ASB Securities Morning Brief for Friday, 27 May 2016
Friday, 27 May 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares gained as Mainfreight posted stronger full-year earnings, giving investors more confidence about its outlook while Air New Zealand rebounded and Metro Performance Glass fell. The S&P/NZX50 Index advanced 39.85 points, or 0.6 percent, to 6,947.89. Within the index, 30 shares rose, 13 fell and seven were unchanged. Turnover was $141.9mn... Read more

The New Zealand dollar fell after Fonterra Cooperative Group gave a lower-than-expected opening forecast for the 2017 milk payout, which it said partly reflected a strong currency, stoking expectations the Reserve Bank will cut interest rates sooner rather than later. The kiwi fell to 67.16 US cents as at 5pm in Wellington, from 67.51 cents late yesterday. The trade-weighted index dropped to 72.32 from 72.83 yesterday... Read more

Finance Minister Bill English has unveiled a rosier set of fiscal projections as the fastest population growth in 40 years drives economic growth and tax revenue, giving him room to spend more on health, law and order, and education while forecasting fatter surpluses. The budget forecasts a $700 million surplus this fiscal year, on an operating balance before gains and losses (Obegal) basis, a $1.1 billion turnaround from the Treasury's forecast in December. Over the five years through until 2020, the surplus is expected to be $6.2 billion bigger than was projected in December, reaching $6.7 billion in fiscal 2020... Read more

Maori Development Minister Te Ururoa Flavell has secured $17.8 million to get a new Maori land service up and running, and provide more assistance for property owners as part of his efforts to overhaul legislation governing Maori land. Some $14.2 million will go to building a new Maori Land Service which will provide administrative services to Maori landowners and take over some functions from the Maori Land Court, Flavell said in a statement. A further $3.7 million will go Te Tumu Paeroa (the Maori Trustee) to help landowners improve their governance arrangements, a key goal of legislation aimed at getting better use out of collectively owned Maori land... Read more

New Zealand's skills shortage was highlighted in the Budget yesterday with the Government allocating $256.5 million to promote tertiary education and apprenticeship programmes, particularly in science, engineering and agriculture... Read more

Good News for Small Business in Government Budget 2016... Read more

Budget 2016: what it has to say on property. Speculation about Budgetary housing initiatives turns out to be premature as the Budget allots little in the way of property related spending.... Read more

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected but predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. The Auckland-based company said it expects to pay its farmer suppliers $4.25 per kilogram of milk solids for the 2016/17 season, ahead of the $3.90/kgMS payment for the 2015/16 season. The New Zealand dollar fell to 67.23USc, from 67.63USc before the announcement... Read more

New Zealand’s second biggest dairy co-operative Westland Milk Products has today released a budget for the 2016-17 dairy season of $4.55 - $4.95 per kilo of milk solids (kgMS). Payout for the current season will be in the range of $3.80 - $3.90 per kgMS. Westland will also start its payout advance payments for the 2016/17 season at $3.80 per kgMS, payable 20 September 2016... Read more

Sanford, the country's largest listed fishing group, almost doubled its first-half profit as it focused on lifting values over volumes and benefited from lower fuel costs and a weaker New Zealand dollar. Profit jumped to $18.8 million, or 20.1 cents per share, in the six months ended March 31, from $9.6 million, or 10.2 cents, a year earlier, the Auckland-based company said in a statement. Revenue from continuing operations edged up 1.3 percent to $215.6 million even as sales volumes sank abut 20 percent as the company extracted more value from its catch... Read more

King Country Energy attacks grid charge overhaul, warns prices will rise. King Country Energy, the central North Island power generator and retailer, has warned the Electricity Authority's planned overhaul of grid charges would both increase prices for its customers and leave it with little incentive to invest... Read more

Z Energy Ltd will make a payment of NZ$785 million on 1 June 2016 to complete the acquisition of Chevron New Zealand, the owner of the Caltex brand in New Zealand. The deal was cleared after receiving approval from the New Zealand Commerce Commission... Read more

Macquarie Group, the Australian financial firm, agreed to sell the majority of its New Zealand retail wealth management business to local investment manager Warren Couillault and some of its employees, retaining a cornerstone shareholding... Read more

Mainfreight had a 6.3 % gain in full-year profit as improved trading in New Zealand, Asia and Europe was offset by weaker results in Australia and the Americas. Profit rose to $87.6 million, or 87.65c a share, in the year ended March, from $82.4 million, or 82.58c, a year earlier, the company says. Sales climbed to $2.28 billion from $2.05 billion... Read more

