ASB Securities Morning Brief for Friday, 21 October 2016
Friday, 21 October 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares were flat as investors saw no reason to buy, with Trade Me Group dropping alongside Infratil and Summerset Group Holdings while Metro Performance Glass rose. The S&P/NZX50 dropped 2.76 points, or 0.04 percent, to 6,973.78. Within the index, 24 stocks rose, 18 fell and eight were unchanged. Turnover was $158.9 million... Read more

The New Zealand dollar rose against its Australian counterpart after figures showed continued weakness in the jobs market across the Tasman, raising concerns about the relative performance of that economy. The kiwi rose to 94.34 Australian cents at around 5pm in Wellington, the highest since Oct. 10, from 94.02 cents late yesterday. The currency rose to 72.40 US cents from 72.12 cents yesterday... Read more

The government's latest attempt to reform the Resource Management Act continues to run into trouble, with the chairman of the select committee conceding today that the Resource Legislation Amendment Bill will miss its third reportback deadline of Nov. 7. In part, the delay appears related to the fact that Environment Minister Nick Smith is still negotiating with the Maori Party over aspects of the bill, which is struggling to gain sufficient support from government support partners to pass into law... Read more

New Zealand’s lending environment has changed and investors need to approach it differently, ANZ’s head of mortgages has warned. Stories about the increased difficulties investors are facing when it comes to gaining finance are legion these days. While the Reserve Bank’s new investor-targeted LVRs play a significant part in the changed environment, so too do the credit policies of the banks themselves.... Read more

Private sales part of HNZ build programme. Housing New Zealand will be ramping up its building programme – and part of the funding for this will come from private sector sales, the government has confirmed... Read more

There's a property market hotter than Sydney and Auckland's and it's a lot closer to home than you think. Queenstown, known for its extreme sport and world-class tourism, has seen property prices increase more than 31 per cent in the year through to September. The average price of a Queenstown home is now $950,000 - twice the 15 per cent increase rate of Auckland.... Read more

Private equity fund managers should take lead in innovation investment – Ferris. The chairman of the independent body tasked with improving Australia's innovation performance, Bill Ferris, says there is a "compelling opportunity" for private equity general partners to play a lead role in the take-up of innovation.... Read more

Don't call it a KiwiSaver contributions 'holiday', expert says. It's time to overhaul the rules around KiwiSaver contribution "holidays" as the number taking them continues to rise, the Commission for Financial Capability will tell the Government. Over 127,000 people are on KiwiSaver contribution holidays, making no regular savings from their salaries... Read more

KiwiSaver risk reward just 2.1%. KiwiSaver members in conservative funds have received returns just 2.1% per year less than those who took on extra risk in a growth fund over the past eight years... Read more

New Zealand's banks paid out nearly $450,000 in the last year to settle disputes with their customers through the Ombudsman service. The figure was revealed yesterday in the latest annual report for the Banking Ombudsman... Read more

KiwiSaver advice sparks complaints. Thirteen customers have complained about bank KiwiSaver sales and advice processes over the past year, the Banking Ombudsman says. The dispute resolution scheme has released its annual report, which shows it received 2458 inquiries in the year, up 2.6 per cent on the year before. Those inquiries led to 568 complaints, down 1.4 per cent. From there, 259 disputes were received, down 4.1 per cent... Read more

Small container ships expected to keep servicing small NZ ports. The abundant global supply of small container ships is likely to mean they will continue to service a range of smaller New Zealand ports "for the foreseeable future", the chairman of Bluff-based Southport, Rex Chapman, told shareholders at the company's annual meeting today... Read more

Fonterra Showcases Clean Water Commitments at Global Summit... Read more

Wool Market Firms. New Zealand Wool Services C.E.O Mr John Dawson reports that the double auctions in the South and North Islands attracted more interest today.... Read more

Mature Blue Sky Meats directors withdraw because of their age. Three directors of a Southland-based meat processing company Blue Sky Meats have stepped down because of an age-related clause in the company's constitution. Founder and chairman Graham Cooney is one of the directors to leave while Malcolm McMillan, the company's first general manager, has also stepped down as a result of exceeding an age cap... Read more

