ASB Securities Morning Brief for Thursday, 28 April 2016
Thursday, 28 April 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell ahead of an interest rate announcement, with Fisher & Paykel Healthcare Corp, Summerset and Xero moving lower. The S&P/NZX 50 Index dropped 45.3 points, or 0.7 percent, to 6,750.41. Within the index, 32 stocks fell, 10 rose and seven were unchanged. Turnover was $223.7 million... Read more

The New Zealand dollar rose against its Australian counterpart after Australia posted its weakest inflation in seven years, sparking speculation of an interest hike across the Tasman just as the market is preparing for the local Reserve Bank's rate decision. The kiwi rose to 90.12 Australian cents as at 5pm in Wellington from 88.90 cents before the inflation figures were released and from 89.16 cents late yesterday. The local currency rose to 68.81 US cents from 68.57 cents yesterday... Read more

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. The trade deficit widened to $3.8 billion in the 12 months ended March 31, from a deficit of $2.37 billion a year earlier, Statistics New Zealand said. Annual exports fell to $48.8 billion from $48.9 billion, while imports rose to $52.7 billion from $51.3 billion... Read more

Finance Minister Bill English says the Government could set a house price-to-income ratio for local bodies to ensure councils release the right amount of land to keep housing affordable. "It wouldn't be a bad thing if one of the possibilities in the future is that Government mandates a housing to income ratio," he told the Herald during a video interview for the Home Truths series... Read more

Flipping tax talk misleading. Capital gains tax talk has hit the headlines again, but industry experts doubt it would cool demand or have an impact on property flipping. In the wake of Prime Minister John Key’s suggestion that a land tax could be on the cards, the spotlight has fallen on demand-side measures to curb the housing market... Read more

Falling interest margins amid a fiercely competitive lending market contributed to a downturn in the New Zealand banking sector's profitability in the final quarter of 2015, according to a report. KPMG's Financial Institutions Performance Survey said the industry's combined profits fell from $1.3 billion in the September quarter to $1.1 billion in the final three months of the year... Read more

Auckland startup The Ownery is offering a new way to enter the housing market by buying shares in a company that then buys a house. Co-founders Paul Jacobs and Kurt Settle say they want to offer people the chance to increase their savings into the housing market because many Kiwis, particularly younger ones, face an uphill battle trying to save for a deposit as the median price in Auckland edges toward $1 million and banks require minimum deposits... Read more

The Financial Markets Authority says there has been a growing interest in property crowdfunding with promoters proposing various business models, including one launched today offering Kiwis a new way to enter the housing market by buying shares in a house share company. The Ownery Ltd is offering people the chance to grow their savings through the housing market because many, particularly younger Kiwis, face an uphill battle trying to save for a deposit as the median price in Auckland edges towards $1 million and banks require minimum deposits... Read more

Devil in land tax detail. Debate over a land tax rages on, but some say more details are necessary to establish the pros and cons of the suggestion... Read more

Bad tenants are being unfairly let off the hook for property damage after a court decision, landlords say. The Court of Appeal ruled last week that tenants who caused a fire by leaving oil unattended on a stove in 2009 could not be held financially liable... Read more

ICBC (NZ), the local unit of the Chinese bank that is the world's biggest lender by assets, has lifted its loan book by 343%, by tapping into the growing economic relationship between China and New Zealand to write more mortgages, commercial and syndicated loans. In its second full year of operations, ICBC (NZ) lifted loans and advances to customers to $379.9 million in 2015 from $85.7 million in calendar 2014. Net interest income rose 105% to $6.1 million, although a charge against the value of derivatives and increased operating expenses resulted in a net loss of about $3 million, little changed from the previous year... Read more

IMF to assess New Zealand. Reserve Bank oversight of the New Zealand insurance and banking sectors, and Financial Markets Authority regulation of the markets, are to be assessed by the International Monetary Fund.... Read more

The Commission for Financial Capability is asking New Zealanders what changes they want to KiwiSaver, as part of a review of retirement income policies. The commission, headed by Diane Maxwell, has developed a shortlist of eight ideas after speaking with KiwiSaver providers, government agencies and a portion of the public... Read more

