ASB Securities Morning Brief for Tuesday, 21 June 2016
Tuesday, 21 June 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose as Brexit fears eased, though trading remained light with investors waiting to see the result later this week. Mainfreight and A2 Milk gained, while Warehouse Group dropped. The S&P/NZX 50 Index rose 22.46 points, or 0.3 percent, to 6,869.53. Within the index, 26 stocks rose, 16 fell and eight were unchanged. Turnover was $120.8 million... Read more

The New Zealand dollar fell to a 12-day low against the British pound as polls showed falling support for the UK leaving the European Union in this week's referendum. The kiwi declined to 48.86 British pence at 8am in Wellington from 49.10 pence on Friday in New York. The local currency edged up to 70.65USc from 70.50USc last week... Read more

The New Zealand dollar rose after polls over the weekend indicated Britain is less likely to vote to leave the European Union, stoking risk sentiment and demand for growth-linked currencies such as the kiwi. The local dollar rose to 71.17 US cents at 5pm in Wellington, the highest in more than a week, from 70.50 cents at the end of last week. The trade-weighted index rose to 75.56 from 75.23... Read more

New Zealand's tourism sector still needs foreigners to cover a gap in the workforce as government and industry look at ways to attract visitors off-peak to create more certainty for full-time jobs and generate local career pathways, says Associate Tourism Minister Paula Bennett. The government estimates New Zealand needs an extra 36,000 workers to meet a record number of tourists that's forecast to keep expanding, and until new pathways are developed that shortfall will have to be filled by overseas staff... Read more

New Zealand consumer confidence fell below its long-run average in the June quarter as Kiwis become increasingly nervous about an economy being driven by population growth while per-capita growth stalls. The Westpac McDermott Miller consumer confidence index fell 3.7 points to 106 in the June quarter, below the long-run average of 111.5... Read more

The pace of growth in New Zealand's services sector slowed in May, although a steady stream of inbound migration continues to stoke demand. The BNZ-BusinessNZ performance of services index fell 0.9 of an index point to a seasonally adjusted 56.9 last month, with all five sub-indices holding above a reading of 50, which separates contraction from expansion... Read more

Capital Markets: Aussies prefer NZ investment. After a stellar 2015, the acquisitions and mergers market here remains confident even though the deal flow has been slow so far this year, reports Bill Bennett... Read more

Local government to target investors? Auckland landlords with empty houses, land and commercial properties may face extra rates if one mayoral candidate wins in October. As public concern about Auckland’s housing supply shortage and affordability issue keeps growing so too do the proffered solutions.... Read more

The prospect of a powerful new Auckland urban development authority has been welcomed by a real estate industry leader. Prime Minister John Key had referred to the new agency overseeing major Auckland building projects, when he spoke to the Chinese Chamber of Commerce... Read more

PM says Government looking at creating urban development authorities to allow developers to build both horizontal infrastructure and buildings and then recover money through development contributions; Chinese developers interested, he says... Read more

New Zealand’s workplace health and safety legislation has been rejigged – and the changes impact on property investors. Clean, green equitable New Zealand has a dirty little secret. Compared with similar countries, our workplace health and safety record is grim... Read more

Dairy farms prices are down nearly 15% compared to last year while lifestyle block prices and volumes set new records in May... Read more

Fitch Ratings has kept state-owned Kiwibank on negative rating watch during its annual review of the lender's credit rating. A negative rating watch means the credit agency is more likely to downgrade the bank's credit rating in the future, which would make it more expensive for Kiwibank to borrow... Read more

Prime Minister John Key says Brexit offers no gains for Kiwis. Britain would be unlikely to open its doors further to New Zealanders if it leaves the European Union, Prime Minister John Key says... Read more

FNZ signs up with service to improve efficiencies. Wrap platform FNZ, which has more than $10 billion in assets under management in New Zealand, has signed a deal with Calastone to streamline its operations. UK-based Calastone describes itself as an “enabler” to help platforms and fund managers run their systems more efficiently... Read more

