ASB Securities Morning Brief for Monday, 18 July 2016
Monday, 18 July 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares were mixed as investors did not follow offshore rallies, with Tower, Westpac Banking Corp and Metro Performance Glass gaining as Fisher & Paykel Healthcare dropped. The S&P/NZX50 Index dipped 7.44 points, or 0.1 percent, to 7,072.89. Within the index, 24 stocks rose, 21 fell and six were unchanged. Turnover was $202.5 million... Read more

The New Zealand dollar is heading for a 1.8 percent weekly fall on a trade-weighted basis as traders second-guess what the Reserve Bank will say when it gives an updated view on the economy next Thursday, and ahead of Monday's inflation print. The trade-weighted index fell to 76.13 from 77.54 last week, and is down from 76.81 yesterday. The kiwi is heading for a 2.1 percent weekly drop against the greenback, trading at 71.54 US cents at 5pm in Wellington from 73.04 cents on Friday in New York last week, and down from 72.04 cents yesterday... Read more

New Zealand shares are expected to open lower this morning in the wake of Turkey's attempted military coup and investors will be cautious as they wait to see how larger markets react to growing global turmoil, says an analyst. Craigs Investment Partners' Mark Lister expected New Zealand's sharemarket and its counterparts in Australia and Japan would be down when they open today but didn't think local investors would panic.... Read more

Inflation figures could deepen Reserve Bank's dilemma - confront house prices or the dollar. Inflation is expected to have stayed well below the official target, adding pressure for a reluctant Reserve Bank to cut interest rates. Figures from Statistics New Zealand on Monday are likely to show that in the year to June 30, the consumer price index - the measure of household inflation - climbed 0.5-0.6 per cent.... Read more

Jobs growth in New Zealand’s regions. Data released today by SEEK shows that there were 7 per cent more jobs advertised on SEEK in June 2016 than 12 months ago. For job seekers it’s an encouraging time to be looking for a new role because job growth is not isolated to our nation’s two largest employment markets, Auckland and Wellington, said Janet Faulding, General Manager for SEEK NZ... Read more

New Zealand's national house prices rose again in June, as five regions hit record highs. The median national sale price jumped 11 percent to $500,000 in June from a year earlier, while the number of properties sold advanced 6 percent to 7,864, according to the Real Estate Institute. Compared with May, the median price slipped 1.2 percent while the volume dropped 13 percent, in line with seasonal trends heading into winter, the Institute said... Read more

The squeeze is going on the market as the number of properties for sale drops quickly, new data from the Real Estate Institute shows. It has released its data for June, which shows a 40% drop in properties available for sale, year-on-year. Wellington has the least available stock – with only seven weeks’ worth of property listed. Five regions hit new record high median sale prices. The national median eased by 1% to $500,000... Read more

Ghost homes - properties lie empty in spite of crisis.... Read more

Rocketing land prices hit council's $20m plan to buy Hobsonville Point park. Auckland Council has become a victim of the massive surge in land prices and can’t afford to buy an 11ha park at Hobsonville Point, residents believe... Read more

Auckland house prices have risen by 85 percent in four years, taking the average price to around nine times the average household’s disposable income, fuelled by record high migration, low interest rates, and housing under-supply. Prices are now rising quickly in most other regions as well with New Zealand’s national house prices increasing again in June, as five regions hit record highs. The median national sale price jumped 11 percent to $500,000 in June from a year earlier, while the number of properties sold advanced 6 percent to 7,864, according to the Real Estate Institute... Read more

Bill English cautions first-home buyers away from Auckland market... Read more

Week's free rent to entice tenants as Christchurch rental rates fall... Read more

Pro-TPP Mark Pence confirmed as Trump's running mate... Read more

China is allegedly trying to heavy the New Zealand government into dropping an inquiry into cut-price Chinese steel. But Charles Finny – the former trade negotiator who confirmed the rumour when the Sunday Star Times came calling – tells NBR he is dubious about his own tip-off... Read more

Trade Minister Todd McClay says he will be asking officials to contact the Chinese embassy in Wellington to clarify its position on competition issues. He was commenting about news reports that China could take retaliatory action against dairy and kiwifruit exports from New Zealand if a formal investigation into alleged steel dumping by China is launched by the Ministry of Business, Innovation and Employment... Read more

John Key downplays retaliation suggestions over potential China steel import sanctions... Read more

Agribusiness needs to budget for volatility. While volatility in business is to be expected, many of New Zealand’s primary producers have experienced a bumpy ride in recent years. Increased volatility driven by to swings in international commodity prices and the value of the NZ dollar is now the new normal according to professional services firm Crowe Horwath... Read more