Westpac launches commission review. Westpac says it has no plans to review commissions paid to brokers in New Zealand, despite a review across the ditch.... Read more

A restriction on soft commissions for advisers has been mooted in submissions to the Financial Advisers Act options paper. The paper said restricting or banning commission was not a preferred option for the review of the legislation, but asked the industry for its views... Read more

Financial advisers are expected to be in increasingly high demand over the coming years as established firms struggle to cope with growing consumer demand for advice, one recruitment firm that deals with the financial services sector says... Read more

Ruataniwha irrigation scheme hits farmer uptake targets... Read more

The Government's agricultural trade envoy Mike Petersen has sounded a note of caution about the timing of the chilled red meat deal with China. Last week Prime Minister John Key said the first shipments might be made in less than two months, but Petersen said this was unrealistic... Read more

Kirkcaldie & Stains' board has emphasised the prospect of an increased payout to shareholders as it urges them to reject an increased bid for the department store's remains by veteran corporate raider Ron Brierley. Brierley raised his offer to $3.00 a share yesterday, one cent above the liquidation value of the shares under the board's low scenario. The board had initially set out a range of values for the money to be returned from liquidation, from its low scenario of $2.99 to a high scenario of $3.49. Shares in Kirkcaldie & Stains were unchanged at $3.13 and have risen by 100 percent since the start of the year.... Read more

Abano offered three times book value for Bay International stake... Read more

Veritas Investments' shares jumped 16 percent after the food and beverage company affirmed its annual earnings guidance and said its three divisions are all showing signs of improvement. Stripping out one-off and significant costs, profit from continuing operations is expected to be between $3 million and $3.5 million in the 12 months ending June 30, the Auckland-based company said in a statement. Veritas posted a first-half loss of $4.8 million when it took impairment charges and other write-downs totalling $5.3 million. The shares climbed 5 cents to 36 cents, the highest level since Feb. 17. ... Read more

Trading platform operator CMC Markets has launched share contracts over the top 45 stocks listed on the NZX. The company said the new contracts for difference (CFDs) would give its clients around the world access to local stocks including Fletcher Building, Spark, Meridian Energy, Fisher & Paykel Healthcare and Air New Zealand... Read more

KiwiRail is starting negotiations for a new funding package it hopes will run from 2017 to 2020 and is looking for a small number of rail upgrade projects that will demonstrate that there is a "value of rail" to New Zealand beyond purely commercial returns. The state-owned rail operator's chief executive, Peter Reidy, told BusinessDesk one such project was in Wiri, South Auckland, where the addition of just three kilometres of railway track could unblock a major rail freight and passenger bottleneck and help alleviate road congestion... Read more

The Trans-Pacific Partnership's longer data protection for biologic pharmaceutical makers will push up the cost of the fastest growing primary health treatment in the country, the Medical Association says. Biologic drugs account for more than 40% of new pharmaceutical products being developed and proposals in the TPP to extend the length of time manufacturers can retain the data in producing those products will delay the introduction of cheaper alternatives, Medical Association chairman Steve Childs told Parliament's foreign affairs, defence and trade select committee... Read more

Vodafone isn't commenting on renewed speculation its New Zealand business could be up for sale. The Australian Financial Review has reported rumours that Australian-listed firm TPG Telecom might be considering buying Vodafone's business on this or both sides of the Tasman. Vodafone New Zealand spokeswoman Elissa Downey said it was aware of the report "and as is the usual way with these things, we are not going to comment on speculation"... Read more

David Boyle and David Wallace have ended their terms on the board of Workplace Savings.... Read more

Former NZME chief executive Jane Hastings is heading across the ditch to take on the role of chief operating officer for Event Hospitality and Entertainment in Sydney. Hastings led the transformation and integration of NZME - owner of the NZ Herald, NewstalkZB, GrabOne, ZM, The Hits and a raft of other entertainment radio brands - since September 2014 as well as orchestrating the move of the company into its new state of the art multi-purpose newsroom on Graham Street... Read more