Southland meat processor Blue Sky Meats has been approached by investors interested in buying some or all shares of the business. Earlier this year the company reported a $1.96 million loss, although chairman Scott O'Donnell said on Thursday it was still a "financially viable" business. "But we are going through a process of change," he said... Read more

Pumpkin Patch shares were the biggest decliner on the NZX today as the deadline looms today for directors to propose measures to address its capital constraints with lender ANZ Bank New Zealand. In its full-year results published last month, the Auckland-based childrenswear retailer told investors that its directors had given an undertaking to the bank that it would put forward proposals by Oct 20. Shares fell 16.6 percent or 1.2 cents to 6 cents in trading on Thursday. Shares have fallen 43.3 percent since the start of the year.... Read more

Mercer Group shares are languishing unloved at a record low on the stock exchange as the unprofitable stainless steel fabricator restructures its operations, undertakes a refinancing to keep it afloat, and faces questions about its products after one of its stainless steel silos collapsed last month at Fonterra Cooperative Group's biggest factory in Edendale, Southland. Shares in Mercer Group last changed hands a week ago at 1.3 cents, the lowest level the shares have traded at since NZX records began in 1967.... Read more

Port of Tauranga expects full-year earnings in the range of $79 million to $83 million, an increase on the $77.3 million reported for 2016, according to a transcript of a speech published to the NZX. Chief executive Mark Cairns told shareholders at their annual general meeting that the forecast was given on the assumption that there would be no significant change to market conditions... Read more

Auckland International Airport says other companies operating near the airport have joined ARA, its job skills and education hub designed to source skilled labour during the current construction boom. The programme, set up late last year in partnership with central and local government, construction companies and sub-contractors, has provided training opportunities for 1000 people and placed 135 people into jobs, mostly with the airport. Auckland Airport's shares are trading at $6.54, and are up 32% over the past year.... Read more

Auckland International Airport says buses part of every great airport. Auckland International Airport has been flying on excellent growth but two shareholders created some turbulence on Thursday with concerns about "third world" buses and poor internet. The airport's boss has defended busing passengers from planes to the international terminal, however, as being typical of all the great international airports... Read more

Intueri Education Group has been granted an extension to respond to audits of its Australian subsidiaries Online Courses Australia and Conwal & Associates by the Australian Skills Quality Authority. It will now have to respond by November 6. The previous deadline was October 21. Shares rose 15.4% to 7.5c. They've fallen 89.5% since the start of the year.... Read more

Shanghai Maling Aquarius officials were quizzed about China's historic melamine scandal and a luncheon meat recall before being approved by the Overseas Investment Office, papers show. The OIO used "open source background checks" on the 19 or so individuals behind Shanghai Maling and controlling shareholder Bright Foods before recommending its proposal to buy 50 percent of Silver Fern Farms... Read more

Wynyard Group, the intelligence software developer, is looking into how it can tap a stand-by loan facility agreed in August with major shareholder Skipton Building Society, saying it needs the funds for working capital. Auckland-based Wynyard, which posted a wider first-half loss in August while slashing its full-year guidance, has seen its shares plunge 88 percent this year before being halted on Monday... Read more

Sky TV's 2017 charges higher than forecast because of accounting error.... Read more

Sky Network Television chief executive John Fellet has hit out at submissions opposing the pay-television broadcaster’s planned $3.44 billion merger with Vodafone, describing them as “unified by their predictability and misleading and inaccurate statements which we’re dealing with point by point." Speaking at the company’s annual meeting in Auckland today, Fellet said the merger was on track, with the Commerce Commission not yet changing its November 11 target date for a decision... Read more

Spark has laid out its darkest fears about Sky Television's proposed merger with Vodafone while putting on a brave face about its competitive position. If the merger went ahead, Sky/Vodafone would have an incentive to use its control of premium sports to force more consumers to buy broadband or mobile services from Vodafone, it said. In a second submission to the country's competition watchdog, Spark said that Sky Sports was a "must have" for a "substantial number of Spark customers"... Read more

Vodafone rebrands TelstraClear HFC network as FibreX, offers $100 credits for late installs.... Read more

Former Sovereign distribution boss Richard Klipin has been appointed the new chief executive of the Financial Services Council.... Read more

BNZ head office and management employees may be out of a job as the bank goes through a major restructure. Spokeswoman Katherine Cornish said the bank had now finished its consultation period with some of the staff whose roles may be affected by the bank's plans... Read more