Data from job website Seek shows that the number of financial planning jobs listed throughout New Zealand is up 12%, year-on-year. What those advisers were being paid was more of a mixed bah – nationwide the average advertised salary was $89,059, virtually the same as the year before... Read more

A controversial border clearance levy has generated $7.5 million more than expected after only five months. There are now calls from the regions for a further levy or tax to be introduced on tourists to fund badly-needed infrastructure - something Prime Minister John Key says is possible... Read more

Millions of litres of water illegally taken: Is ECan doing enough? Millions of litres of Canterbury's water may have been taken illegally, as the extent of non-compliance among high-scale water users is revealed. Data shows that in one year, consented users were recorded taking hundreds of millions of litres of water above their entitlements. They received few fines and there were no prosecutions. The vast majority were not punished at all.... Read more

Wellington International Airport, which is 66 per cent owned by investment group Infratil, posted a 29 per cent gain in full-year profit as growth in international passenger volumes drove revenue. Profit rose to $12.5 million in the 12 months ended March 31, from about $9.7 million a year earlier, the company said in a statement. Sales gained 4.8 per cent to $113.5 million... Read more

James Pascoe, the retail group owned by David and Anne Norman, has lifted its holding in Warehouse Group to 17.5% buying shares on-market last week. Pascoe bought 244,367 shares for a total of $679,015 or about $2.78 apiece on June 17, it said in a statement to the NZX... Read more

GFNZ Group plans to revert to its old name of Geneva Finance and carry out a seven-for-one consolidation to boost its share price. One of the few finance companies to survive its moratorium and repay investors after a string of collapses that began in 2007, the company said key values associated with Geneva were "trust, integrity and (a) high level of consumer and market recognition."... Read more

ASX-listed Skydive the Beach Group, which operates Skydive NZone in Queenstown, will expand its footprint in New Zealand with the $10.4 million purchase of Skydive Wanaka. The Woolongong-based company raised A$15 million in a placement to sophisticated and institutional investors to fund the deal, buying the Wanaka operation, a new aircraft, and three luxury coaches to ferry customers between Queenstown and Wanaka, it said in a statement. The ASX-listed shares last traded at 48 Australian cents and have gained 33 percent so far this year.... Read more

The Better Drinks Co, which includes New Zealand assets bought by Japanese brewer Asahi Group during an acquisition spree in 2011, has taken a $42.3 million impairment to write off all of its goodwill, resulting in an annual loss. Better Drinks includes Charlie's Group, which Asahi acquired in 2011 for 44c a share, valuing the listed juice maker at $129 million. The price amounted to a 57% premium to Charlie's stock before the deal was announced that year... Read more

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. The Sydney-based company today said the exemption to the Overseas Investment Act relating to the proposed demerger was granted, though it was still subject to other regulatory approvals and exemptions. Trading in APN shares on the NZX was halted today pending an announcement, in what was already a period of ​deferred settlement to let a share consolidation be processed... Read more

Eden Park launches bid to be Auckland's number one concert venue. (+video)... Read more

Callaghan Innovation says its rejection of a funding application from a company involving the chief executive’s brother was declined by the board based on its merits rather than any conflict of interest. Pastoral Robotics was started in 2013 by Bert Quin and Geoff Bates of Pastoral Robotics to develop a product aimed at resolving nitrate leaching and greenhouse gas emissions from cow urine patches... Read more

Two fund managers are seeking support for a class action by shareholders of software company Wynyard Group to recover losses since the share price has plunged following a disappointing annual result and a heavily discounted rights issue to raise cash. The campaign is being driven by Logic Funds principal Greg Marshall, who successfully waged a campaign that led to a $60 million settlement for Credit Sails investors, and Australian-based Millinium Capital managing director Tom Wallace. The shares were trading at 65 cents today.... Read more