The Supreme Court has rejected an application by the operator of the Tiwai Point aluminium smelter to challenge a High Court decision requiring it to stump up some $20 million in back-pay after a complaint from the smelter workers' union that they were underpaid for days in lieu. The Court of Appeal had already rejected the arguments put forward by New Zealand Aluminium Smelters, a company majority-controlled by Anglo-Australian metals giant Rio Tinto against the 2013 High Court decision... Read more

A top lawyer being double-booked isn't enough for Callaghan Innovation to put off a defamation and breach of contract lawsuit brought against it by Trends Publishing International. Trends' claim is one part of a High Court stoush involving the Auckland-based magazine publisher and the Government agency that supports science and technology businesses... Read more

School workers' annual pay shouldn't be stretched across 54 weeks, the Employment Relations Authority has ruled in a decision which has been welcomed by a Waikato worker who says she was short changed by the scheme. An extra pay period in 2016 has hit many support staffers - such as executive officers, librarians or those in learning support - in the pocket... Read more

Panama Papers: Majority of Kiwis 'concerned' about New Zealand's new reputation. Pressure over the Panama Papers on the Government is rising after a poll showed a majority of New Zealanders were concerned about the country's new reputation as a tax haven. An announcement by international investigators said details of hundreds of thousands of entities, including many with local links, would soon be made public... Read more

Opinion - Pattrick Smellie: Peace breaking out on the future of rail?... Read more





Australian Headlines

Australian Market Report: A heavy volume buying spree on the Australian sharemarket reversed into the red after a fall in March-quarter inflation signalled weak pricing pressure across the domestic economy. The S&P/ASX 200 index ramped 1.2 per cent to hit a marginal four-month high after inflation fell 0.2 per cent over the quarter, raising hopes for a Reserve Bank rate cut next week... Read more

The Australian dollar has plunged following the first quarterly fall in inflation in more than seven years. At noon (AEST), the currency was trading at US76.54 cents, down from US77.00 cents yesterday, and from US 77.66 US cents just prior to the release of the inflation numbers... Read more

The cash rate could be cut to the lowest level ever recorded on the day of the federal budget after a surprise slump in consumer prices. The prices of Australian goods and services slumped 0.2 per cent in the March quarter, figures from the Australian Bureau of Statistics show, while for the past year the recorded rise was just 1.3 per cent... Read more

Australian consumer prices fell in January-March for the first time since 2008 during the global financial crisis, data showed Wednesday, putting pressure on the central bank to cut interest rates and sending the local dollar tumbling. The statistics bureau said the consumer price index (CPI) fell 0.2 percent in the quarter from the previous three months -- when prices had risen 0.4 percent -- as plunging world oil prices sent the cost of fuel lower... Read more

Cost of living is in retreat which is good news and bad news. Big price reductions have caused inflation to go backwards, which isn’t the good news it might seem. Inflation fell by 0.2 per cent in the March quarter, a sign of deflation. The year-on-year figure was a slight rise of just 1.3 per cent... Read more

Federal budget jitters have returned, sending consumer confidence down with a thud. With less than a week until Treasurer Scott Morrison’s first budget, the weekly ANZ-Roy Morgan confidence gauge tumbled 3.5 per cent and below its long-run average.... Read more

National Australia Bank expects the central bank to cut the cash rate to a new record low next week.... Read more

First-home buyers have been given a glimmer of hope of cracking into the property market after another major lender announced it was banning non-resident borrowers. Westpac have followed in the footsteps of the nation’s biggest lender, the Commonwealth Bank, who last week announced they would no longer accept mortgage applications from non-residents.... Read more

The number of Australians in financial distress is on the rise, with new figures showing an increase in the number of people entering insolvency in first three months of 2016... Read more

Pioneer Resources Ltd to boost cash for expanding lithium portfolio... Read more

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

Beach Energy will cut scores of jobs and reduce costs by $40 million as it assimilates its Drillsearch Energy acquisition... Read more

Atlas Iron’s most pressing debt problems are all but over, after shareholders this morning approved a debt-to-equity swap that will save it $20 million in interest payments a year. Atlas’ lenders signed off on the deal late last week, and the company’s shareholders overwhelmingly voted in favour of the company-saving agreement this morning, with only 2.1 per cent of the 1.2 billion shares against the arrangement. Atlas shares were down 0.1¢ to 2.2¢ at 1100AWST.... Read more