A man has appeared in Christchurch District Court accused of obtaining $8.3 million in a ponzi scheme that prosecutors say may have caught out hundreds of people. The Serious Fraud Office says Jimmie McNicholl has been charged with one count of obtaining by deception. A second person has been charged but has yet to appear in court. It says that Arena Capital, trading as BlackfortFX, obtained registration as a financial services provider by deception.... Read more

Opinion - Susan Edmunds: Is it a good idea to break your fixed-term loan to take a better deal? I recently contacted my bank about the possibility of paying off a chunk of my mortgage early. We were moving house and thought – wrongly, as it turned out – we might be able to reduce our mortgage in the process... Read more

Opinion - Peter Townsend: International visitors - Can we cope?... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket edged higher as disappointing domestic jobs data was offset by a greater chance for another interest rate cut. The S&P/ASX 200 index bounced from little changed to a 0.4 per cent gain after news the economy shed 9800 jobs last month, but it slipped back to close up 6.7 points, or 0.12 per cent, at 5442.1 as bond yields fell.... Read more

The Aussie dollar is pushing towards 77 US cents in a bullish session with traders buying up the currency as all its key drivers strengthen. At 1200 AEDT on Thursday, the local unit was trading at 76.98 US cents, up from 76.76 cents on Wednesday.... Read more

Spending gains pace in Sept: CBA. Economy-wide spending showed its strongest rise in 17 months in September, according to Commonwealth Bank. CBA's Business Sales Indicator, based on the value of credit and debit card transactions processed through its merchant facilities, rose 0.7 per cent in trend terms last month... Read more

The largest monthly fall in full-time employment in more than five years sits at odds with the Turnbull government's recent mantra "a job is the best form of welfare". The number of full-time workers dropped by a hefty 53,000 in September and was only partly off-set by a 43,200 rise in part-time work... Read more

200,000 jobs at risk as housing boom rolls over, Morgan Stanley research shows... Read more

More than 4000 WA jobs lost in September - 140 a day. The number of West Australians with a full time job has fallen below 900,000 for the first time in almost five years as the employment market weakens... Read more

Banks accused of gouging super customers. Banks are being accused of gouging customers by delaying the transfer of superannuation accounts into lower cost default superannuation funds. Under new rules, retail funds have been given four years to switch accounts nominated as "default" into cheaper My Super products with a deadline of July 1, 2017... Read more

Nickel bulls are talking up the comeback of their industry at the Paydirt 2016 Australian Nickel Conference in Perth this week... Read more

Mining heavyweight Rio Tinto PLC has cut full-year iron ore and copper production guidance. Rio Tinto's expectations for iron ore shipments from its Pilbara assets in 2016 have been revised to between 325 and 330 million tonnes from “around 330 million tonnes”, subject to weather conditions, the group revealed in a third quarter production output... Read more

BHP Billiton Chairman Jac Nasser will not seek re-election at next year's annual general meeting (AGM), he announced on Thursday. Nasser said he had intended to announce his retirement last year but agreed to stay on at the mining company to provide stability as BHP Billiton responded to the Samarco dam disaster in Brazil... Read more

Greenpower Energy Ltd has been granted a trading halt by the ASX.... Read more

Grand Gulf Energy Ltd in trading halt pending acquisition details... Read more

Debt demand sees Enerji call in administrators. Listed power technology company Enerji - once a share market darling - has collapsed. Directors appointed administrators from KordaMentha on Tuesday, according to details filed with the Australian Securities Exchange late yesterday... Read more

Fortescue Metals Group has reported a five per cent increase in iron ore shipments and an 11th straight quarter of cost cuts... Read more

Selling half of Ausgrid for $16 billion is an outstanding result, New South Wales Premier Mike Baird says, but the Opposition argues he could have made more money. Australian companies IFM Investors and AustralianSuper are the new owners of 50 per cent of Ausgrid, which powers 1.7 million homes and businesses... Read more

Tethys Petroleum stumbles amid further negotiations over Olisol funding. Talks continue over how Tethys will use of some of the funds raised through the Oilsol arrangements.... Read more

Woodside Petroleum has reported a sharp increase in September quarter sales revenue and production, helped by record volumes at its liquefied natural gas facilities... Read more

