ASB Securities Morning Brief for Tuesday, 23 August 2016
Tuesday, 23 August 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, pushing the NZX 50 Index to a new record, as a lack of negative surprises during earnings season ensured ongoing demand for the market's relatively high yields. Genesis Energy, Metro Performance Glass and A2 Milk gained. The S&P/NZX 50 Index gained 56.91 points, or 0.8 percent, to 7,462.16. Within the index, 28 stocks rose, 15 fell and eight were unchanged. Turnover was $161 million... Read more

The New Zealand dollar fell as Federal Reserve officials talked up the prospect of an interest rate hike this year which would sap the kiwi's relative interest rate advantage, and ahead of a speech by Reserve Bank governor Graeme Wheeler. The kiwi declined to 72.16 US cents at 5pm in Wellington from 72.42 cents at 8am and 72.68 cents on Friday in New York. The trade-weighted index dropped to 76.64 from 77.05... Read more

Wheeler to speak about 'monetary policy challenges in turbulent times'.... Read more

Oil has been on a bull run after months in the doldrums, pushing up prices at the pump. In New Zealand, petrol companies have steadily been increasing petrol and diesel prices for the past two weeks, and Z Energy and BP put them up again yesterday, even though the price of oil dipped to be trading at US$48.04 a barrel... Read more

New Zealand export log prices slid to an eight-month low in August as a stronger local currency and higher shipping rates dented returns. The average wharf gate price for New Zealand A-grade logs dropped to $110 a tonne in August, from $114 a tonne in July, according to AgriHQ's monthly survey of exporters, forest owners and saw millers. That's the lowest level since December's $104 a tonne... Read more

Forest industry fearful as farmers sell immature logs. Jobs and environmental sustainability are under threat from foreign log buyers who are flying over New Zealand forests and offering struggling landowners cash to buy immature trees. That's the claim of saw millers and wood industry organisations, who say they now have grave concerns about the country's long-term log supplies... Read more

UMR poll finds 60% of Aucklanders over 18 would prefer house prices fell a bit or dramatically; 63% of NZers want lower house prices; 55% of home owners would like lower prices; 85% of Aucklanders see housing crisis... Read more

Private property developer demand for bank-alternative mortgages surges. An environment characterised by soaring demand for housing and a passive stance imposed by New Zealand’s trading banks has placed companies like Omega Capital Corporation in a position of strength... Read more

Gaming the LVR restrictions with 'back-to-back' house flipping. How Auckland house flipping can be used to rort the RBNZ restrictions on high LVR mortgages... Read more

Yashili New Zealand Dairy Co, the local unit of Chinese-owned Yashili International Holdings, has agreed to sell as much as $18.7 million of base powder dairy products to Danone under a contract that will run until the end of the year. The deal is disclosed in a notice to the Hong Kong stock exchange because Danone Asia owns 25 percent of Yashili International and is deemed a "connected person."... Read more

Consumers are being misled over New Zealand-made manuka honey, and purchasing it at vastly inflated prices, according to the latest swipe from the British media. Reports from the United Kingdom claim that New Zealand honey growers are still committing "The Great Manuka Honey Swindle", potentially damaging one of the industry's most lucrative export markets... Read more

Only one farmer showed up for a Beef + Lamb New Zealand director consultation meeting, and he was a dairy farmer. The meeting, held in Mossburn, was to outline Beef + Lamb's plan for a new way to carry out market development and the review of the Beef + Lamb New Zealand Constitution... Read more

Australian steel manufacturer Bluescope is seeking another $A15 million a year in savings from its New Zealand operations, which broke even on an operating earnings basis, after depreciation and amortisation, in the latest financial year... Read more

Air New Zealand to invest $100m in fleet upgrade... Read more

TPG Telecom, the Australian company that bought Spark New Zealand's AAPT business in 2013, has hosed down speculation it's on the verge of buying Two Degrees Mobile. ... Read more

Xero suffered a glitch transferring its online accounting service to its new cloud-hosting provider Amazon Web Services. A planned four-hour outage on Sunday turned into a longer period of disruption for customers who use about 500 specialist software applications that have been built on top of Xero by software partners... Read more