Ralec's Pym says Clear hoped rebates would lure major grain buyers. The former owners of the Clear Grain Exchange believed providing rebates to major buyers would put the business on a stronger financial footing even though they would have eaten through most of the fees generated from trading, the High Court in Wellington heard.... Read more

Property owners should follow up on building contracts where possible, the Commerce Commission has urged. The Commission’s warning comes after the Christchurch District Court today fined a Canterbury builder for failing to supply promised Homefirst building guarantees to a number of home owners... Read more

Canterbury builder fined for failing to supply building guarantees. Gerard James Thomson, the Director of construction business, Flaxmill Ltd, was fined $12,800 and ordered to pay $16,700 in compensation to two of the three complainants for making false representations about providing Homefirst building guarantees to home owners. Mr Thomson appeared in Christchurch District Court today having earlier pleaded guilty to three charges under section 13(i) of the Fair Trading Act 1986... Read more

Ports of Auckland fined $50,000 after worker falls off ledge... Read more

Wendy's driveway fight going to Supreme Court. A fight between Wendy's and the Auckland Council over the resource consent for driveway changes at one of the fast-food chain's restaurants is heading to the Supreme Court. The changes in question altered exit and entry points and the amount of traffic coming across Wendy's premises at the corner of Auckland's Great South Road and Ronwood Ave.... Read more

Opinion - Penny Hulse: Industry needs to move over house build delay.... Read more

Opinion - Basil Sharp: A generation of lost opportunity. We need to allow trading of water use rights for the future of the environment and the economy... Read more

Opinion - Thomas Pippos and Alex Mitchell: Deloitte column: Are tax cuts on the horizon?... Read more

Australian Headlines

Australian Market Report: Stocks’ best day since RBA cut. The Australian sharemarket closed the opening session of the week with its best advance since the Reserve Bank cut interest rates on May 3 as Brexit-related nerves were temporarily calmed. The gains, which amounted $27 billion in value, were led by the resources sector amid broker upgrades for the major energy players and a rise in commodity prices. At the closing bell, the benchmark S&P/ASX 200 index rose 94.1 points, or 1.82 per cent, to 5256.8, while the broader All Ordinaries index jumped 87.3 points, or 1.66 per cent, to 5335.6.... Read more

A recovery in oil prices and brief return of risk sentiment has helped push the Australian dollar above US74 cents again. At 5.10pm (AEST) on Monday the currency was trading at 74.44 US cents, up from 73.93c at the same time on Friday.... Read more

More tightening in mortgage lending likely: Macquarie analysts. Australian banks still allow property investors to borrow a significantly larger multiple of their income than owner-occupiers, despite a crackdown on lending to landlords, new research shows.... Read more

Services boom to help wages: report. Workers will get a bigger slice of the national income pie thanks to growth in services industries, according to a new report. "Thankfully, the era of a declining labour share may be set to unwind in Australia, due mostly to above-average growth in the labour-intensive service sectors of health, education and professional services," the report by economists at ANZ and the University of Queensland says... Read more

When the economy slows down women do better than men, according to Suze Orman.... Read more

ANZ: Services-dependent economy, ageing population could cause skilled labour shortage. A new report from ANZ has warned there could be a shortage in significantly skilled labour across Australia by 2030, caused by a shift from a mining economy to a services one, and as the country grapples with an ageing population.... Read more

Energy stocks soar more than 5pc. The three behemoths in the local energy space have surged as much as 10 per cent in Monday trade, after receiving a ratings upgrade from Morgan Stanley on a much improved outlook for crude prices... Read more

Green shoots back in small resources. Talga Resources has led a wave of Perth resources companies announcing capital raisings this morning, as risk money streams in on resources once again. Jumping on its recent share price spike, Talga announced a $10 million strategic placement to “European investment groups” this morning at 28¢ a share in a bid to fund trial mining at its Swedish mines... Read more

Canadian company Teranga Gold has announced a $84 million takeover play for Perth gold explorer Gryphon Minerals. Toronto-based Teranga announced the deal this morning which will each Gryphone share exchanged for 0.169 Teranga shares, valuing each Gryphon share at 20.6¢... Read more

