce earlier in the session, when a deal appeared less certain... Read more

U.S. existing home sales at nine-month low, supply limited... Read more

One-Third of Americans Living on Financial Edge... Read more

Local bankers are joining the fight against a congressional proposal to audit the U.S. Federal Reserve's policy decisions, with more expected to lobby against the bill if it gains traction in Washington... Read more

For the last decade, Wall Street brokerages have had a pact not to sue brokers that leave their firms and try to take clients with them. Now Bank of America BAC.N Merrill Lynch, one of the founding signers of the truce, is taking steps to erode the agreement, industry lawyers say... Read more

Across the U.S. Midwest, the plunge in grain prices to near four-year lows is pitting landowners determined to sustain rental incomes against farmer tenants worried about making rent payments because their revenues are squeezed... Read more

Why the World Is So Bad at Tracking Dirty Money Global regulations on money laundering are expensive to enforce and unfair to poor countries. They don't work very well, either... Read more

Apple Inc said it would spend 1.7 billion euros ($1.9 billion) to build two data centers in Europe that would be entirely powered by renewable energy and create hundreds of jobs. The company said the centers, in Ireland and Denmark, will power Apple's online services, including the iTunes Store, App Store, iMessage, Maps and Siri for customers across Europe... Read more

Euro remains weak as Greece concerns remain... Read more

Greece is preparing to present a list of reforms to lenders in order to secure a bailout extension. The list to be submitted on Monday must be approved by international creditors to secure a four-month loan extension... Read more

German business morale holding up, Ifo survey says. Confidence among German businesses is holding up despite problems in the eurozone and other uncertainties, a survey by the Ifo institute suggests. Its latest Business Climate Index inched up to 106.8 points in February from 106.7 points last month... Read more

HSBC may face extra $1 billion in FX fines, U.S. compensation costs... Read more

HSBC says Swiss scandal has brought 'shame' on bank... Read more

UK retail sales fell 0.3% in January from the previous month, according to figures from the Office for National Statistics. The decline in sales follows a 0.2% rise in December 2014. The January figure was a 5.4% rise on a year earlier, the ONS said... Read more

French pharmaceuticals group Sanofi came under fire from French government ministers on Monday over a welcome bonus planned for its new CEO. Sanofi's new boss, Olivier Brandicourt could pocket a one-off golden handshake of 4 million euros ($4.5 million) in addition to making 4.2 million euros a year... Read more

'New Scottish brand' needed to boost exports, says N-56 report. Scotland needs a new brand to sell its skills and modern industries to the world, according to a new report. N-56, an economic think tank with links to the SNP, wants exports to play a large part in the Scottish government's economic strategy, which is due for an update next month... Read more

How GM Is Coping With Ruble Trouble in Russia. The company’s CFO, Chuck Stevens, also explains why China is so important for restoring Cadillac’s brand... Read more

Plunging car sales leave Russia’s auto industry running on empty. Results for 2014 show that Russia’s auto industry has been thrown into crisis by the devaluation of the ruble, with a drastic fall in car sales registered over the past year as Russians’ relative income has decreased and production costs have risen... Read more

The Central Bank of Azerbaijan depreciated the country's currency by 33.5% against the U.S. dollar on Saturday, the bank said in a statement... Read more

China's Wanxiang to rebrand Fisker as Elux - sources... Read more

Japan's ANA joins bid to rescue bankrupt Skymark Airlines... Read more

Honda CEO to step down, replaced by low-profile engineer... Read more

Mitsubishi Heavy Industries' shares rose on Monday after a consortium led by Japan's top heavy machinery maker struck a $3.36 billion deal to build Qatar's first subway system. The Tokyo-listed stock climbed 0.69 percent to finish at 654.6 yen ($5.5) on news that the five-member consortium, which includes Hitachi and French defense contractor Thales, had received the order from Qatar Railways to build "Doha Metro"... Read more

India’s Reliance Group plans to bid for more than $20 billion worth of defense contracts in the next few years and is in talks with global aerospace and defense companies to form partnerships for manufacturing an array of equipment, a top executive said... Read more

Opinion - Jeff Reeves: The Apple Car hype is all hot air... Read more

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