Rift Valley Resources Ltd has recently been advancing exploration for gold in Tanzania, with new regional high priority targets identified. The company is now heading to market with a capital raising, with the ASX granting a trading halt to prepare.... Read more

WA explorer Gold Road Resources is looking to bank on a recent kick in its share price, announcing plans to raise as much as $74 million in a placement and entitlement offer. The explorer, which is in the midst of developing its Gruyere project in the Yamarna Belt north-east of Laverton, will attempt to raise $74 million through Macquarie Capital and Argonaut Securities... Read more

Breaker Resources NL has been granted a trading halt by the ASX, pending details of a capital raising... Read more

Fortescue Metals is taking advantage of firmer iron ore prices to further trim its massive debt pile. The world’s fourth biggest iron ore exporter will buy back corporate bonds worth $US577 million ($A745 million) on June 1, a move it says will also deliver interest savings of $US48 million a year... Read more

Bannerman Resources Ltd has applied for a voluntary de-listing of its securities from trading on the Toronto Stock Exchange.... Read more

Argonaut Resources NL has confirmed 21.7 million shares at $0.012 have been issued under the Shortfall Placement following the company's 1 for 6 non-renounceable rights issue. In total between the placement and rights issue, the company raised circa $2.4 million.... Read more

Telstra has agreed to a five-year deal with Visionstream that will see the infrastructure services company continue to maintain over 40,000 exchange and network assets across Australia. The telco will pay Visionstream around $350 million for "network integrity and facilities management" of Telstra’s exchange network and other network sites... Read more

Telstra will abandon its controversial “one-click opt-in” method for third-party mobile subscriptions after a wave of online criticism about the practice. The West Australian revealed on Monday that Telstra is the only telecommunication company that still uses the practice, which is understood to have netted it millions and affected thousands of customers... Read more

Anteo Diagnostics Ltd's shares hit $0.063 intra-day yesterday, a 31% jump from a low of $0.048 just six days earlier. Anteo received a ASX Price Query, with the company responding that it was not aware of any information that could explain the recent trading... Read more

Elders has marked another milestone in cattle exports to China as the industry in Australia weighs up the impact of the latest controversy to rock the trade with Indonesia. Elders air freighted 180 beef cattle to Zhengzhou yesterday as it works to create a safe, reliable supply chain into China... Read more

Chobani says it is giving its employees an ownership stake in the privately held company. The Greek yoghurt maker says the shares being distributed would amount to 10 per cent of the company’s future value in the event of a sale or initial public offering. It says each of its approximately 2000 fulltime employees will receive shares based on their role and time spent with the company... Read more

Former State Treasurer Troy Buswell has been promoted to chief financial officer at Brierty under a management shake-up. The civil and mining contractor said Mr Buswell would add the CFO role to his duties as general manager commercial... Read more

Exports of wood residues could resume from southern Tasmania within months for the first time since the Triabunna woodchip mill was shut down five years ago. Forestry Minister Peter Gutwein announced the State Government is in negotiations with four parties to export containerised logs from Hobart... Read more

Suncorp spends $6.45m to bring insurance app to Australia. Suncorp has sunk US$5 million (A$6.45 million) into US fintech startup Trōv as part of a partnership that will see the developer’s on-demand insurance app launch in Australia next month... Read more

Cash Converters could be forced to pay $17 million to more than 20,000 Queensland battlers after allegedly charging them more than 400 per cent interest on their loans. Litigation lawyers Maurice Blackburn have filed a huge class action against the pawn broker and money lender in the Federal Court alleging that loans were loaded with a brokerage fee that effectively pushed the interest rate to astronomical levels... Read more

Quickflix, what went wrong? It is the perfect real-life example of “be careful what you wish for”. In 2014, before its Australian launch, Stephen Langsford penned an open letter to Netflix chief Reed Hastings, asking him to “play by the rules” and enter the Australian market legitimately... Read more

Why ANZ separated its data platform and analytics teams. ANZ Bank has separated its enterprise-wide data technology unit from its business unit-based analytics teams as part of a digital strategy introduced by chief executive Shayne Elliott... Read more