SkyCity Entertainment Group, New Zealand's only listed casino, has signed a deal with the South Australian government on preliminary works to prepare for the expansion of its Adelaide casino and the wider redevelopment of the site. The work is expected to take place in the second half of the calendar year and the costs will be split between the company and the state. It will include modifications to Festival Drive, work on the structural piling, modifications to loading docks and the relocation of existing services. Shares in SkyCity were unchanged at $4.68. They've risen 6.8 percent since the start of the year.... Read more

Mayor of Dunedin Dave Cull will lead a Dunedin delegation to China next month focused on strengthening existing ties and unlocking further economic opportunities for the city, particularly in the areas of tourism, education and trade. The delegation will visit Dunedin's sister city Shanghai, friendship city Qingdao, as well as Beijing, Guangzhou and Qingyuan. The delegation includes representatives from Dunedin City Council, Otago Chamber of Commerce, University of Otago, Otago Polytechnic and Dunedin tourism operators and businesses... Read more

A trial is under way to streamline border processing for low-risk travellers and traders, starting with those who fly across the Tasman. While in its early stages, Customs Minister Nicky Wagner said trusted passengers who regularly travelled the route would be involved in the trial. They would supply extra information to border agencies and in return undergo less screening as they go through airports. Other measures, such as iris scanning, could also be used... Read more

The Supreme Court has granted former Ross Asset Management investor Hamish McIntosh leave to appeal the Court of Appeal's ruling that he could keep the $500,000 he managed to extract from the Ponzi scheme before its failure, but not the fictitious profits he earned. In March, the Court of Appeal dismissed McIntosh's bid to hold on to the $454,000 return he received when he withdrew almost $1 million from RAM before it collapsed, which he claimed he was entitled to keep because without it, he wouldn't have pursued a speculative property investment... Read more

The Ministry for Primary Industries has laid a second set of charges as part of an investigation into the alleged abuse of bobby calves in the Waikato. MPI began investigating after TVNZ's Sunday programme broadcast footage which showed the calves being thrown onto trucks and being left for dead... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket twice rallied from the red before finishing in the black as falling Chinese stocks capped bullish sentiment. A 5.2 per cent slump in March-quarter private sector capital expenditure, worse than the forecast 3.5 per cent drop, underscored the growth headwinds and difficulty re-balancing away from mining-led growth... Read more

The Australian dollar's fall has resumed despite further gains on global share markets and and oil prices. At 1200 AEST on Thursday, the currency was trading at 71.83 US cents, down from 72.10 cents on Wednesday.... Read more

Shoppers will no longer be slugged with excessive surcharges on credit card payments under new rules, but could face other fees as banks look to make up for lost revenue. The Reserve Bank has announced that from September 1, surcharges on card transactions will be limited to the amount it costs a retailer to process the payment... Read more

Businesses are unable or unwilling to step up their investments to make up for dwindling spending in the mining sector. Business investment in capital goods, which includes buildings and equipment, fell 5.2 per cent in the March quarter - much worse than forecasts of a 3.5 per cent fall. Businesses expect to invest $126.8 billion by the end of the 2015/16 financial year, 15 per cent less than their estimate in the previous year, the Australian Bureau of Statistics said... Read more

A businessman who lost more than $15 million in an off-the-plan unit purchase is warning ordinary apartment buyers to be aware they can lose much more than their deposit if they break the contract. Businessman Charlie Caltabiano bought an off-the-plan penthouse on the Gold Coast in 2006. The penthouse, in the Soul apartment building, cost him almost $17 million - an Australian record at the time... Read more

Treasurer Scott Morrison has challenged Labor to set out its policy costings well before the election. The challenge came as Mr Morrison prepared to debate shadow treasurer Chris Bowen at the National Press Club on Friday... Read more

Women over the age of 50 who are struggling to catch up on superannuation are bearing the brunt of Federal Government tax changes, according to new research. This month's budget unveiled a reduction in the cap on super contributions that can be made before tax kicks in. A University of Canberra (UC) study found women were being penalised because they often tried to catch up with contributions later in life. The reduced superannuation proposal will see the pre-tax contribution cap for the over-50s drop from $35,000 to $25,000, while the cap will be reduced for under-50s from $30,000 to $25,000.... Read more

