ASB Securities Morning Brief for Monday, 26 September 2016
Monday, 26 September 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell, led by Orion Health Group as the export-focused software developer contends with a strong kiwi dollar, while Warehouse Group and Hallensteins Glasson Holdings gained on their earnings. The S&P/NZX 50 Index dropped 14.98 points, or 0.2 percent, to 7,296.73. Within the index, 24 stocks fell, 18 rose and eight were unchanged. Turnover was $154.6 million... Read more

The New Zealand dollar fell against the greenback and the Australian dollar after the Reserve Bank's interest rate review left traders with more of a sense that governor Graeme Wheeler is likely to cut the official cash rate at the next meeting in November. The kiwi fell to 72.74 US cents at 5pm in Wellington from 73.29 cents late yesterday. The local currency fell to 95.19 Australian cents from 95.93 cents yesterday... Read more

Buyers told to use new, wider range of tools to gauge a property's value.... Read more

Why get into commercial? Restrictions and pressure on residential property investors keeps growing and many investors are looking for possible solutions: commercial property is one such option. Run your eye over New Zealand’s rich list and you’ll soon notice that property is the star performer when it comes to making, and growing, a multi-million dollar fortune... Read more

Key, Smith challenged on building consent completion rate. Labour challenges Key view that "virtually 100%" of building consents turn into actual houses; Twyford cites Statistics NZ estimates of new dwellings being 800 a month or 13% lower than dwelling consents since 2014; Smith insists almost all will be built... Read more

Resimac tightens rules for investors. Significant increase in demand, following the announcement of new investor targeted LVRs, has led Resimac to make changes to its rules around investment lending... Read more

The New Zealand Super Fund remains confident that losses from its ill-fated Portuguese excursion will be reclaimed, although litigation is proceeding at a "glacial" pace, says chief executive Adrian Orr. The UK Commercial Court ruled last year that the debt recovery case filed by the New Zealand fund and others against Portugal's Novo Banco could be heard in an English court... Read more

Employers can use KiwiSaver as tool to attract and retain staff. There are few businesses in New Zealand who do not have something to do with KiwiSaver. With more than 2.5 million people in the scheme after almost 10 years in operation, managing contributions has become as much a part of life as dealing with PAYE and GST. But do you know the full extent of your obligations as an employer, and the potential benefits available to you?... Read more

End in sight for dairy slump after Fonterra upgrade. A bumper profit and a milk price upgrade from Fonterra has raised hopes that the dairy slump may finally be coming to an end. Those involved in the industry are fully aware of last year's false start, which saw whole milk prices rally by more than US$1000 ($1379) a tonne in just two months before slumping by almost the same amount a short time after... Read more

Strong demand from dairy farmers has helped fuel buoyant prices for bulls during the on-farm selling season in Waikato. Over the past two seasons cash-strapped dairy farmers have mated part of their dairy herd to a beef bull to capitalise on strong international beef prices. This has has resulted in white-headed dairy-beef calves from hereford bulls fetch $250-$400 at saleyards in the province... Read more

Brighter future predicted by sustainable business report. Kiwi businesses are playing it safe when it comes to sustainability, says a survey by the University of Auckland's Business School. Firms like to target projects which can deliver clear payback by saving costs in areas such as improved energy and reduced waste, said the Sustainable Business 2016 report... Read more

Wellington Drive Technologies, the maker of energy efficient motors for commercial refrigerators, has taken a $2 million facility from major shareholder SuperLife, the investment fund owned by NZX. The loan will give the company "additional working capital to support the company's growth initiatives", with a one-year term and a 14.75 percent interest rate calculated on a quarterly basis in arrears, it said in a statement... Read more

Port Nelson has reported a solid result for the 2016 year with an operating profit of $18.3 million as against a figure of $17.9 million in the previous year. This was ahead of budget due in main to higher than expected cargo revenue tonne and container volumes... Read more

University of Auckland launches country's biggest fundraising campaign. The University of Auckland launched the country’s biggest fundraising campaign to raise $300 million to address critical challenges in society and the economy. The money will be used for research projects, scholarships and teaching resources to answer such questions including whether the country can be earthquake-proofed, the economy made more robust or lives transformed with creativity.... Read more