John Mullen has today taken over as chairman of Telstra following the departure of Catherine Livingstone. In late February, the telecommunications company (TLS) announced Ms Livingstone planned to retire from the board of directors and would hand over to Mr Mullen in the “coming months”... Read more

High-profile managing director Gary Helou has exited Australia's biggest dairy producer, Murray Goulburn, and farmers face a painful year after severe downgrades to the co-operative's profit forecasts and milk prices... Read more

The world’s biggest online shopping company has quietly announced plans to come to Australia. But what exactly is Alibaba, and will its presence change the way we shop? Often referred to as the Amazon of China, the $257 billion ($US197 billion) behemoth is a collection of eCommerce, cloud computing, payments and media assets... Read more

Fifty people are set to lose their jobs following an announcement that Tasmanian electrical company White and McAllister has been placed into administration. Unions said the demise of the Hobart-based company, which was established in 1961, was due to poor management... Read more

The Tax Office has warned it is prepared to ask the Federal Government for even steeper penalties as part of its crackdown on multinational tax avoidance. The new missive comes as the ATO (Australian Taxation Office) has confirmed that some multinational companies have created complex schemes to dodge tough new laws in tax avoidance introduced at the beginning of the year... Read more

What is negative gearing and why should I care? Unless you’ve been living under a rock these past few weeks, you would have heard a lot of talk about negative gearing and proposed government changes to it. But what does it actually mean? Gearing is just a fancy financial term associated with investment properties and repayments on the mortgage.... Read more

Opinion - Greg Jericho: Jobs pledge takes a hit as Election 2016 looms. Remember the Government's promise to create one million jobs in five years? Well, at the halfway mark - and with an election just around the corner - things have slowed and that goal is looking a little less clear cut, writes Greg Jericho... Read more





International Headlines

U.S. Market Report: U.S. stocks were off their lows 30 minutes before the Federal Reserve's interest rates announcement on Wednesday, as Apple clawed back some of its steep losses. Apple's (AAPL.O) shares were down 6.2 percent at $97.91, making it the biggest drag on the three major indexes. They had fallen as much as 8.3 percent after the company reported its first revenue decline in over a decade. Gains in Boston Scientific (BSX.N), Boeing (BA.N) and Mondelez (MDLZ.O) also helped limit the losses... Read more

North/South Americas Market Report: North and South American markets are mixed today. The Bovespa is up 2.32% while the IPC gains 0.93%. The S&P 500 is off 0.02%... Read more

European Market Report: European markets finished higher today with shares in France leading the region. The CAC 40 is up 0.58% while London's FTSE 100 is up 0.56% and Germany's DAX is up 0.39%... Read more

Asian Market Report: Asian markets finished lower today with shares in China leading the region. The Shanghai Composite is down 0.37% while Japan's Nikkei 225 is off 0.36% and Hong Kong's Hang Seng is lower by 0.21%... Read more

The Federal Reserve isn't budging for now. The Fed's committee unsurprisingly decided not to raise its key interest rate Wednesday. Fed Chair Janet Yellen foreshadowed the decision in a speech in March, noting that the central bank would move "cautiously" in 2016... Read more

Corporate America's profits are getting crushed this earnings season. Apple, Chipotle and Twitter each got thumped Wednesday after reporting weak or disappointing earnings. Twitter and Chipotle have their own distinct failures, but Apple, like many, is also a victim of the global slowdown... Read more

Social media users upbeat on Facebook; gloomy on Apple, Twitter... Read more

FBI Makes Official Its Decision to Keep Apple iPhone Hack Secret... Read more

Exxon Mobil boosts dividend day after ratings downgrade... Read more

DreamWorks Animation's shares have surged almost 18% after reports that US cable giant Comcast is in talks to buy the Hollywood studio for $3bn (£2.1bn). While there is no certainty of an offer, the talks are "serious", according to the Financial Times... Read more

The temperature is rising in one of the world's hottest trade disputes. U.S. Steel Corp has accused dozens of Chinese steel producers of breaking trade rules, and it wants the U.S. International Trade Commission to investigate.... Read more