Former NZX and MediaWorks boss Mark Weldon will leave the board of minnow human resources software developer GeoOp at the end of the month, and will be replaced by an Australian director. Weldon handed over the chairmanship of GeoOp as part of a merger with Australia's InterfaceIT in April, having led the board through a $10 million private offering ahead of its compliance listing on the NZAX. His resignation is effective from Aug. 31, the Auckland-based company said in a statement. The shares fell 3.6 percent to 27 cents, having slumped 30 percent so far this year, and are almost a quarter of the $1 listing price in 2013.... Read more

nib doubles profit after OnePath acquisition. nib's New Zealand chief executive says its strong investment in marketing and promotion of all distribution channels should help advisers... Read more

If you are looking for the best value loyalty scheme, you should opt for one accepted by as many retailers as possible, one researcher says. New Zealanders are showing no sign of ditching rewards schemes. Loyalty NZ, the company that owns Fly Buys, on Monday announced it had operating revenue of $89.4 million in the most recent financial year, up from $87.5m the year before. Profit rose 83 per cent to $1.5m. Through the year to the end of March, 250,000 new customers signed up to Fly Buys... Read more

Media companies NZME and Fairfax New Zealand will have to wait until March next year for the Commerce Commission’s decision on their merger application. The commission had been due to publish a decision today but said this morning it has agreed an extension to March 15, 2017... Read more

Sir Peter Jackson will use his Weta Workshop business to take his passion for aircraft to new heights. Weta Workshop has acquired the online distribution rights for Wingnut Wings, Jackson's scale model kitset company, which will make Weta its largest online distributor.... Read more

OCS Group has sold Envirocomp back to the original owners after writing down the value of the Christchurch-based composting firm to zero last year. Frontier Group Partners, a consortium including Envirocomp founder Karen Ashby, bought the local firm for an undisclosed sum, and plans to review the operations with a view to introducing new technology to expand the business, OCS said in a statement... Read more

E tū will be working to minimise job losses and to support workers at Amcor Flexibles NZ Ltd, following today’s announcement that the firm’s Carmen Road plant is to close. Nearly 30 E tū members face redundancy, after the company’s decision to consolidate its operations at its Branston Street site... Read more

A controversial Christchurch entrepreneur dubbed "Million Dollar Mike" has been served with bankruptcy papers by a liquidator pursuing him for $1.6 million. Mike McDonald was at the helm of MCAM Ltd, which purported to be an international mining company when it went bust in November 2014, owing unsecured creditors about $1.1m. It had entered contracts to buy several farms on the West Coast including Westland district councillor Andy Thompson's property for which it was prepared to pay about $7.5m... Read more

A real estate agent facing misconduct proceedings is accused of sending soiled sanitary pads, used condoms and a decapitated rat through the post. Prosecutors say Grant Tucker also sent offensive and derogatory letters and emails, which included homophobic slurs, in a "campaign of harassment" targeting his former boss and a lawyer... Read more

Former Treaty negotiator Ngatata Love defended hiring Redwood Group for a potential building project in Wellington, saying the Auckland property developer understood some of the complexities of working with iwi land. Love began his testimony in the High Court in Wellington today in a case where he's accused of signing an agreement in late 2006 with Auckland property developers Redwood Group and Equinox Group to ensure they could lease land owned by the Wellington Tenths Trust, and that he received service fees through Pipitea Street Development Limited (PSDL), a company owned by his partner Lorraine Skiffington, without the trust's knowledge.... Read more

Former Treaty negotiator Ngatata Love told the High Court he didn't know about a $1.5 million payment from a developer chosen for a land deal involving the trust he chaired, even though it was paid into his partner's account and used to cover a mortgage on the house he lived in.... Read more

Stacey loses Diversified fight. Norman Stacey may have had “seller’s regret” after selling his company Diversified to Fisher Funds – but cannot blame his former co-director, Vicki Watson, for the outcome, a judge has ruled. Watson and Stacey were in the Auckland High Court in July... Read more

William Yan has reached a settlement with the police over the $40m of assets seized following a money-laundering inquiry.... Read more

Ticket retailers may be breaching the Fair Trading Act by not disclosing all their fees upfront, one lawyer says. Stuff is investigating retailers who use "drip pricing" - adding on unavoidable charges to their advertised price, once people have opted to buy a product... Read more