G.J. Gardner Homes Kapiti/Wellington named Business of the Year... Read more

Prime Minister John Key, who’s been in New York this week to address the United Nations General Assembly and chair a meeting of the UN Security Council, says he won’t be taking a traditional path after his stint as prime minister comes to an end. Speaking to Q+A’s Corin Dann, Mr Key said being prime minister was his focus and he intended to win the next election... Read more

Spark customers are upset at a lack of information from the telco about the discovery of a security breach. It was revealed on Friday that Spark customers' data was stolen in a massive hack on its email partner, Yahoo. Yahoo said as many as 500 million accounts were potentially compromised in November 2014... Read more

Mossack Fonseca man takes Nicky Hager to task. The local agent of the company at the centre of the Panama Papers scandal has been partly successful in complaining about an article by journalist Nicky Hager published on TVNZ’s website... Read more

Two Canterbury quarry owners have appealed a decision rejecting their plans to dig deeper into the ground. In August, a group of Canterbury quarries wanting to dig deeper into the ground had their bid rejected by an independent hearings panel. About 500 out of 600 submissions opposed the plan and just two two were fully supportive. Residents near the quarries feared it would impact their drinking water... Read more

The owner of a Christchurch concrete company nearly "wrecked" by an employee fraud says he will go after the employee in the civil court. Steve Duff, the owner of Canterbury Concrete Cutting NZ Ltd (trading as Concut), said he was unhappy with the sentence imposed on the offender and believed the court did not have the full facts... Read more

Opinion - Mark Lister: Reserve Bank should quit while it's ahead. I'm starting to think that the Reserve Bank should just quit while they're ahead. Leave the official cash rate (OCR) where it is, and don't bother cutting it any lower.... Read more

Opinion - Liam Dann: Return of the rock star economy the right time to tackle inequality. This Thursday GDP figures are expected to show the New Zealand economy grew by at least 3.5 per cent in the year to June 30. ASB's economists are picking it to be as high as 3.7 per cent.... Read more

Opinion - Bernard Hickey: A rough 30 years for the young, with more to come. Kiwis born since 1985 have largely missed out on the explosive gains in wealth and higher incomes seen since then. Now they are being set up to pay for baby-boomers' retirement without a big enough NZ Super Fund to help them... Read more

Opinion - Nigel Latta: We need to move beyond commodities... Read more

Opinion - Fran O'Sullivan: Fonterra emerging from long winter. It is still too early for Fonterra's top brass to perform a victory roll. But after more than 18 months in the trenches, this week's record profit has at least lifted confidence among the co-operative's leadership that their strategies are bearing fruit... Read more

Australian Headlines

Australian Market Report: The Australian share market is expected to open lower on Monday following a weak lead from the US and Europe, but strong base metals prices may help soften the fall. Wall Street stocks fell on Friday as lower oil prices weighed on energy shares, but CommSec's chief economist Craig James said a slight improvement in commodities could assist the local market... Read more

The Australian dollar has hit its highest level against the New Zealand dollar in a month and could continue to bounce back towards its mid-year highs. At 1700 AEST on Friday, the local unit was trading at $NZ1.0505, up from $NZ1.043 on Thursday, and its highest level since August 22.... Read more

An "unprecedented hardware malfunction" caused the Australian share market to shut down on Monday, according to a report on the disruptions released by the ASX. On Monday, the Australian share market was shut early after a tumultuous day which saw technical problems delay the market open and disrupt trade... Read more

Prime Minister Malcolm Turnbull has confirmed there will be no change to the GST carve-up for "some years". Just last month, at the West Australian state Liberal conference, Mr Turnbull flagged changes to the GST, proposing a minimum amount each state and territory would receive... Read more

Netwealth has announced the launch of a new international managed account solution, providing investors and advisers with direct access to global equity markets. The solution couples direct access to global equity markets with professional management, trade execution and administration, Netwealth said in a statement... Read more

The NSW Government must immediately investigate the failure of 7-Eleven's 231 stores in the state to pay payroll tax, the state Opposition has said. Labor's Daniel Mookhey said Freedom of Information documents revealed 7-Eleven and its franchisees had paid no payroll tax in NSW for at least the past three years... Read more

