ASB Securities Morning Brief for Tuesday, 19 July 2016
Tuesday, 19 July 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, led by Metro Performance Glass, Tower and Trade Me Group, with little corporate news to drive prices ahead of earnings season. The S&P/NZX50 Index rose 33.08 points, or 0.5 percent, to 7,105.96. Within the index, 27 stocks rose, 15 fell and nine were unchanged. Turnover was $139.5 million... Read more

The New Zealand dollar fell after figures showed inflation was weaker than expected in the second quarter adding to the case for a central bank rate cut at its Aug. 11 monetary policy review. The kiwi traded at 70.93 US cents as at 5pm in Wellington, from 71.48 cents immediately before the inflation data was released and from 71.09 cents at the New York close on Friday. The trade-weighted index fell to 75.74 from 76.13... Read more

New Zealand's services sector, which accounts for about two-thirds of the economy, slowed in June although it remains in positive territory with retailing one of the strongest industries. The BNZ-BusinessNZ performance of services index fell 0.2 of an index point to a seasonally adjusted 56.7 last month, with all five sub-indices holding above a reading of 50 which separates contraction from expansion... Read more

New Zealand consumer prices rose less than expected in the June quarter as cheaper meat and domestic airfares offset a recovery in petrol prices, adding pressure on the Reserve Bank ahead of its unscheduled economic update on Thursday. The kiwi dollar dropped. The consumers price index rose 0.4% in the three months ended June 30, accelerating from a 0.2% increase in the first quarter, Statistics New Zealand said... Read more

Odds on for an August cut. Lower than expected inflation has economists predicting another cut to the official cash rate... Read more

Prime Minister John Key hopes rising beef prices, as well as a global trade case, will encourage Indonesia to lift restrictions on Kiwi beef imports. Key has promised to raise concerns with Indonesian president Joko Widodo when the pair meet in Jakarta on Tuesday evening (NZ time)... Read more

Prime Minister John Key says there is no indication China has threatened retaliatory trade measures if the New Zealand government launches an investigation into alleged steel dumping or steel safety issues. "We have no indications that they have concerns with us. They haven't raised any of those issues with us." Mr Key told media in Jakarta last night... Read more

A trade war with China will hit New Zealand hard, as the country has become more reliant on exports to the populous nation in recent years. Since the signing of the free trade agreement in 2008, exports from New Zealand to China had trebled to $11.5 billion by March this year, second only to Australia which takes $13b worth of goods... Read more

Dairy farm sales and prices have fallen sharply but the rest of the rural market is stable, lifestyle block prices at record high - REINZ... Read more

Quarterly Auckland rental update. Rents continue to increase by approximately 5% year-on-year with the average weekly rent for a 3-bedroom Auckland home now $514. Suburb pricing trends continue but Mt Albert, Parnell and Sandringham break the mold with 11+% year-on-year increases... Read more

Proposed changes to the Financial Advisers Act will place more power in the hands of the code committee, which administers the code of professional conduct. At the moment, only authorised financial advisers are covered by the code, which dictates their client care and ethical obligations as well as CPD and qualification requirements... Read more

Our comprehensive review of Default KiwiSaver fund performance to June 2016, identifying who has the best long-term returns... Read more

Pacific Property Fund, an unlisted commercial property fund established three years ago, is seeking to raise $15 million selling shares to buy two Auckland properties and fund the construction of a new warehouse in Tauranga in a move that would double the size of the fund to $46.2 million from about $23 million. Pacific currently owns three sites, an industrial property in Wiri in Auckland, a site leased to Tui Products at Mount Maunganui and a large industrial property in Te Rapa, Hamilton... Read more

Smartpay shares jumped to a 20-month high on tiny volumes, marking the biggest gain on the NZX's main board today. The shares jumped 41 percent, or 6.5 cents, to 22.5 cents on the NZX, the highest they've been since November 2014. Some 15,500 shares changed hands, less than a tenth of the 119,300 average daily volume over the past year. The company is dual-listed, and the shares were unchanged at 18 Australian cents on the ASX... Read more