Supermarket wholesaler Metcash has taken a huge earnings hit to its core food and grocery business as it tries to keep up with Coles and Woolworths while fending off Aldi. Metcash, which supplies independent supermarkets, including IGA, Foodland and Foodworks stores, posted a $216.5 million annual net profit on Monday, bouncing back from a $384.2 million loss 12 months ago... Read more

Guvera executives will hold crunch talks with representatives from the Australian Securities Exchange on Tuesday to discuss why the music streaming group's proposed float was rejected by the market operator. In a surprise move, the ASX blocked Guvera's proposed $100 million initial public offering on Friday, less than 24 hours after the Australian Securities and Investments Commission approved a revised prospectus... Read more

Woolworths takes on convenience stores. Woolworths has thrown down the challenge to the convenience store sector with the opening of its inaugural small outlet, offering a range of fast food for the time-poor shopper... Read more

Supermarket wholesaler Metcash has taken a huge earnings hit to its core food and grocery business as it tries to keep up with Coles and Woolworths while fending off Aldi. Metcash, which supplies independent supermarkets, including IGA, Foodland and Foodworks stores, posted a $216.5 million annual net profit on Monday, bouncing back from a $384.2 million loss 12 months ago... Read more

Can We Talk? Headspace CEO leaves in frustration as Turnbull government dismantles vital mental health initiative. The Turnbull government is quietly dismantling the youth mental health initiative Headspace, according to its chief executive, who is leaving the organisation in frustration... Read more

Shipbuilder Austal has won two contracts worth a total $29 million to build commercial passenger ferries.... Read more

Australian start-up launches ‘smart handbag’ as part of a growing female-focused tech trend. Behold the smart handbag. An Australian technology start-up is targeting women to create an unorthodox fashion empire in what is becoming a growing international market. The Gold Coast and Sydney-based pair, Lorna Swinstead and Bel Wood, are launching technology-packed “smart handbags” for women in Australia, with plans to expand overseas into high-end fashion stores.... Read more

Cellmid Ltd's Maria Halasz, chief executive officer, has lifted her indirect stake in the company through an on-market trade.... Read more

Crown Resorts' credit rating is being reviewed for a potential downgrade by Moody's following the casino operator's proposal to spin off its international assets and pay out more in dividends. "The proposed demerger and increased dividend payout ratio will reduce retained cashflow and the company's asset base materially, which is credit negative for Crown and prompted us to put its ratings (Baa2) on review for downgrade," Moody's said on Monday. Shares in Crown were 10 cents higher at $13.00 at 1400 AEST.... Read more

OtherLevels Holdings Ltd granted ASX trading halt... Read more

Tradies buying almost 40,000 Toyota HiLux utes a year have underpinned a solid 22 per cent increase in Toyota Australia's net profit to $236 million, just 15 months before the car maker shuts down its manufacturing operations in Melbourne. The Hilux in the first five months of 2016 is the biggest-selling new vehicle of any brand or type but is made overseas in Thailand for the Australian market, with Toyota's 2500 employees at the Altona plant in western Melbourne building Camry and Aurion sedans only... Read more

Scare campaign could hamper attempts to boost Medicare’s efficiency. It's Labor’s big hope for victory on July 2, a campaign based on the claim the Liberals want to sell off one of our public policy ornaments — Medicare. And it’s as scary as political scare campaigns can get with family health care the ultimate provision at risk.... Read more

Litigation funder JustKapital Litigation Partners Ltd will up the ante with the acquisition of a private company with a portfolio of 5 Supreme and Federal Court cases with a gross claim value of $230 million. Litigation funding firms provide finance to corporate and individual plaintiffs without the resources to pursue claims in court... Read more

Australia needs to hasten the rollout of the National Broadband Network and increase its ranks of cyber security experts, according to Australia's IT sector. The Australian Computer Society (ACS), the professional association for IT industry professionals, has released its own federal election manifesto contending that the NBN should be the foundation of a successful digital economy... Read more