New Zealand farmers are producing a lot less milk, with overall production for June down 10 per cent compared to last year. South Island volumes have tumbled by 22 per cent, with the North Island declining 6 per cent. South Island cows provided 2 million kilograms of milksolids, 1 million less than last year, while in the North Island they produced just over 7 million kg/ms, down from 8 million... Read more

The horticultural potential of Taranaki without dairy... Read more

Christchurch based agricultural technology company, CropLogic Limited (“CropLogic”), is pleased to announce that it has successfully closed its offer on the Equitise Pty Ltd (“Equitise”) crowd funding platform and has appointed Ventnor Capital Pty Ltd (“Ventnor Capital”) as Corporate Advisors, in preparation for the Company’s anticipated listing on the Australian Securities Exchange (ASX). CropLogic received a positive response in a short timeframe from the investor community, via the crowd funding platform Equitise and successfully raised $512,200... Read more

Spark NZ will sell land it had been using for car parking in Auckland for $26.5 million. The property, on Mayoral Drive, will be sold to Miland, which is working with a prospective anchor tenant to develop the site, Spark said. The shares rose 0.4% to $3.715 today... Read more

The Inland Revenue Department says a 10-year project to overhaul its IT infrastructure and introduce new processes to make it easier for taxpayers is still tracking below budget. Treasury documents released yesterday showed the total cost of the project may be as much as $2.61 billion, when depreciation, capital charges and inflation adjustment are included... Read more

Luxury tourism is booming but lodge owners say luring local staff is a problem and another operator says the country could be doing better by widening its approach to marketing. Tourism New Zealand says spending in the luxury lodge sector has risen more than 20 per cent during the last year, claiming a bigger chunk of a global market potentially worth US$46 trillion ($65t)... Read more

The sale of Diversified Investment Strategies Ltd (DISL) occurred for lower than the market rate and with greater risk for the vendors, according to an industry expert. Financial advice firm DISL closed down after its funds were sold to Fisher Funds Management and one of its directors, Vicky Watson, took up a job with Fisher Funds... Read more

The government's plans to rewrite legislation governing telecommunications will tilt the regulatory approach of the sector in favour of end-consumers over investors in fibre and copper networks, says broking house First NZ Capital. Communications Minister Amy Adams this week announced plans to change the way telecommunications network operators, such as Chorus, can charge for wholesale access to their regulated services. The favoured approach is to impose a revenue cap based on an ultrafast broadband provider's regulatory asset base and price caps for basic services, which would likely be voice-only, entry-level broadband, and basic broadband products... Read more

Inductees to Wellington Region Business Hall of Fame. Congratulations are in order for the eight businesses that were inducted at the Wellington Region Business Hall of Fame awards presented by Deloitte Private and the Hutt Valley Chamber of Commerce & Industry.... Read more

Auckland Council head economist Chris Parker leaves for Treasury role... Read more

Commerce and Consumer Affairs Minister Paul Goldsmith has announced the appointment of top corporate lawyer and MinterEllisonRuddWatts partner Silvana Schenone to the Takeovers Panel. The appointment is effective from 01 October 2016... Read more

Misuse of New Zealand's Financial Service Providers Register 'may be larger than identified'. The Government is acknowledging that misuse of New Zealand's Financial Service Providers Register (FSPR) may be a bigger problem than has been identified... Read more

NBR Rich Lister Stephen Jennings told TVNZ’s Q+A programme that high immigration is masking poor productivity. “New Zealand has some fantastic strengths. There’s no denying that. We have tremendous institutions. We’ve had exemplary fiscal policies. Our debt situation is very good by Western standards," Mr Jennings said... Read more

Australia's heart attack insurance scandal forces rethink in New Zealand... Read more

The Financial Markets Authority has dropped civil proceedings against private equity firm Archer Capital and Abano Healthcare shareholder Peter Hutson over the way they pursued a takeover of Abano in 2013. The market watchdog filed papers against Archer and Hutson's Healthcare Industry vehicle in late 2014, claiming they should have notified the market of their plans to pursue a takeover of Abano earlier than they did. The FMA today said it will discontinue those proceedings and that the defendants accepted an investigation was justified, with each party agreeing to bear their own costs... Read more

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. The Commerce Commission filed proceedings against the companies in December 2014... Read more