Diversified miner South32 has reported a four per cent fall in manganese ore production in the first quarter of 2017 but says its on track to achieve its cost guidance for the majority of its production... Read more

Venturex Resources Ltd’s share price has increasedafter receiving high-grade results of 43.9% zinc plus 19.5% lead from drilling at its Whim Creek Project in Western Australia... Read more

API lifts profit 19.8% to $43.1m... Read more

Dairy co-operative Murray Goulburn has cut its forecast farmgate milk price for 2016/17 and downgraded its profit expectations for the year, blaming a lower milk intake because of wet weather... Read more

China has become Australia's number one wine market after exports to the Chinese mainland jumped 51 per cent to $474 million in the past year. A decade ago, wine exports to China were valued at just $27 million... Read more

James Packer’s Crown Resorts to spin off hotel business. James Packer plans to spin off a minority stake in some of his Australian hotels and retail properties, as his casino empire goes into damage control... Read more

Crown still in the dark about China arrests. Crown Resorts chairman Robert Rankin says the casino giant will review the circumstances around the arrest of 18 employees in China but has defended the company's record operating overseas. The multibillion dollar gaming company held its annual general meeting in Perth on Thursday, three days after news of the arrests broke... Read more

Crown order media off premises as shareholder speaks about detained employees... Read more

Ten Network has halved its annual loss to $156.8 million after lifting advertising revenue despite an overall drop in the market. The network's tie-up with Foxtel's Multi Channel Network helped lift television revenue for the 12 months to August 31 by 7.5 per cent to $676.4 million, despite capital city free-to-air television advertising market declining 2.9 per cent in the same period... Read more

Pulse Health Ltd has been granted a trading halt by the ASX this morning, pending details of a non-binding and indicative proposal to acquire 100% of the shares in the company... Read more

Banducci stitches up knickers deal for Woolies. Woolworths has set the stage for a battle between the two giants of Australia's $1.8 billion underwear market, Bendon and Bonds, and it's a fight that's coming to a supermarket near you. Woolies has stitched up a deal to stock an exclusive range of men's and women's underwear created by New Zealand-based Bendon and sold through the supermarket giant's network of 780 stores... Read more

Former CBA chief David Murray's phone woes colour his view of newly appointed chairman Catherine Livingstone. Former Commonwealth Bank chief executive David Murray has again poured scorn on the Commonwealth Bank of Australia's newly appointed chairman Catherine Livingstone. In answer to a question from The Business host Ticky Fullerton about his criticism of Ms Livingstone's performance while leading the Business Council of Australia, Mr Murray said he formed his view of her during her time as Telstra chairman — a time when he was Future Fund chairman, the telco's major shareholder... Read more

Opinion - Jessica Haynes: How can Gen Y actually get into the housing market?... Read more

International Headlines

U.S. Market Report: Wall Street recovered sharply to trade flat on Thursday as a rally in American Express and health stocks helped counter a drop in Verizon and technology stocks. AmEx soared 9.7 percent, on track for its best day in more than seven years, after its strong quarterly results and upbeat forecast... Read more

North/South Americas Market Report: North and South American markets are mixed. The Bovespa is higher by 0.38%, while the IPC is leading the S&P 500 lower. They are down 0.29% and 0.02% respectively... Read more

European Market Report: European markets finished higher today with shares in Germany leading the region. The DAX is up 0.52% while France's CAC 40 is up 0.44% and London's FTSE 100 is up 0.07%... Read more

Asian Market Report: Asian markets finished mixed as of their recent closing prices. The Nikkei 225 gained 1.39% while the Hang Seng was higher by 0.30%. The Shanghai Composite was even... Read more

The World’s Biggest Oil Kingdom Reverses Course. In an effort to get prices off the mat, Saudi Arabia looks to pull back on the amount of crude it pumps... Read more

Portfolio managers at hedge funds, facing an exodus of investors frustrated with high fees, are about to feel the pain from an estimated 34 percent reduction in their compensation. While fund managers may take the biggest pay cut in the industry, professionals with seven or more years of experience see their total compensation declining by 14 percent on average for 2016, recruiter Odyssey Search Partners said in a report this week following a September survey of 500 hedge fund professionals... Read more