Tainui Group Holdings is seeking expressions of interest from port operators for its planned multi-billion dollar inland port development just outside of Hamilton. TGH chief executive Chris Joblin said after years in planning and hearings, Ruakura has cleared zoning and resource consent hurdles for the first stage of the inland port and logistics hub and now wants to appoint a port operator to have input on its construction which will get underway later this year. The deadline for formal expressions of interest is Sept. 30... Read more

The National Urban Māori Authority (NUMA) and Te Waipareira Trust have succeeded in their claim over a $20 million trust set up for the benefit of urban Māori, meaning all directors of the trust must represent Māori who are not affiliated with an iwi. Te Putea Whakatupu Trust was set up under the 2004 Māori Fisheries Act as part of the settlement of Māori fishing rights claims to provide for urban Māori who might not benefit from iwi-based settlements because they no longer had an active association with their tribe... Read more

The $180 million Hurunui irrigation scheme is seeking money from investors and construction companies for its planned dam in North Canterbury. But before Hurunui Water Project can issue a prospectus it must raise about $900,000 in loans from its current shareholders to fund the offer. If successful in raising the $900,000 it will be eligible for a $3.3m loan from the Government's Irrigation Accelerator Fund... Read more

The original Mad Butcher store has shut down, with the outlet's liquidator attributing its demise to flaws in the chain's business model. But NZX-listed Veritas Investments, which acquired the franchise in 2013, is placing the blame squarely on the franchisee who ran the site. The Massey Rd store, in Mangere, went into liquidation on Friday, owing hundreds of thousands of dollars to creditors... Read more

Hyundai Heavy Industries, the world's biggest shipbuilder, has beaten out its largest rival for the contract to build a $493 million ice-capable naval tanker for the New Zealand Defence Force which is part of an increased emphasis on the country's strategic interests in Antarctica and the Southern Ocean. Hyundai and Daewoo Shipbuilding & Marine Engineering, both listed on the Korean stock exchange, were shortlisted last year for the contract to replace the 30-year-old tanker HMNZS Endeavour, which is due to retire in 2018, leaving a two-year gap before the new vessel is delivered in 2020... Read more

SeaDragon, the fish oil refiner, has hired Nevin Amos as its new chief executive. Amos will take over from interim chief executive Richard Alderton in October. The shares last traded at 1.2 cents and have dropped 21 percent this year.... Read more

Michael Stein, Synlait’s General Manager Quality and Regulatory, has accepted the role of Quality and Food Safety Director, Asia Pacific, with Danone Nutricia Early Life Nutrition. “This is a great personal and professional opportunity for Michael and a clear milestone in his international career,” said John Penno, Synlait’s CEO and Managing Director... Read more

Omnicom Media Group today announced that it has appointed Peter Horgan as its new CEO for its Australia and New Zealand region. He will replace Leigh Terry, who has stepped down from the current position. Horgan was most recently CEO of OMD Australia and will report to Cheuk Chiang, CEO of Omnicom Media Group Asia Pacific... Read more

New Zealand news websites are this week trying to negotiate a deal that will allow them to freely cover the upcoming Olympic Games – or may pull their reporting teams entirely. Sky TV is attempting to severely restrict the online coverage of the games, with rules that Fairfax executive editor Sinead Boucher said were unprecedented... Read more

The liquidator of Ross Asset Management has cut deals totalling $4.5 million with 16 investors and is in talks with a number of others about reaching settlements. PwC's John Fisk is seeking to recover as much as possible of the $100 million-to-$115 million of investor money frittered away in the country's biggest Ponzi scheme... Read more

Plans to build a Countdown supermarket in Palmerston North's Pioneer Highway are headed for the Environment Court. Resource management commissioners acting for the city council last year refused consents for the $16 million Progressive Enterprises' development that was expected to create about 100 jobs... Read more

'Super salary' on offer, court told. One of Diversified Investment Strategies’ directors says he had no idea of the salary and benefits on offer to his co-director if she jumped ship to Fisher Funds. Diversified closed down after its funds were sold to Fisher Funds Management and director Vicky Watson took a job there. But she and the firm’s other director, Norman Stacey, disagree on the circumstances surrounding the sale. That has now culminated in a High Court case in Auckland.... Read more