Opinion - Charles Finny: Is cheap Chinese steel harming Kiwi manufacturers? Anti-dumping cases involving China are not new – but never before have there been threats of Chinese retaliation like those New Zealand industry alleges are happening now... Read more

Opinion - Rod Oram: The housing mish-mash. Quick building programmes are not the answer to Auckland's property problems.... Read more

Opinion - Geoff Simmons: Three questions for Labour on their housing policy . Geoff Simmons sees more questions than answers in Labour's housing proposals. Equity, NIMBYs and government monopolies all point to serious potential flaws... Read more

Opinion - David Chaston: An open letter to NZ's main bank CEOs. David Chaston calls on the five main banks to give back the full OCR cuts from December and March now that it is clear the 'higher costs' claimed never materialised or have since faded... Read more

Opinion - Christopher Niesche: Three lessons from Dick Smith collapse. Administrators' report on collapsed chain reveals flaws in growth and a $64m mountain of unwanted stock.... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket is enjoying its best run for the year, extending its winning streak to seven sessions on Friday as the big banks and miners drew enthusiastic buying. It is the longest positive run since a streak of nine days in December. At the closing bell, the benchmark S&P/ASX 200 index had risen 18 points, or 0.33 per cent, to 5,429.6, while the broader All Ordinaries index climbed 18.3 points, or 0.33 per cent, to 5,510.1.... Read more

The Australian dollar has climbed to a fresh 10-week high Friday on better news from China’s economy. At 4.05pm (AEST), the Australian dollar was trading at US76.25 cents, slightly down from US76.32c late on Thursday as investors took profits. Earlier in the session, it had touched US75.76 cents, its best price in 10 weeks. It began the week trading at US75.20c.... Read more

The Australian share market is likely to gain a further lift from the strength of US shares at the start of the week although European markets were undercut by the terrorist attack in Nice on Friday. Local shares finished last week at an 11-month high in anticipation of central banks offering further stimulus to lift economic growth and following better-than-expected Chinese economic growth figures, running at an annual rate of 6.7 per cent... Read more

A new report from NAB shows sentiment towards the housing market has softened but remains positive, with properties in Victoria and Queensland expected to have the highest returns over the next two years as prices in Western Australia continue to fall. Average survey expectations were for 0.7 per cent growth in national house prices for the quarter... Read more

Australia could be one of the first nations to sign a free trade agreement with Britain once it is untethered from the European Union. Malcolm Turnbull had his first conversation with new British PM Theresa May on Saturday, with both leaders making a trade pact a priority in the wake of the Brexit vote... Read more

Trade Minister Steven Ciobo has dismissed concerns the Trans-Pacific Partnership (TPP) could be blocked by the Australian Senate, amid opposition from a key US senator. Orrin Hatch, the US Senate Finance Committee's chairman, is blocking support for the TPP, saying he will not budge until changes are made to trade rules governing a new class of drugs called biologics... Read more

The ATO has issued a stern warning as they crackdown on the sharing economy. The taxman will target thousands of Uber drivers and Airbnb hosts earning undeclared extra income from the so called ‘sharing economy’ this tax time. The Australian Taxation Office said it was “concerned” people making income from sites such as Uber, Airbnb and Airtasker were unaware they have to declare these amounts on their tax return... Read more

The Council on the Ageing is calling on Monday's coalition party room meeting to reject pressure to water down superannuation reforms. Chief Executive Ian Yates says the fact the prime minister and treasurer are under pressure from backbenchers to reverse sound policy based on election results would be "laughable if it wasn't so serious"... Read more

Prime Minister Malcolm Turnbull has flagged changes to his controversial plans for superannuation tax concessions, insisting he has listened to people's concerns. But Labor says this is just a further sign of a "haphazard" approach to superannuation policy from a "hopelessly divided" government... Read more

Chinese tourists spend record amounts but Australian retailers risk missing the boom.... Read more

The Environmental Protection Authority is set to recommend approval within weeks for two uranium mines in the Goldfields. Toro Energy, which is developing the proposed Wiluna mine, said yesterday the EPA had accepted its response to more than 2400 individual submissions as part of a three-month public review process which closed in February. Toro last week signed a native title agreement with the traditional owners of the area... Read more

Inca Minerals Ltd has been granted a trading halt by the ASX, pending details of a capital raising.... Read more

RTG Mining to raise US$15m... Read more

Catapult Group has raised $91 million from the institutional component of an entitlement offer and placement, with a further $9 million to be raised in the retail portion... Read more