The Commerce Commission has filed 28 charges against The 123 Mart Limited (123 Mart) relating to 10 children’s toys and five clothing items it sold between April 2013 and June 2016... Read more

Opinion - Shamubeel Eaqub: Education is the key to preparing for economic change. The economy is changing and education holds the key to better preparing our future generations. Our education system is not working well enough. The economy is changing, but young people are not well prepared.... Read more

Opinion - Rob Stock: Law to let banks raid debtors' KiwiSaver accounts planned... Read more

Opinion - Liam Dann: Post-Brexit, more than 10,000 Brits have expressed an interest in coming to New Zealand. But do we want them? This country is already in the grip of a record immigration boom - nominally outstripping any time in our history, dating back to 1860... Read more

Australian Headlines

Australian Market Report: The Australia share market has closed lower amid mixed company earnings reports and a firmer expectation that the US central bank will lift its interest rate this year. At 1615 AEST on Monday, the S&P ASX/200 index was down 11.6 points, or 0.21 per cent, at 5,515.1 points, and the All Ordinaries was down 13.1 points, or 0.23 per cent, at 5, 612.3 points... Read more

Petrol prices may be at their lowest levels in more than a decade but motorists are still being dudded. A report from the consumer watchdog today says gross retail margins in the petrol industry have jumped to their highest levels since records began in 2002, suggesting the full benefits of low oil prices are not being passed on to motorists.... Read more

Petrol prices lowest in 14 years but ‘should have been lower’ as retail margins hit record highs... Read more

Sydney has topped a national list for transport costs, with the average family paying about $420 a week to get around, according to a new report. The Australian Automobile Association (AAA) has done the first national Transport Affordability Index... Read more

Economic equality could cost each Australian $500 a year. If your latest wage rise was so small it left you convinced others must doing better, you probably are right. Economic inequality is growing and its most serious consequence is not just to your pay packet. It’s affecting the entire nation’s well being, according to a high-powered report today... Read more

More Aussie companies are paying out dividends. The casual observer of our reporting season at the half-way mark might think Australian business is very patchy indeed, if not seriously weak. The actual numbers tell a different story, particularly in regards to Australian investors' greatest love: dividends... Read more

A skills shortage in regional South Australia is holding back economic growth, a new study has found. Business SA surveyed 160 people in regional areas and the results highlight the challenges of doing business outside of Adelaide... Read more

Kibaran Resources has started studies on expanding its Epanko graphite project in Tanzania.... Read more

Mid-cap gold miner Northern Star Resources has outlined a program of organic growth to lift gold production in the wake of a 65 per cent jump in full-year profit that was helped by higher gold prices and cost savings. Northern Star has reported a net profit of $151.4 million for the year to June 30, up from $91.9 million a year earlier and confirming estimates given earlier in August. Revenue rose five per cent to $887.4 million... Read more

Sheffield Resources Ltd has been granted a trading halt by the ASX this morning, pending details of an equity raising... Read more

Eclipse Metals Ltd can expect to receive up to $5 million in exploration expenditure from Rio Tinto Exploration, in exchange for a 90% interest in one of Eclipse’s Northern Territory uranium projects. Rio Tinto Exploration Pty Ltd is a wholly owned subsidiary of Rio Tinto Ltd (ASX:RIO)... Read more

Fortescue Metals Group has hoisted its final dividend to a record high after a partial rebound in iron prices and lower costs helped the Pilbara miner more than treble full-year profit. A year after it paid a final dividend of just two cents per share, Fortescue exceeded analyst expectations of a four-to-six cent dividend by announcing a payout of 12 cents per share... Read more

BlueScope Steel expects its upward earnings trajectory to continue after the resurgent steelmaker more than doubled full-year profit, helped by sharp cost reductions and high sales growth. Australia's largest steelmaking business posted a net profit for the year ended June 30 up 160 per cent to $353.8 million. BlueScope shares, which have nearly doubled this year, rose further on the strong results, ending the day up 47 cents, or 5.7 per cent, at $8.72.... Read more