Austin Exploration Ltd’s shares have surged today after intersecting a significant 790 feet column of oil in the Pierre formation at the company’s flagship Pathfinder project in Colorado, U.S.A. The oil was discovered in both drill cuttings and on the drill string which was saturated and dripping in crude oil. Testing of the well is expected to take one month to analyse its production potential... Read more

Gina Rinehart topples down rich list... Read more

BHP Billiton's Olympic Dam copper, gold, uranium mine is entering a growth phase.... Read more

Steelmaking giant Ansteel has ended months of uncertainty over the future of the loss-making Karara magnetite operation, backing a new $US200 million ($278 million) lifeline to the struggling exporter. The move will be welcome relief for Karara staff and contractors, who were told in January its majority Chinese owner was unwilling to continue to bankroll the operation’s losses... Read more

Shares in Spectrum Rare Earths Ltd continue to be suspended from trading pending an announcement regarding its change of activities. Shares stand suspended from trading since May 17, 2016. Spectrum has executed a Heads of Agreement for the acquisition of the entire issued capital of BCAL Diagnostics Pty Limited, a Sydney-based company developing a blood-based test for the detection of breast cancer... Read more

Morgan Stanley is tipping Wesfarmers will cut its full-year dividend to as low as $1.80 on the back of the profit deterioration in its coal and Target businesses. While most analysts are flagging a lower payout, the global banking and investment giant is among the more pessimistic... Read more

Metcash unveiled its new corporate structure on Thursday, a reorganisation of the listed wholesaler that is expected to cut at least 50 roles across its headquarters and state offices. The blueprint will cut out the duplication of roles across the head office and state support outlets as well as creating what Metcash is calling "Centres of Excellence" in state offices dedicated to functions including, customer service, media and credit control... Read more

Two disgraced former executives of Sigma Pharmaceuticals have been fined $25,000 each but avoided immediate jail time for falsifying company accounts. Former chief executive Elmo de Alwis and former chief financial officer Mark Smith were both sentenced to a year in prison on each of two charges of providing false information to the company's auditors and directors... Read more

Opinion - Harold Mitchell: Federal Election 2016: Employment is the sleeper issue.... Read more

Opinion - Ian Verrander: Why the banks should be nervous about Election 2016... Read more

International Headlines

U.S. Market Report:... Read more

North/South Americas Market Report: ecipe Prep Time: 5 minutesTotal Time: 5 minutes Yield: 18 small squares Ingredients 2 cups creamed coconut (you can probably also use coconut butter) 2 cups fresh organic blueberries (frozen, thawed might work too) 1/4 cup pure maple syrup 2 tsp ground vanilla beans Blueberry-Bliss-Bars-Steps-ingredients-1 Instructions Combine all ingredients in a food processor until the mixture is smooth. Line an 8x8 pan with parchment paper, leaving enough room for some paper to stick out the sides. Dump the mixture into the pan and spread it out evenly. The mixture is very thick and you may need to wet a spatula to help spread it evenly. Once the mixture is in the pan. Gently press down using the extra sides of parchment paper. Stick the pan in the fridge to firm up. This should only take about 15-20 minutes. Once the mixture is firm, lift the whole thing out by the edges of parchment paper... Read more

European Market Report: World MarketsEuropean markets finished higher today with shares in France leading the region. The CAC 40 is up 0.69% while Germany's DAX is up 0.66% and London's FTSE 100 is up 0.04%... Read more

Asian Market Report: Asian markets finished higher today with shares in China leading the region. The Shanghai Composite is up 0.26% while Hong Kong's Hang Seng is up 0.14% and Japan's Nikkei 225 is up 0.09%... Read more

Oil prices tested the $50-per-barrel mark on Thursday as production outages brought a faster-than-expected recovery to an oversupplied market many thought will stay depressed through the year. While a crude glut could grow in coming months if demand stalls, wildfires in Canada's oil sands, unrest in the Nigerian and Libyan energy sectors, and a near economic meltdown in OPEC member Venezuela have knocked out nearly 4 million barrels per day in immediate production... Read more

U.S. business spending intentions weakened in April for a third straight month amid soft demand for machinery, but a surge in contracts to purchase previously owned homes to a 10-year high supported views economic growth was gaining speed. The growth picture was further boosted by another report on Thursday showing the number of Americans seeking unemployment benefits fell more than expected last week, pushing them back to near cycle lows... Read more

Federal Reserve Governor Jerome Powell laid out a clear argument for raising interest rates while stressing that global risks, including the Brexit vote in the week following the next meeting of the U.S. central bank, meant there was no reason “to be in a hurry.” “Depending on the incoming data and the evolving risks, another rate increase may be appropriate fairly soon,” Powell said Thursday in Washington, adding that the pace of hikes “should be gradual.”... Read more