The California Attorney General's Office has launched a criminal investigation into Wells Fargo over allegations it opened millions of unauthorized customer accounts and credit cards, according to a seizure warrant seen by Reuters. Attorney General Kamala Harris authorized a seizure warrant against the bank that seeks customer records and other documents, saying there is probable cause to believe the bank committed felonies... Read more

A blockchain platform developed by a group that includes more than 70 of the world's biggest financial institutions is making its code publicly available, in what could become the industry standard for the nascent technology. The Corda platform has been developed by a consortium brought together by New-York-based financial technology company R3... Read more

Electric carmaker Tesla says all cars it now builds will have hardware needed to drive completely on their own. But despite the cameras, sensors and radars being introduced, it is still expected to be years before the vehicles become fully self-driving... Read more

First-time buyers boost U.S. home sales; jobless claims rise... Read more

Apple has complained of a "flood" of counterfeit goods masquerading as its products being sold on The claim relates to items sold via Amazon's "fulfilment" scheme, whereby third parties list their goods on the retail giant's site, store their inventory in its warehouses and rely on it for deliveries... Read more

The European commission will redouble its crackdown on multinational tax avoidance next week with the relaunch of proposals to create an overarching corporation tax regime across all member states. The proposed legislation would subject companies to a single set of rules for calculating their taxable profits, according to drafts seen by the Guardian. It would be compulsory for corporations with annual turnover of more than €750m (£670m) and which are tax-resident in a European country... Read more

Eurozone yields fall as ECB’s Draghi hints at December bond-buying extension. 10-year bund yield turns negative for first time in 2 weeks. Prices on eurozone debt rose Thursday, sending yields lower, after European Central Bank President Mario Draghi hinted that the central bank would announce an extension of its monthly €80 billion ($88 billion) bond-buying program at its December meeting... Read more

At her first summit since Brexit vote, May vows to work closely with EU... Read more

British retail sales recorded their strongest quarter of growth since late 2014 in the three months to September, but warm weather and higher prices dented demand for new clothing towards the end of the period. Britain's statistics agency said consumer sentiment had remained firm since June's vote to leave the European Union, and that the sector would make a robust contribution to economic growth during the third quarter... Read more

London's financial district plans special visas for bankers. London's financial district is proposing a special new visa to ensure international workers aren't shut out of the U.K. after the country leaves the European Union. The new visa proposal, produced by PwC for the City of London, argues that U.K. work visas should be granted based on regional business needs.... Read more

British lawmakers backed stripping billionaire Philip Green of his knighthood over the collapse of BHS department store, in a symbolic move on Thursday that will raise pressure on the tycoon over his promises to resolve the company's pension problems. Green owned BHS for 15 years before he sold the loss-making 180-outlet chain to Dominic Chappell, a serial bankrupt with no retail experience, for just one pound ($1.22) last year. It went into administration in April and the last of its stores closed in August, with the loss of some 11,000 jobs... Read more

Delivery giant Hermes faces HMRC inquiry into low pay allegations. Move follows Guardian investigation that revealed self-employed couriers take home less than minimum wage... Read more

Tesco executives accused of fraud get trial date for next year. Christopher Bush, Carl Rogberg and John Scouler appear in court in relation to scandal that left £326m hole in accounts... Read more

Swiss food giant Nestle has cut its annual growth forecast to 3.5%, from the 4.2% it forecast in August. The firm, whose brands include Nespresso and KitKat, blamed "the current softer environment", which it says is causing food prices to fall... Read more

Swiss Launch Market Access Offensive Amid Brexit Opportunity... Read more

China's Geely shows global ambitions, launching new compact SUV in Germany... Read more

Nintendo has revealed a unique new gaming console called Switch -- one part mobile, one part home console. Nintendo posted a three-minute trailer of its NX console on Thursday... Read more

Battleground Bollywood: Pakistan bans Indian movies. Rising military tension between India and Pakistan has claimed an unlikely casualty: Bollywood. Pakistan's media regulator on Wednesday ordered satellite TV channels and radio stations to stop carrying any Indian movies or shows. The ban will take effect on Friday.... Read more

Opinion - James Quinn: Twitter has a negative vibe and a nebulous purpose - no wonder nobody wants to buy it. First tweet, and wondering why the twitter site is soooo slow on internet explorer?” Sent on the evening of April 15 2009. So far, so dull... Read more

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