Yahoo to add four directors to board in deal with Starboard... Read more

Marissa Mayer and activist hedge fund manager Jeff Smith have been locked in a bitter struggle for control of Yahoo. Now Smith is Mayer's boss. Smith, who manages hedge fund Starboard Value, has joined Yahoo's board along with three other directors chosen by Smith... Read more

Tesla Motors Inc Chief Executive Elon Musk has told investors his electric car company will stop burning cash and turn a profit this year, and corralling costs associated with quality problems will be critical to making good on that pledge. While Tesla has trimmed its average warranty repair cost per premium electric vehicle since 2014, it still spends more than twice as much as General Motors Co (GM.N) and Ford Motor Co (F.N), according to a Reuters analysis of company data... Read more

Billionaire Elon Musk is planning to send his Dragon spacecraft to Mars as early as 2018. Mr Musk has long targeted a trip to Mars and has previously said he can get humans to the red planet by 2026... Read more

The UK's economic growth slowed in the first quarter of the year, hit by a drop in manufacturing and construction output, official figures have shown. Gross domestic product grew by 0.4% between January and March, down from 0.6% in the fourth quarter, the Office for National Statistics (ONS) said. On an annual basis, growth was 2.1%... Read more

Germany is giving electric cars a big push. The government has joined forces with three of the country's biggest automakers to launch an incentive program to boost sales of electric and hybrid vehicles. Buyers will get rebates of 4,000 euros on electric cars and 3,000 euros ($4,500) for plug-in hybrids -- up to a total of 1.2 billion euros ($1.4 billion).... Read more

Carlyle Group LP said first-quarter profit declined 78 percent as its holdings didn’t appreciate as quickly as a year earlier. Economic net income after tax, which reflects both realized and unrealized investment gains, fell to $58.2 million, or 18 cents a share, from $260.6 million, or 80 cents, a year earlier, Washington-based Carlyle said in a statement Wednesday... Read more

The former BHS owner, Dominic Chappell, says he is preparing a bid to buy BHS out of administration. He told the BBC the administrators had been informed and talks with US based investors were at a "mature" stage. However, a senior retail source also informed the BBC they were "extremely sceptical" about the move, given Mr Chappell's recent track record... Read more

Blackouts, Zika, recession and now this: a two-day work week. This is life in Venezuela, a crisis-stricken country. Venezuela's President Nicolas Maduro decided Tuesday night to shorten the work week to two days -- Monday and Tuesday -- in an effort to save energy and electricity. The country's most important source of electricity, El Guri dam, has record-low water levels... Read more

Fink Says China to Do Well This Year as Bubble Threat Postponed... Read more

The Chinese government’s efforts to shift consumption from coal to less polluting natural gas are being felt on the other side of the world by Canadian energy producer Husky Energy Inc. Husky, controlled by Hong Kong billionaire Li Ka-Shing, has been pummeled on the stock market after saying it plans to defend the contract for its biggest project amid attempts from China to lower natural gas prices for consumers... Read more

Bondholders of 1Malaysia Development Bhd. face the threat of more complications ahead of another bond interest payment due next month amid a tussle with Abu Dhabi’s sovereign wealth fund that has already resulted in a default... Read more

Mitsubishi Motors Corp said Japanese orders for its cars have halved since it revealed last week it cheated on fuel economy tests, intensifying concerns over its prospects given an already chequered history of scandals. The automaker said it may approach its financial backers, which include other Mitsubishi Group companies, for assistance if necessary, but its financial position is strong and it sees no need for fresh funding for now... Read more

The Bank of Japan will conclude a two-day policy meeting Thursday in which the state of financial markets may play a greater role than at any previous gathering since Governor Haruhiko Kuroda began a campaign of unprecedented monetary stimulus in April 2013. This will be “the most closely watched meeting in recent memory,” Izumi Devalier, an economist at HSBC Holdings PLC, wrote in a report this week. “We believe the fundamental case for additional easing remains strong.”... Read more

Analysis - Ben Steverman: How Americans Blow $1.7 Trillion in Retirement Savings. Economists discover we're pretty shortsighted, and it's costing us... Read more

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