A truck driver fired for failing a drug test has been awarded $32,300 by the Employment Relations Authority. Christchurch man Gary McLeod was fired from his job as a rubbish truck driver for Envirowaste in April last year, after he failed a drug test... Read more

The union representing workers at the Tiwai Point aluminium smelter and New Zealand Aluminium Smelters have reached a settlement of more than $20 million for years of underpayments. Some 450 current and former employees will share the settlement, the E Tu union said in a statement. E Tu and NZAS met last week to reach a deal, after the smelter owner's battle through the courts was turned down by the Supreme Court in April when it rejected an application to challenge a High Court ruling... Read more

Opinion - Siah Hwee Ang: The China food boom. Siah Hwee Ang says new food regulations are pivotal for foreign food companies in China... Read more

Opinion - Mark Thomas: Fresh thinking can make port deliver... Read more

Opinion - Pattrick Smellie: NZ caught in global backlash against Chinese steel imports. The Chinese government wants New Zealand to maintain its reputation for "not being difficult" on trade issues, fearing that if Wellington imposes countervailing duties on Chinese steel imports, other countries will escalate the international backlash against its steel producers... Read more

Opinion - Liam Dann: Why low rates of inflation are bad news for us all. As the world's economic bogeyman low inflation has been swamped this year by global political turmoil. But the data released yesterday shows it remains a very real and present threat... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has extended on its best winning run for the year, gaining for an eighth straight session on Monday. At the closing bell, the benchmark S&P/ASX 200 index lifted 28.9 points, or 0.53 per cent, to 5,458.5, while the broader All Ordinaries index added 28.8 points, or 0.52 per cent, to 5,538.9.... Read more

The Australian dollar has pared gains after strong US economic data raised the chances of a Federal Reserve rate rise, boosting the greenback. At noon (AEST), the currency was trading at US75.91 cents, down from US76.32 cents on Friday.... Read more

Deloitte: Australia's dependence on China 'huge', political gridlock threatens. Australia's growth is currently around average, but dependence on China "remains huge", and China's fortunes are more central to the globe than Britain's decision to leave the EU. In its report, "Brexit: More huff than puff", Deloitte forecast projects through to the 2020-21 period and flagged that Australia's living standards would continue to fall from the peaks reached when China was booming and coal and iron ore prices were at record highs.... Read more

The number of housing loans with payments overdue crept up further in May, giving weight to concerns about potential problems emerging for banks if the economy gets into trouble. The latest rise was only small, with 1.14 per cent of loans in arrears, compared to 1.07 per cent in April, according to new data from S&P Global Ratings on Monday... Read more

Start-ups hail Greg Hunt’s appointment to innovation portfolio. Australia’s technology start-ups have reacted with broad optimism to the appointment of former Environment Minister Greg Hunt to the innovation portfolio, after he was announced as Christopher Pyne’s successor. Mr Hunt will take over as the Minister for Innovation, Industry and Science, a portfolio previously held by Mr Pyne who moves to defence industry.... Read more

The Australian energy industry has welcomed the Turnbull government's decision to give one minister control of both the environment and energy portfolios, with Josh Frydenberg given the challenging gig on Monday. The Australian Petroleum Production and Exploration Association chief, Dr Malcolm Roberts, said combining the two portfolios was the "holy grail" of policy development... Read more

Social Services Minister Christian Porter has talked down conservative opposition to the Coalition's superannuation policy. A small group of conservative Liberal politicians have voiced concerns over the policy, which would introduce a cap of $500,000 on after-tax super contributions... Read more

Coal of Africa said its offer for the entire share capital of Universal Coal has lapsed. While the offer received strong support from Universal shareholders, Coal of Africa directors were not able to opine on the required working capital statement on the readmission of the consideration shares and Coal of Africa shares to trading on AIM... Read more

Mount Gibson Iron has won a conditional recommendation from the environmental regulator that its new Mid West iron ore mine be approved for development. The Environmental Protection Authority said this morning it would recommend Environment Minister Albert Jacob approved the development of Mount Gibson’s Iron Hill deposit, 250km east of Geraldton... Read more