IFM Investors and AustralianSuper have both submitted an unsolicited proposal to acquire a 50.4 per cent interest in a 99-year lease of Ausgrid, just over a month after Treasurer Scott Morrison blocked its sale to Chinese bidders. The Government is reviewing the proposal and will make a decision later in the year, the consortium said... Read more

Is superannuation's wealth accumulation role in jeopardy? The 2016-17 Budget proposed major changes to superannuation... Read more

Darwin real estate in freefall, owners remove listings. Darwin locals trying to sell their properties are feeling the pinch of a depressed housing market as the volume of sales reaches an all-time low. Some have been forced to leave the market altogether... Read more

Two of the key architects of Fortescue Metals Group’s revival are quitting, with chief financial officer Stephen Pearce leaving the WA iron ore miner and operations director Nick Cernotta stepping aside for former Rio Tinto executive Greg Lilleyman. After cutting Fortescue’s expansion-driven debt pile, Mr Pearce will rejoin fellow former Sons of Gwalia alumnus Mark Cutifani at Anglo American early next year, where as chief financial officer he will help the Anglo chief executive sell assets and slash costs... Read more

Armour Energy Ltd has shipped the first load of crude oil produced from the Emu Apple oil field near Roma in southwest Queensland. Armour started oil production on 17 August and the field is currently producing at a steady rate of 42 barrels per day... Read more

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

Anson Resources Ltd has been granted a trading halt by the ASX, pending details of an agreement to farm-in to a project... Read more

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

Diploma woes delay construction of $6.3m Yanchep surf club. The Yanchep Surf Lifesaving club fears new facilities could be delayed by up to six months because work by builder Diploma Group has ground to a halt. Club president John Heesters said the $6.3 million complex had been scheduled for completion by November but no work had been done on the site for at least six weeks... Read more

Chinese company gets green light to buy WA pastoral leases. The Chinese visitors didn’t buy that farm but less than two years down the track their company has acquired 1.6 million hectares of land in WA. Shanghai CRED founder Gui Goujie got an early taste of WA hospitality at Moora and it grew into a huge appetite for beef-producing assets... Read more

Resonance Health Ltd has initiated international regulatory submissions for its new technology for assessing bone marrow iron using magnetic resonance imaging (MRI). Resonance Health specialises in the delivery of quantitative MRI techniques for the diagnosis and clinical management of diseases... Read more

NBN boss Bill Morrow says internet providers must do their part to ensure costs for consumers don't rise on the national broadband network, and not just rely on lower access charges. As smaller industry operators express concern about high access charges for high-speed services on the new national network, Mr Morrow says NBN Co will continue to reduce access charges... Read more

News Corp Australia CTO Alisa Bowen will reveal the inside story on the rewiring of a media giant at Australia’s creative technology event, Pivot Summit in Geelong later this year. Bowen, confirmed as the latest guest speaker in a stellar line-up that includes Start-up Muster CEO Monica Wulffand US virtual reality evangelist Robert Scoble, is leading the rollout of a national innovation platform which reaches into every part of the news business... Read more

Media mogul Rupert Murdoch collected more than $US34.5 million ($A45.2 million) last financial year, with sons Lachlan and James not far behind him.... Read more

Not-for-profits at challenging crossroads. Differences between the corporate and not-for-profit sectors are widely contested in the business world. While raising revenue is the aim of both sectors, the paths each take varies. But are these two areas of business really poles apart?... Read more

Police say they have charged a man in connection with a burglary on the Cottesloe home of mining billionaire Andrew Forrest. The John Street home was burgled last Saturday, with a thief breaking in and taking $12,500 of jewellery. Police announced this morning they had charged a 31-year-old Mt Claremont man with burglary and commit, stealing and trespass.... Read more

Opinion/Analysis - Zsuzsa Banhalmi-Zakar and David Rissik: Australian investors want bankable projects that help us adapt to climate change... Read more

International Headlines

U.S. Market Report: Major U.S. stock indexes fell Friday but notched weekly gains as global central banks assuaged investors’ fears about the possibility of an end to easy money. Stocks, bonds and commodities rallied after the Federal Reserve held off on raising interest rates and the Bank of Japan revamped its monetary policy on Wednesday. Gold prices posted their biggest weekly gain since June, while the S&P 500 and U.S. government bonds had their best weeks since July... Read more