Investigator Resources Ltd's cash raiser has a silver lining. Investigator Resources Ltd is focused on the 33 million silver ounce Paris project in New South Wales, with the company planning a pathway to production. Providing a boost, the price of silver is up 50% during 2016, trading at over US$20 an ounce... Read more

Ausgold Ltd is heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare... Read more

Silver Mines Ltd is aiming to fast-track mine development of its Bowdens Silver Project located near Mudgee, New South Wales. Part of the reassessment of the project is to find a more capital cost effective development with enhanced project economics... Read more

Aurizon to cut 100 jobs in north Queensland, rail union says. About 100 jobs in north Queensland are set to go from freight operator Aurizon, the Rail Tram and Bus Union (RTBU) says. Aurizon notified workers of job losses on Thursday, but did not say how many would go. Implementation is expected to start early next month.... Read more

Sales of genetically modified canola seed in WA have plunged in the face of the significantly lower prices the crops it produces fetch on world markets. The fall of about 10 per cent in seed sales to 700 tonnes for this growing season comes as the State Government prepares to scrap laws giving it the power to halt production of GM crops... Read more

Craft beer boom brews expansion for Australian hop farmers in Tasmania, Victoria. Australia's insatiable taste for craft beer is spurring on an expansion for the country's biggest hop grower.... Read more

British retail giant John Lewis, an institution on London’s Oxford Street, is coming Down Under. The retailer will open as a “shop-in-shop” in six Myer stores, including in Perth, next year.... Read more

Big Energy Switch campaign to help save Aussies on their power bills as some could be hit with an extra $240 a year. A “perfect storm” has hit the wholesale electricity market, with households just beginning to feel its ferocity. Many big businesses are already being severely buffeted, leading to calls for government intervention to limit job losses and damage to the economy... Read more

Property giant Charter Hall has revealed a detailed proposal for a dramatic $150 million Raine Square overhaul, including a multi-screen cinema and hotel tower. The plans, subject to City of Perth approval, have been designed to create an appealing public environment within a high-quality retail and entertainment precinct, repositioning the Raine Square development as one of the CBD’s most valuable assets... Read more

Counter-Strike: Valve, Twitch announce crackdown on controversial skins gambling. Unregulated betting websites that allow underage gamers to gamble away huge amounts of money look set to be shut down after video game giant Valve announced a crackdown on the controversial practice of skins gambling... Read more

After a career of ups and downs, Joe Gutnick is once again a diamond in the rough... Read more

Diamond Joe Gutnick's trail of debt leads to convicted US fraudster. One of men caught up in the $275 million bankruptcy of high-profile mining mogul Joe Gutnick is a well-known New York rabbi and convicted fraudster with close ties to the millionaire's family. The news has emerged as creditors increasingly fear they will receive just a fraction of what they are owed in the wake of "Diamond Joe's" financial collapse.... Read more

Australia will have to wait until February to see if Malcolm Turnbull gave $1 million to the Liberal election campaign. The prime minister refused to reveal if he had made the donation reported in media, saying only that everything would be disclosed in line with the law... Read more

Tyre king Bob Jane has declared bankruptcy after Harold Mitchell, his mate of four decades and one of Australia's most prominent businessmen, pursued him over a $200,000 debt. The former race car champion owes millions of dollars and says his fortune has been whittled down to $15 cash and a Holden Commodore... Read more

Opinion - Adele Fergusson: Shades of grey in stand-off over super emissions. Being seen to be a responsible company has become big business, both financially and reputation-wise. Last month the Australian Council of Superannuation Investors (ACSI) released a report revealing that 71 cents in every dollar invested in ASX200 stocks goes into companies shown as reporting on ESG environmental, social and governance to a "leading standard"... Read more

Opinion - Michael Janda: Banks' 'low-risk model' high risk for Australian economy. You have to listen to a lot of talk from central bankers to glean the odd tidbit of enlightenment, but it's worth it when you get an insight... Read more

Opinion - Ross Gittins: Think twice before throwing open the government coffers. Labor's Mediscare will have a benefit if it causes our politicians to think twice before they resort to "outsourcing" or "contracting out" the provision of government services, a practice that's led to a string of disasters... Read more

International Headlines

North/South Americas Market Report: North and South American markets finished mixed as of the most recent closing prices. The IPC gained 0.46% and the Bovespa rose 0.18%. The S&P 500 lost 0.09%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The FTSE 100 gained 0.22%, while the CAC 40 led the DAX lower. They fell 0.30% and 0.01% respectively... Read more

Asian Market Report: Asian markets finished mixed as of their recent closing prices. The Nikkei 225 gained 0.68% while the Hang Seng was higher by 0.46%. The Shanghai Composite was even... Read more