ExxonMobil has been outed as the mystery stalker trying to scupper Oil Search’s $US2.2 billion ($2.9 billion) takeover of LNG hopeful InterOil. As reported in WestBusiness earlier this month, ExxonMobil has emerged with a rival, superior bid for InterOil, which the company’s board has initially accepted... Read more

Emerald Resources NL has been granted a trading halt by the ASX today, pending details in relation to a potential material transaction by the company... Read more

Red River Resources Ltd to reveal placement for Thalanga Zinc... Read more

Metals X has all but wrapped up its takeover of Aditya Birla with the Reserve Bank of India approving Indian company Hindalco’s plan to sell its 51 per cent stake in the miner into an improved takeover offer. In April, Metals X lifted its offer for Aditya Birla to one share for every four-and-a-half shares, plus eight cents cash per Aditya Birla share. Shares in Metals X were off two cents, or 1.24 per cent, to $1.595 while Aditya Birla shares were up 4.5 cents, or 11.84 per cent, to 42.5 cents at the close.... Read more

Renaissance Minerals Ltd has been granted a trading halt by the ASX today, pending details in relation to a potential material corporate transaction... Read more

Australian oil and gas producer Oil Search could find itself dragged into a bidding war over InterOil after a counter-bid by global energy giant ExxonMobil. The Papua New Guinea-focused company said on Monday its near $3 billion bid for InterOil had suffered a setback with the target company switching its support to a "superior" proposal from ExxonMobil... Read more

Kidman Resources has continued its bullish run this morning after rocketing a massive 74 per cent on Friday on the back of a “significant” lithium discovery. Shares in the company were up another seven cents, or 25.93 per cent, to 34 cents this morning.... Read more

Sipa Resources Ltd has been granted a trading halt by the ASX today, pending details on a placement and share purchase plan. The halt will remain in place until the opening of trade on Wednesday 20th July 2016, or earlier if an announcement is made to the market... Read more

Peak Resources Ltd has received approval from the Fair Competition Commission in Tanzania for the second stage of funding for the Ngualla Rare Earth Project in Tanzania. The second stage investment provides $3.1 million funding towards the completion of the bankable feasibility study... Read more

Imdex has drawn a blank to a so-called speeding ticket from the ASX after shares in the drilling fluids and downhole instrumentation company spiked over the past week. The ASX noted Imdex shares had risen from 23.5 cents on Tuesday last week to an intraday high of 36 cents today on no apparent news... Read more

Arrium workers in South Australia have been asked to take a 15 per cent pay cut to help save the plant. The Australian Workers Union has entered discussions with administrators KordaMentha, who are looking to cut labour costs across the Whyalla mining and steelworks operations by up to $30 million... Read more

Peppermint Innovation has inked a commercial agreement with the largest bill payment business in the Philippines, resulting in a surge in its share price in todays trading. The Australian-based company was trading 12% higher at 2.8c in intraday trading with over 7 million shares changing hands after announcing the deal with CIS BAYAD CENTER (CBCI) to provide its proprietary mobile application called the Peppermint Payment Collection Solution... Read more

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

Knosys has appointed industry veteran and experienced technology company executive, John Thompson as new CEO. Mr Thompson follows the resignation of former CEO, Ashley Gall... Read more

Commonwealth authorities have banned two livestock exporters from sending cattle to Vietnam in the wake of the most recent animal-cruelty scandal to hit the industry. The Department of Agriculture said two of the eight exporters operating in Vietnam had been ordered to cease supplying the market as it investigates footage of cattle being bashed to death with sledgehammers and other cruelty... Read more

Macquarie Bank has revealed plans to design a private cloud environment based on Openstack open source technology. The corporate operations group – which houses Macquarie’s technology operations – will work with a “large”, undisclosed, “world leading IT vendor” to design the private cloud, which it said will be “based on an outsourced IaaS model”... Read more

With Telstruggle taking the mantle from Vodafail as Australia’s most unreliable telco, will a new advertising campaign change customers’ minds? That’s the idea, with Telstra this weekend launching its first major brand shake-up in five years in a bid to overhaul its tarnished image.... Read more