North/South Americas Market Report: North and South American markets finished lower on Friday with shares in U.S. leading the region. The S&P 500 is down 0.57% while Brazil's Bovespa is off 0.50% and Mexico's IPC is lower by 0.41%... Read more

European Market Report: European markets finished lower on Friday with shares in France leading the region. The CAC 40 is down 0.47% while Germany's DAX is off 0.44% and London's FTSE 100 is lower by 0.03%... Read more

Asian Market Report: Asian markets finished lower on Friday with shares in Japan leading the region. The Nikkei 225 is down 0.32% while Hong Kong's Hang Seng is off 0.31% and China's Shanghai Composite is lower by 0.28%... Read more

The split at the Federal Reserve over when to next raise interest rates appears to hinge largely on disagreements over the labor market outlook, comments from policymakers on Friday suggest. When the Fed earlier this week decided to stand pat on rates, Fed Chair Janet Yellen said she felt the labor market had more room to run before it could overheat... Read more

Clinton-Trump debate showdown carries potential to sock stocks. Investors will be keeping a close eye on the first of the presidential debates between Democrat nominee Hillary Clinton and GOP nominee Donald Trump for signs of a momentum shift in the heated race. The outcome from the head-to-head matchup carries the potential to deliver a jolt to U.S. equity markets coming off closely watched policy decisions by central bankers.... Read more

Target Corp said on Friday its chief digital officer has left the company amid a company overhaul of its e-commerce operations to boost online sales and better compete with larger rivals such as Inc. Target said Jason Goldberger, who had been with the company for four years, will leave immediately. His role will be split between Chief Information Officer Mike McNamara and Chief Merchandising Officer Mike Tritton... Read more

Some Yahoo users close accounts amid fears breach could have ripple effects... Read more

Shares in Twitter jumped more than 20% after a report said the home of the 140-character tweet had received takeover approaches. Twitter, which has been the subject of takeover rumours before, is getting closer to a sale, according to the US business news channel CNBC... Read more

Office Depot Inc said on Friday it would sell its European operations to investment company Aurelius Group, four months after the office supplies retailer said it would explore strategic alternatives for the business. The company, which did not disclose a deal value, said the deal would be structured as an equity sale for "nominal consideration."... Read more

Jann Wenner to Sell 49% of Rolling Stone to Singapore’s BandLab... Read more

CBS Radio Inc, which CBS Corp is planning to shed, is preparing to take on about $1.5 billion in debt ahead of its initial public offering and use most of the proceeds to pay its parent in cash, according to people familiar with the matter. The IPO for the subsidiary, which owns 117 U.S. radio stations, including in top markets such as New York and Los Angeles, was registered in July with the U.S. Securities and Exchange Commission. CBS has not publicly disclosed how much debt the unit plans to issue... Read more

Two former Wells Fargo & Co employees have filed a class action in California seeking $2.6 billion or more for workers who tried to meet aggressive sales quotas without engaging in fraud and were later demoted, forced to resign or fired. The lawsuit on behalf of people who worked for Wells Fargo in California over the past 10 years, including current employees, focuses on those who followed the rules and were penalized for not meeting sales quotas... Read more

City figures hit out at May over lack of clarity on Brexit strategy. Some of the City’s biggest hitters have delivered a withering critique of Theresa May’s Brexit negotiations ahead of the 100-day anniversary of Britain’s decision to leave the European Union. The chief executive of Ryanair, Michael O’Leary, and the financial PR Roland Rudd rubbished the prime minister’s oft-used “Brexit means Brexit” catchphrase, while Sir Martin Sorrell has urged the government to maintain access to the single market... Read more

Brussels must fight and beat McDonald’s in the battle for tax justice. Corporate taxation around the world is at risk of becoming a joke. Large-scale avoidance must be challenged and defeated. Speculation is rife in Brussels that the European commission is strapping on its boxing gloves in preparation for another battle over corporate tax avoidance... Read more