Yes, e-cigarettes are bad for you. In a world-first, Australia’s consumer watchdog is taking two e-cigarette makers to court for claiming their products did not contain toxic chemicals — after independent tests proved otherwise. The Australian Competition and Consumer Commission has commenced separate proceedings against Social-Lites Pty Ltd and Elusion New Zealand Limited for allegedly making false and misleading claims... Read more

Connexion Media Ltd is heading to market with a capital raising, and the ASX has granted the company a trading halt pending details.... Read more

The corporate watchdog has asked the Federal Court to appoint liquidators to a Victoria-based tech firm that claims it can increase GDP in every world economy by one per cent.... Read more

The liquidator of Forge Group is seeking funding to investigate the prospects of legal action against former directors of the collapsed engineering company. The move could include public examinations of ex-board members of Forge, which left debts of about $800 million when it folded in early 2014... Read more

NAB has been accused of “Big Brother” tactics by monitoring when its business customers are shopping around for rival loans, sparking competition concerns. The lender has been receiving the “tip-offs” from credit reporting agency Veda, which it says are used to “better manage relationships with customers”, Fairfax Media reports... Read more

Opinion - Ian Verrander: Is globalisation coming to an end? Underemployment and an ever widening wealth chasm has created a deep sense of mistrust in trade and globalisation - particularly notable in the Brexit debate. We are entering dangerous times, writes Ian Verrender... Read more

Opinion - Michael Pascoe: Aged care clients, staff set to pay for government crackdown.... Read more

International Headlines

U.S. Market Report: Wall Street held its rally steady on Monday, with the S&P and the Dow recovering last week's losses after the latest polls showed an increased possibility of Britain remaining in the European Union. Uncertainty about the consequences of Britain leaving the European Union sent global markets into a tizzy last week, with investors flocking safe havens such as gold and the yen. Britain will vote on its membership on Thursday... 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 1.96% while Mexico's IPC is up 1.31% and U.S.'s S&P 500 is up 0.89%... Read more

European Market Report: European markets closed sharply higher today with shares in France leading the region. The CAC 40 is up 3.50% while Germany's DAX is up 3.43% and London's FTSE 100 is up 3.04%... Read more

Asian Market Report: Asian markets finished broadly higher today with shares in Japan leading the region. The Nikkei 225 is up 2.34% while Hong Kong's Hang Seng is up 1.69% and China's Shanghai Composite is up 0.13%... Read more

Two years into the worst oil price rout in a generation, large and mid-sized U.S. independent producers are surviving and eyeing growth again as oil nears $50 a barrel, confounding OPEC and Saudi Arabia with their resiliency. That shale giants Hess Corp (HES.N), Apache Corp (APA.N) and more than 25 other companies have beaten back OPEC's attempt to sideline them would have been unthinkable just months ago, when oil plumbed $26 a barrel and collapses were feared... Read more

Copper prices steadied on Friday as market worries over a potential British exit from the European Union receded and the dollar eased, though a surge in inventories weighed on zinc. Three-month copper on the London Metal Exchange closed with a 0.3 per cent gain at $US4,552 a tonne, clawing back a little of the previous session's more than two per cent decline... Read more

Gold prices sank in London on Monday, as market participants took profit following weeks of strong gains amid global economic and political uncertainty. Spot gold was down 1.2 per cent at $US1,282.44 a troy ounce in morning European trade, moving within a $US19 range.... Read more

U.S. commercial real estate prices may fall as much as 5 percent in the next 12 months amid tightened regulations, a wall of debt maturities and property sales by publicly traded landlords, Pacific Investment Management Co. said in a report Monday. A global surge in demand for U.S. property investments that pushed real estate values to records may wane as slowing growth in China, lower oil prices and dislocated debt markets threaten to halt six years of price growth, Pimco portfolio managers John Murray and Anthony Clarke said in their report, titled “U.S. Real Estate: A Storm Is Brewing.”... Read more