CIMIC Group has taken legal action against Chevron in the United States over their $2.36 billion Gorgon LNG project dispute. The contractor said while dispute negotiations in Australia continued, it had begun the US action against Chevron and project manager KBR to further pursue its entitlement... Read more

Buxton Resources Ltd has been granted a trading halt by the ASX, pending details of a joint venture agreement... Read more

Imdex has posted a $56 million annual loss, in a result dragged down by its up-for-sale oil and gas businesses. The drilling products supplier said impairments, restructuring and other costs - mainly related to the oil and gas division - contributed $50 million of the loss... Read more

Panoramic Resources Ltd has been granted a trading halt by the ASX, pending a material upgrade to the Savannah North Resource... Read more

Fortescue Metals Group has hoisted its final dividend to a record high after a partial rebound in iron prices and lower costs helped the Pilbara miner more than treble full-year profit. A year after it paid a final dividend of just two cents per share, Fortescue exceeded analyst expectations of a four-to-six cent dividend by announcing a payout of 12 cents per share.... Read more

Mid-cap gold miner Northern Star Resources has outlined a program of organic growth to lift gold production in the wake of a 65 per cent jump in full-year profit that was helped by higher gold prices and cost savings. Northern Star has reported a net profit of $151.4 million for the year to June 30, up from $91.9 million a year earlier and confirming estimates given earlier in August. Revenue rose five per cent to $887.4 million. Northern Star shares closed down 13 cents or 2.8 per cent at $4.58 on Monday.... Read more

Online job agency SEEK has seen its full year profit jump 27 per cent to a record $387 million, driven by the sale of its stake in an education business. However, excluding the $182 million sale of its stake in the IDP joint venture, underlying earnings were up a more modest 3 per cent to $198 million, which was still slightly ahead of analysts' expectations... Read more

Electricity network owner Spark Infrastructure will return more capital to investors, underpinned by acquisition of a 15 per cent stake in NSW's TransGrid, and has ruled out a bid for AusGrid after foreign bidders were ruled out by the federal government. Spark has forecast a 20.8 per cent jump in distribution to 14.5 cents a security for 2016, from 12 cents a year earlier.... Read more

Bathroom and kitchen fittings supplier GWA group's profit has jumped to $53.7 million off the back of cost cutting and a bump in sales revenue. GWA says its revenue from continuing operations rose three per cent to $439.7 million in the year to June 30 as its restructure over 2015 and 2016 now delivers results. But statutory revenue was down 19 per cent at $444.5 million... Read more

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

Matrix Composites & Engineering has had about $29 million in cancelled orders for oil and gas products reinstated, but pushed back for three years. In February the contracts for two riser buoyancy systems for drillships each worth $US10.9 million ($14.4 million) were cancelled even as one was ready for delivery. The company’s shares were down 7¢, or 13 per cent, to 47¢ at 12.20pm.... Read more

Woolworths revamps rewards as $1 billion loss beckons. Woolworths is overhauling its loyalty program less than a year after the unpopular revamp that introduced orange tickets and prompted complaints from customers. It comes as the grovery giant braces itself for a reported $1 billion loss when it announces its full-year results later this week... Read more

Flying high? Woolworths Rewards versus Coles FlyBuys loyalty programs compared... Read more

Woolworths' multi-million-dollar turnaround plan could be hampered by falling food prices amid stiff competition, analysts warn, but they are more upbeat about its rival, Coles owner Wesfarmers. Beleaguered Woolworths is expected to unveil a $1 billion annual loss on Thursday, the slump linked to an already announced $959 million in restructuring costs and impairments from its failed Masters hardware chain... Read more

Freshtel Holdings is seeking to raise up to $375,000 to strengthen its working capital.... Read more

The Finance Sector Union (FSU) has warned the "relentless pursuit of profits" by Australian banks is having a detrimental effect on staff and has called for a Royal Commission into the sector. The FSU said its members have been taking part in surveys about the impact of product sales targets on pay and culture at banks, ahead of the Australian Bankers Association's inquiry into product-based payments... Read more

National Australia Bank, ANZ Banking Group and Westpac Banking Corp have told the corporate regulator to back-up "serious allegations" they engaged in rigging the bank bill swap rate, rather than airing the claims in the media, as the major banks hunker down for a protracted legal battle... Read more