BHS to relaunch in the UK online. BHS is to relaunch in the UK this week as an online retailer just one month after the last of its high street shops shut their doors for the final time. The 88-year-old retailer collapsed into administration in April and was wound up in August after failing to find a buyer for the whole of company... Read more

Britain intends to become an independent member of the World Trade Organisation when it leaves the European Union, trade minister Liam Fox will say next week, according to a report in the Sunday Telegraph newspaper... Read more

Former IMF head Rodrigo Rato on trial over bankers’ luxury sprees. Rato will stand trial with 65 other former bank executives over allegations they spent $13.5m on personal expenses... Read more

Cracks showing in Germany's fragile truce with the ECB. Michael Stuebgen, a conservative member of the German parliament, was speaking with the head of a local savings bank recently about the European Central Bank's quantitative easing (QE) program. "He told me the bond market was being emptied out," Stuebgen recalled. "He likened it to going into a supermarket where everything has been bought up. You might find a shriveled old carrot or potato. Pretty soon you're starving."... Read more

Chancellor Angela Merkel has ruled out any state assistance for Deutsche Bank AG in the year heading into the national election in September 2017, Focus magazine reported, citing unidentified government officials. The German leader also declined to step into the Frankfurt-based bank’s legal imbroglio with the U.S. Justice Department, which may seek as much as $14 billion in sanctions against Deutsche Bank’s mortgage-backed securities business, the magazine said... Read more

Contagion Risks Rise as Chinese Banks Fund Each Others’ Lending. China’s smaller banks have never been more reliant on each other for funding, prompting rating companies to warn of contagion risks in any crisis. Wholesale funds, including those raised in the interbank market, accounted for a record 34 percent of small- and medium-sized bank financing as of June 30, compared with 29 percent on Jan. 31 last year, Moody’s Investors Service estimated in an Aug. 29 note that analyzed central bank data... Read more

China's Dalian Wanda opens $5.1 billion tourism park... Read more

Japan Seeks to Maintain Momentum for TPP as Headwinds Gather. As the Japanese parliament begins sitting again on Monday after a near four-month break, lawmakers in Prime Minister Shinzo Abe’s ruling party will turn their attention to passing legislation for the Trans-Pacific Partnership trade agreement... Read more

The Bank of Japan’s decision to engineer the perfect yield curve isn’t convincing analysts an end is in sight to falling bank earnings. By refraining from dragging short-term interest rates further negative and pledging to keep 10-year bond yields around zero, the central bank will give lenders room to protect their razor-thin loan margins. The policy will also help them to secure interest income from their longer-dated bond holdings... Read more

India has signed a formal agreement with France to buy 36 Rafale fighter jets for $8.7bn (7.8bn euros; £6.7bn), in a major defence deal. Indian Defence Minister Manohar Parrikar and his French counterpart Jean-Yves Le Drian signed the agreement in Delhi on Friday... Read more

Sudan should remove foreign exchange controls to unify the official and black-market rates for its currency in order to reverse the contraction of its economy, according to the World Bank. “It is essential that Sudan undertakes a combination of institutional, macroeconomic, and sectoral reforms to reach a more stable growth path,” the Washington-based bank said in a report published Sunday... Read more

Saudi Arabia’s central bank stepped up efforts to support lenders in the Arab world’s biggest economy as they grapple with the effects of low oil prices. The Saudi Arabian Monetary Agency, as the central bank is known, said it decided to give banks about 20 billion riyals ($5.3 billion) in the form of time deposits “on behalf of government entities.” It’s also introducing seven-day and 28-day repurchase agreements, as part of its “supportive monetary policy.”... Read more

Few people, even in Egypt, have heard of Hend El Sherbini. But she last year pulled off an amazing feat with the help of Abraaj Group: In May, she led her lab company, Integrated Diagnostics Holdings, to an IPO on the London Stock Exchange that put its value at $668 million. IPOs in the Middle East are still rare — those of companies led by women, incredibly so (I don’t know of any others, though would be glad to hear of some in the comments at the end)... Read more

Opinion - Kester Kenn Klomegah: Russia struggles to regain influence in Africa. Russia has more than 40 full-fledged diplomatic representations in Africa and has fixed special trade missions to help facilitate trade and investment in a number of African countries. Despite this, economic engagement has faced difficulties over the years... Read more

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