The Australia China Business Council has appointed former ANZ and Telstra executive Helen Sawczak as its new chief executive. A former corporate lawyer at international law firms, Ms Sawczak worked for 10 years at Telstra in senior positions including corporate counsel, national corporate security manager and assistant company secretary... Read more

pSivida is implementing a site consolidation plan in support of its product development program and plans to conduct all future research and product development in a single location. Psivida will close its research facility in Malvern, UK, and locate all research and product development activities in the companys state-of-the-art, cGMP facility in Watertown... Read more

Tasmanian council considering banning Wicked campervans with offensive sign writing... Read more

Opinion - Clancy Yeates: Why banker pay is in the spotlight.... Read more

International Headlines

U.S. Market Report: Wall Street eked out gains on Monday as Bank of America's better-than-expected profit boosted optimism about the U.S. quarterly earnings season, but not by enough to send the Dow and the S&P 500 to fresh highs. SoftBank's $32 billion deal to buy British chip designer ARM Holdings stocks as oil prices dropped after the failed coup attempt in Turkey... Read more

North/South Americas Market Report: North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 1.23% while Mexico's IPC is up 0.48% and U.S.'s S&P 500 is up 0.24%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The FTSE 100 gained 0.39%, while the CAC 40 led the DAX lower. They fell 0.34% and 0.04% respectively... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.68% and the Hang Seng rose 0.66%. The Shanghai Composite lost 0.35%... Read more

Crude prices were largely steady in early Asian trade Monday as investors focus their bets on favorable growth data reported by the US and China and dismissed worries of oil supply disruptions from the attempted coup in Turkey over the weekend. On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $46.00 a barrel at 0231 GMT, up $0.05 in the Globex electronic session. September Brent crude on London’s ICE Futures exchange rose $0.20 to $47.81 a barrel.... Read more

Oil prices fell more than 1 percent on Monday after rising stockpiles of crude and refined fuel intensified fears of another major glut building. Market intelligence firm Genscape reported that the Cushing, Oklahoma delivery hub for U.S. crude futures saw a supply build of 26,460 barrels in the week to July 15, traders who saw the data said... Read more

The Coup Failed, But Erdogan’s Wrath Keeps Investors on Edge... Read more

Millennials are set to become the first generation to earn less than their predecessors, new research suggests. The Resolution Foundation found that under-35s earned £8,000 less in their twenties than Generation X workers. The thinktank defines Generation X as those born between 1966 and 1980 and millennials as those born between 1980 and 2000... Read more

Bank of America Corp., the second-biggest U.S. bank by assets, posted higher profit in each of its four main businesses as bond-trading revenue increased more than analysts estimated and expenses fell. Net income dropped 21 percent, to $4.23 billion as the company booked a roughly $1 billion accounting charge, Charlotte, North Carolina-based Bank of America said Monday in a statement. Per-share earnings were 36 cents, compared with 43 cents a year earlier. The average estimate of analysts surveyed by Bloomberg was 33 cents... Read more

Bank of America sets new cost target under pressure from low rates... Read more

Hasbro Inc reported higher-than-expected quarterly profit and revenue, driven by strong demand for Disney Princess and Frozen dolls and action figures based on "Star Wars" movies. However, the toymaker's shares fell as much as 7.6 percent in noon trading on Monday, which analysts attributed to factors such as slowing sales of toys targeted at boys, inflated Street expectations and a near 30 percent runup in the stock this year... Read more

Bloated Yahoo May Face Job Cuts After Sale of Core Assets... Read more

OUR Walmart, the American worker group, has taken the unusual step of collaborating with a group of Chinese Wal-Mart workers trying to fight work schedule changes and low wages. OUR Walmart and the Wal-Mart Chinese Workers Association (WCWA) discussed strategy for recent strikes in China on a Skype call last month using a translator, both groups told Reuters... Read more

Card declined. Some Walmart shoppers in Canada can no longer use their Visa cards -- and the change will roll out across the rest of Walmart's stores in Canada in the near future. The companies are tussling over the fees that retailers pay every time a shopper uses their card. Walmart says the fees it pays Visa in Canada are four times higher than in other countries... Read more