The Commonwealth Bank will cut the size of lucrative discounts offered to customers taking out new home loans by 0.15 percentage points, pointing to higher funding costs and tougher capital rules. With banks competing fiercely for credit growth in recent months, lenders have sought to win customers by offering deals that are 1.4 to 1.5 percentage points below standard variable rates for new borrowers, a trend that eats into profitability... Read more

Auswide Bank confirms merger proposal... Read more

Fight over consumers' financial data heats up. What if there can be a way for people to choose to share their financial data with external comparison apps, without threatening security by handing over banking passwords? Britain has found a way. If the Australian government really wants to see banks do a better job serving customers, then it can do the same... Read more

More than $480 million has been wiped off APN Outdoor's market capitalisation - over a third of its value - after the advertiser cut full-year earnings and revenue forecasts. APN said on Monday the extended federal election campaign and count, coupled with the Olympics, had caused a significant reduction in market activity... Read more

Netflix is warning Australian users that they could soon face delays seeing new shows because classification of the content is taking too long. Global public policy manager Josh Korn has called on the federal government to allow streaming video-on-demand (SVOD) providers to self-classify content, similar to schemes used by traditional broadcasters and the games industry... Read more

A proposal to hand the Australian Communications and Media Authority (ACMA) a deeper remit has been met with a cautious response from telcos. Telstra said any remit changes should be “temporary”, while Optus argued the approach demonstrated “common sense” but should be clarified. Vodafone largely ignored the issue, showing more concern for how the ACMA and ACCC interact... Read more

Hexagon Resources Ltd has appointed Charles Whitfield a non-executive director. Hexagon is focused on the delivery of exceptional high purity and highly crystalline flake graphite for use in new technologies... Read more

McPherson's managing director Paul Maguire has retired, with Laurie McAllister to succeed him starting November 1. Mr McAllister joins McPhersons following a career as a general manager/managing director with extensive FMCG exposure... Read more

MZI Resources Ltd will appoint Rod Baxter as chairman to succeed long-serving director, Mal Randall, as part of the board succession planning. Baxter will take the reins as MZI enters its next major stage of growth following the construction and commission of the Keysbrook mineral sands project... Read more

Oswals hope to settle with ANZ and ATO... Read more

Opinion - Antony Harrowell: Women’s incubator is worth copying. Forging paths to change often creates an uncomfortable level of uncertainty for the establishment under threat, making the surge of entrepreneurial women in the business technology space a compelling phenomenon... Read more

International Headlines

U.S. Market Report: U.S. stocks were little changed on Monday as a drop in oil prices that weighed on the energy sector was offset by strong gains among biotech stocks. Oil prices fell about 3 percent, after touching two-month highs last week, on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count... Read more

North/South Americas Market Report: Markets closed lower across the region as at the most recent closing prices... Read more

European Market Report: European markets finished lower today with shares in Germany leading the region. The DAX is down 0.47% while London's FTSE 100 is off 0.44% and France's CAC 40 is lower by 0.24%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.32% and the Hang Seng rose 0.26%. The Shanghai Composite lost 0.75%... Read more

BlackRock Inc said on Monday it is upgrading its view on emerging market stocks, adding that the equities will continue thriving as central banks keep interest rates low. Rates globally remaining "lower for longer" keeps the risk of the U.S. dollar rising slim, while increasing the likelihood of more rate cuts by emerging market central banks, Richard Turnill, global chief investment strategist for the world's largest asset manager, said in a note... Read more

Pfizer announced a $14 billion deal for Medivation, a biotech company that makes an important cancer drug. Medivation's portfolio includes Xtandi, a drug that treats prostate cancer. Pfizer said Xtandi generated approximately $2.2 billion in worldwide sales, and the purchase should add to its earnings per share immediately... Read more

Syngenta shares jump after US clears ChemChina deal... Read more

Office Depot Inc said on Monday Chief Executive Roland Smith would retire, three months after the second-largest U.S. office supplies retailer and bigger rival Staples Inc abandoned their planned merger. Smith would continue as CEO until a replacement was found, which the company expected by the end of the first quarter of 2017. Smith, 62, was appointed to the top job in November 2013... Read more