The next president of the United States has to prepare for a crisis, an economic one. The U.S. is overdue for a recession. The economy has been growing for seven years now. The average Post World War II expansion cycle lasts less than five years, according to the National Bureau of Economic Research.... Read more

Wall Street analysts who cover big banks will endure a long night on Thursday, when a barrage of data will show how well the largest U.S. financial institutions can stand up under stress. The crunch will start at 4:30 p.m. EDT when the U.S. Federal Reserve will release the first of two sets of results from the banks' annual stress tests. Minutes later, more numbers will rain down when banks disclose how they scored themselves... Read more

Goldman Sachs expects steep dropoff in U.S. demand for stocks... Read more

Walmart has announced a partnership with the Chinese e-commerce firm to help revive the US company's struggling website Yihaodian. Walmart will give ownership of Yihaodian's marketplace, including the brand, website and app. In exchange Walmart will take a near 5% stake in, China's second largest e-commerce firm after Alibaba... Read more

Dell Inc. is selling its software group as the computer maker continues to sell assets and change strategy to focus on its acquisition of storage vendor EMC Corp. Private-equity firm Francisco Partners and hedge fund Elliott Management Corp. said Monday that they would buy Dell Software Group for an undisclosed price... Read more

German prosecutors are looking at whether former Volkswagen AG Chief Executive Officer Martin Winterkorn was too slow to tell investors about the potential cost of the diesel-emissions scandal, which wiped about 20 billion euros ($22.6 billion) off the carmaker’s market value in the week after it admitted to cheating. The probe is reviewing whether Volkswagen should have disclosed the risks to investors sooner, prosecutors in Braunschweig said in an e-mailed statement Monday... Read more

Top bosses including Sir Richard Branson, the Premier League chair and car industry executives have backed Remain ahead of Thursday's EU vote. Premier League chair Richard Scudamore said the 20 clubs in the top tier wanted to remain and that leaving would be "incongruous" in the context of the league's commitment to "openness"... Read more

What a difference a day makes. The pound is seeing its biggest gains in months after taking a beating last week. The stunning rally Monday follows a series of opinion polls suggesting that more U.K. voters are being swayed to vote to remain in the European Union during a historic referendum on Thursday... Read more

Some of the world's leading car makers have come out in support of Britain remaining in the European Union. Jaguar Land Rover, Toyota, BMW and Vauxhall -- owned by GM -- said a vote to leave the EU (the so-called Brexit) could damage the U.K.'s booming car industry.... Read more

Nissan is taking legal action against Leave campaign... Read more

Boeing Co. is nearing a $4 billion deal with Russia’s largest air-freight company that would help extend the life of the iconic, hump-nosed 747 jumbo jet amid waning demand for four-engine aircraft, people close to the transaction said... Read more

Putin Said to Weigh $11 Billion Rosneft Sale to China, India... Read more

In a World of Below-Zero Bond Yields, China Debt Bucks the Trend... Read more

India has thrown open its doors to investment by foreign companies, a move that should make it easier for brands such as Apple and Ikea to operate in the country. Sweeping changes announced by the government Monday lift limits on foreign investment in defense, civil aviation and breeding farm animals. The reforms also relax restrictions on single-brand retailers that had vexed Apple... Read more

India will allow foreign entities such as funds and portfolio investors to fully own local airlines, raising from an earlier cap of 49 percent, in a bid to lure investment into Asia’s third-biggest economy. Shares of InterGlobe Aviation Ltd., Jet Airways India Ltd. and SpiceJet Ltd. rallied... Read more

Opinion - Robert Powell: Why the Brexit isn’t the biggest risk investors should worry about... Read more

Opinion/Analysis - Mihir Sharma: "Rexit" Is Bad News for India. All too often, the stewards of India’s economy have been short of credibility. Politicians’ promises of economic reform are rarely fulfilled, bureaucrats’ assurances are widely disbelieved, and even India’s growth numbers have become objects of suspicion... Read more

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