How Sumner Redstone created the hotbed for Viacom’s infighting. In refusing for decades to cede control—all while claiming he would never die—Sumner Redstone helped create the succession and corporate governance turmoil unfolding at Viacom Inc., experts and analysts say. Redstone’s ailing health and he-said, she-said spats with his former girlfriend and executives have turned into a public tug of war for power and control of media company Viacom. The former chairman of Viacom and CBS Corp. CBS, who will turn 93 years old on Friday, owns nearly 80% of the voting shares in both companies, which his seven-member trust will oversee when he dies or is incapacitated. The trust has operated more like the Thunderdome of late... Read more

Viacom Inc Chief Executive Officer Philippe Dauman has asked a Massachusetts court to expedite a legal challenge to his removal from a trust that will determine the company's future after controlling shareholder Sumner Redstone dies or is deemed incapacitated. Dauman requested a trial date be set for no later than the end of September in a court filing dated Wednesday, May 25... Read more

Apple Inc. in a meeting late last year with Time Warner Inc. broached the subject of buying the media company.... Read more

Savers withdrawing money from their pension pots could face a maximum exit charge of 1%, under plans released by the Financial Conduct Authority (FCA). People joining pension schemes after March 2017 should be able to withdraw their cash for free, the FCA said... Read more

Industrial action over labour law reforms is gripping France nationwide, with oil refineries, nuclear power stations and transport hubs affected. Motorways and bridges were blocked and flights delayed, and 16 arrests were made as a result of clashes in Paris. Prime Minister Manuel Valls insists the reforms will not be withdrawn but has suggested they could be "modified"... Read more

Bank of England rejects claim it has watered down ringfencing plans Sir John Vickers accused Bank of stepping back from proposals on how much capital banks should hold to endure heavy losses... Read more

A Brexit wouldn’t just weaken the pound -- it would jeopardize its status as a reserve currency used in world trade, according to S&P Global Ratings. Sterling lags only the dollar and euro in central banks’ holdings, a legacy of Britain’s large economy, its trusted legal system and use of the global lingua franca. But a vote to leave the European Union on June 23 may dethrone the pound and would even threaten the nation’s top AAA credit rating, says S&P... Read more

Government plans to overhaul the pension scheme behind Tata Steel have been supported by the trustees despite warnings that the move would set a dangerous precedent. Allan Johnston, chairman of the board of trustees of the British Steel pension scheme, welcomed the government’s decision to consult on a shakeup of the scheme as it would be a better outcome for members than entering the Pension Protection Fund (PPF), where Tata Steel workers would suffer a 10% cut to their benefits... Read more

Qatar’s unprecedented $9 billion Eurobond sale has pressed the re-set button for the Gulf region’s debt market. The country sold $9 billion of bonds in three maturities on Wednesday, almost double the amount expected by analysts. The issue helped push 2016 offerings from the Middle East and North Africa, which includes Saudi Arabia and the United Arab Emirates, to $29.3 billion, already a record for the first half of a year, according to data compiled by Bloomberg... Read more

Saudi oil giant Aramco is gaining market share and pushing for greater efficiency, chief executive Amin Nasser said in an interview, as it acts as a "bridge" to a future when the nation relies less on energy exports. Nasser also told Reuters that the state-owned group was pressing on with preparations for its partial privatization via a stock market listing, which he said lay at the heart of Riyadh's "Vision 2030", a long-term economic plan headed by Deputy Crown Prince Mohammed bin Salman... Read more

The first wave of robots taking over human jobs is upon us. Apple Inc. supplier Foxconn Technology Co. has replaced 60,000 human workers with robots in a single factory, according to a report in the South China Morning Post, initially published over the weekend. This is part of a massive reduction in headcount across the entire Kunshan region in China’s Jiangsu province, in which many Taiwanese manufacturers base their Chinese operations... Read more

Higher-yielding currencies in Asia moved higher against the dollar Thursday, as sentiment in emerging markets picked up as Brent crude passed $50 a barrel for the first time this year. Analysts said recent data from the US indicated that the global economy was showing signs of a gradual recovery, but warned that it was unclear whether long-term sentiment could stay positive... Read more

U.S. Virgin Islands sues Takata, Honda over airbags... Read more

Japan Said to Push for ‘Crisis’ Language in G-7 Communique... Read more

Latest reports

Latest reports