U.S. banks want to cut branches, but customers keep coming... Read more

AT&T signs deal to offer roaming services in Cuba... Read more

Disgraced U.S. swimmer Ryan Lochte lost two sponsorship deals Monday, hours after the end of the Rio 2016 games. Speedo was the first to drop the swimmer... Read more

General Motors Co on Monday asked a Texas judge to throw out a lawsuit over a fatal 2011 crash blamed on a faulty ignition switch, accusing plaintiffs and their lawyers of fabricating evidence about the vehicle’s key during the ongoing trial. According to a GM court filing, plaintiffs Zachary Stevens and his parents and their lawyers showed jurors in Harris County court a key attached to a chain containing several other items, claiming it was the one used to drive the 2007 Saturn Sky involved in the crash... Read more

Mexico's economy took a turn for the worse at a time when the entire country is closely watching the U.S. elections. The economy shrank for the first time in three years in the second quarter. Even though Mexico's economy only contracted 0.2% from the previous quarter, any drop is a shock for a country that many experts consider a success in a troubled region... Read more

Trudeau’s Cure for Canada’s Slump? Architects and Accountants. Service exports a bright spot amid general economic gloom... Read more

The Baltic Exchange board has unanimously backed a takeover bid from Singapore Exchange Ltd, a deal that will give SGX access to a trading platform for the multibillion-dollar freight derivatives market. The exchanges have agreed on the terms of the SGX offer, they said in a joint statement on Monday, with Baltic shareholders entitled to 160.41 pounds per share plus 19.30 pounds per share as a final dividend, giving the business a total valuation of about 87 million pounds ($114 million)... Read more

Top U.K. investor scraps 'ineffective' bonuses. Bye-bye bonus! One of the U.K.'s top performing investment firms is scrapping bonuses for employees, saying they're a distraction, can lead to short term decision making and encourage bad behavior.... Read more

Tourism in the UK will "hold up well" in 2016 after the Brexit vote but fewer jobs than expected will be created in the longer term, executives have said. The World Travel and Tourism Council (WTTC) is predicting growth in the sector of 3.6% in the UK over the year. This is higher than predicted global growth in the sector of 3.1%... Read more

The London Metal Exchange has cut fees in half for open outcry trades during August as a goodwill gesture after it had to vacate its premises because of structural problems, it said on Monday. Ring trading moved to its disaster recovery site in Chelmsford, east of London, in July after a potential safety issue was discovered in the building that houses its offices in London's financial district... Read more

Volkswagen is being forced to cut production of cars in Germany. A dispute with parts suppliers is causing serious disruption at six of the automaker's factories. Volkswagen said it has had to reduce hours for about 27,700 workers until the end of the month... Read more

A fresh attempt will be made to sell four small banks Italy rescued from bankruptcy in November after three bids submitted last month were rejected, two sources familiar with the matter said on Monday. The bids had not been accepted as they were subject to a number of conditions and were not backed by the required bank guarantee, the sources said... Read more

As China’s sovereign bond yields tumble to decade-lows, investors are piling into the most defensive part of the stock market in search of returns. The Shanghai Stock Exchange Dividend Index, composed largely of banks, utilities and expressway operators, has rallied 5.6 percent in the past month and climbed to the highest level versus the Shanghai Composite Index in a year on Aug. 12... Read more

A U.S. national security panel has cleared ChemChina's $43 billion takeover of Swiss pesticides and seeds group Syngenta, the companies said, boosting chances that the largest foreign acquisition ever by a Chinese company will go through. The decision removes significant uncertainty over the takeover of the world's largest pesticides maker after the two companies agreed on a deal in February... Read more

Taiwan’s government will probe a bank that was fined $180 million for violating anti-money laundering laws by a U.S. regulator, which described its compliance program as a “hollow shell.” Officials from Taiwan’s financial supervisor, a prosecutors’ office and the justice ministry will look at whether any crime has been committed in the case involving Mega International Commercial Bank Co., Deputy Minister of Justice Chen Ming-Tang said by phone on Monday... Read more

Malaysia’s Petronas Posts 96% Profit Drop on Lower Oil Price... Read more

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