Uber has completed more than 2 billion trips on its app, the company's chief executive said on Monday, a milestone that arrives just weeks after the ride service added another $4.7 billion to its warchest. Uber hit 2 billion rides on June 18, CEO Travis Kalanick said in a Facebook post, six months after marking its first billion rides. ... Read more

Uber Inks Software Deal With Concur for Business Trips... Read more

SpaceX successfully launched a critical space station docking port for astronauts early Monday, along with a DNA decoder for high-flying genetic research. As an extra treat, the company brought its leftover first-stage booster back to Cape Canaveral Air Force Station for a vertical touchdown — only the second such land landing for an orbital mission and the ultimate in recycling. Twin sonic booms rocked the moonlit night, old shuttle landing-style... Read more

Buffett Buys $1.8 Billion ‘Gem’ of a Medical Insurer in New York. Berkshire Hathaway Inc. agreed to buy Medical Liability Mutual Insurance Co., extending Chairman Warren Buffett’s leadership in the business of protecting doctors against lawsuits.... Read more

Wells Fargo Said to Pay $397 Million for City of London Office... Read more

Just like Mark Carney, Mario Draghi can afford to wait a bit before adding more monetary stimulus.... Read more

The finance chiefs of Britain's biggest companies are feeling very gloomy. A new survey by Deloitte found that about 80% of CFOs expect hiring and spending to slow over the year following Britain's vote to leave the European Union. And more than two-thirds think leaving the EU will lead to a deterioration in the U.K. business environment in the long term... Read more

The pound climbed after SoftBank Group Corp. agreed to buy ARM Holdings Plc for 24.3 billion pounds ($32.3 billion) in the biggest takeover of a British company since the country last month decided to leave the European Union. The U.K. currency also advanced versus the euro as Bank of England policy maker Martin Weale said “firmer evidence” was needed on the impact of Brexit before the central bank considers additional stimulus... Read more

ARM Holdings, one of Britain's most successful tech companies, is being snapped up by Softbank for £24.3 billion ($32 billion) in the biggest foreign takeover by a Japanese company. The cash purchase, which has been agreed to by the boards of both companies, represents a major strategic bet by Softbank CEO Masayoshi Son on mobile communications and the "Internet of Things."... Read more

Germany’s Bundesbank proposed reforms to streamline Europe’s response to future fiscal crises. The central bank suggests turning the European Stability Mechanism into the region’s leading fiscal authority with competences encompassing those currently carried out by the European Commission and the European Central Bank. It also wants a change in the terms of new government-debt issues to allow easier restructuring and a maturity extension should the country enter an aid program... Read more

Turkish shares close down 7% after coup attempt... Read more

Zimbabwe Says It’s on Course to Clear $1.8 Billion Loan Arrears... Read more

$120 Billion Says the Lira May Struggle to Defy Goldman... Read more

China withholds Mongolia hydropower loan over Russian concerns – report. Mongolia would like to construct a dam on the Eg River near its confluence with the Selenge River, the main source of Lake Baikal. Environmentalists have expressed concern over the hydropower project, claiming it could threaten the lake’s fragile ecosystem... Read more

Singapore dollar bondholders, already stung by the first default since 2009, face more companies struggling to meet the terms of their debt, after two oil and gas companies sought to extend maturities. Ausgroup Ltd. and Otto Marine Ltd. are among 10 Singapore-listed firms that have started a process to loosen bond vows this year, up from eight in 2015, according to Bloomberg-compiled data... Read more

Hong Kong Said to Survey Brokerages on Dark Pool Compliance... Read more

Opinion - Ian Verrander: Goodbye Lenin, Hello Bernanke. In the space of a mere eight years, the former US Federal Reserve Bank Chair Ben Bernanke has managed to achieve what Lenin could barely conceive. He's convinced the US, the UK, Japan and Europe to embark on a revolutionary journey to completely subvert free market instincts, writes Ian Verrender. Maybe it's just me, but have you noticed the striking similarity between Vladimir Lenin and Ben Bernanke lately?... Read more

Latest reports

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