As oil’s upward climb runs out of momentum, more and more analysts expect the market’s next move will be back down toward $40 a barrel. Brent crude prices almost doubled between January and June, signaling that markets were finally healing as falling U.S. output, rising demand and disruptions from Nigeria to Canada all helped eliminate a global production surplus. Now, as consumption falters and halted supplies return, analysts from BNP Paribas SA to JBC Energy GmbH warn prices may sink once more... Read more

Worst Weekly Loss in a Year Shows Treasuries Stuck in Tug-of-War... Read more

Yahoo Inc. is expected to report second-quarter earnings after the market’s close on Monday, but the company’s looming sale will likely be front-and-center. The company is expected to stop taking bids and make a decision about a potential suitor, on or around Monday... Read more

Discount Investment Corp. saw the biggest gain in almost four years after entering into an accord to sell its remaining stake in Adama Agricultural Solutions Ltd., the world’s largest maker of generic agro-chemicals, to China National Chemical Corp. Shares in Discount leaped 23 percent to 10.90 shekels at the close in Tel Aviv in 25 times the 3-month average daily volume. The yield on the company’s 4.95 percent bonds maturing December 2025 dropped 117 basis points to 6.09 percent, the lowest level since November 2014... Read more

What to expect from Netflix earnings. Netflix Inc. is set to report its second-quarter earnings after the market closes on Monday. The Los Gatos, Calif. company has had a rocky couple of months as investors focus on its growth potential in the U.S. and overseas... Read more

NextEra’s $2.6 Billion Hawaii Deal in Doubt as Regulator Says No... Read more

Herbalife Ltd agreed to pay $200 million and change the way it does business to avoid being labeled a pyramid scheme by regulators, a blow to hedge fund manager Bill Ackman who for years has been betting against the dietary supplements maker. Shares of Herbalife jumped more than 20 percent after the settlement was made public and the Los Angeles-based company said its board had cleared the way for billionaire investor Carl Icahn to boost his stake in the company to as much as 35 percent from his current 18.3 percent... Read more

A federal judge dismissed a swathe of customer claims in the nationwide litigation over General Motors Co.’s deadly ignition switch defect that triggered the recall of millions of vehicles two years ago. Friday’s ruling by a Manhattan federal judge comes two days after an appeals court dealt GM a blow by reviving hundreds of related cases that had been blocked by the carmaker’s 2009 trip through bankruptcy court. GM’s shifting fortunes in the case come as the Detroit-based company prepares for a third test trial over the flaw, set to start in September. GM won the first two... Read more

WeWork Companies Inc, a closely held operator of shared office space, has sued a former employee for unauthorized disclosure of information to Bloomberg News that showed the firm, which is valued at $16 billion, falling short of its financial goals. In a complaint filed late on Friday with the New York Supreme Court for Manhattan, WeWork accused Joanna Strange, who was fired June 10, of unlawful access to its computers and of stealing confidential and proprietary information... Read more

Travel stock slump deepens as France suffers another attack. Investors are dumping travel and tourism stocks again as yet another terror attack on a popular European destination threatens to deter visitors. French hotel chain Accor, discount airline easyJet and tour operator Thomas Cook all fell by more than 3% on Friday as investors hit the sell button again following an attack in Nice, France, that killed 84 people.... Read more

European Central Bank President Mario Draghi is likely to plead for governments to do more to boost the euro zone's economy in the coming week as the fallout of Britain's vote to leave the EU and weaker global growth threaten the bloc's fragile recovery. Governments in China, Japan and Britain have already started easing their fiscal stance or hinted at plans to do so as sub-par global growth and inflation show that central banks' ultra-easy monetary policy has run up against its limit... Read more

The U.K. will fall into a “short, shallow recession” around the turn of the year as Brexit hits house prices, jobs and spending, according to the EY Item Club. In a report to be published Monday, the forecaster will say it’s slashing its 2017 growth estimate to 0.4 percent from 2.6 percent and predicting the Bank of England will cut interest rates to zero by the end of 2016. Tax reductions are also a possibility, it will say, as the government scales back austerity to aid an economy reeling from the shock vote to pull Britain out of the European Union... Read more

Turkey's failed military coup may prompt some flight to safe-haven assets on Monday but there will only be a more serious longer-term impact for investors if instability persists in the strategically important emerging market. Strategists and economists said on Sunday the fact that the coup, launched while U.S. markets were still trading on Friday, had been put down would limit its impact on developed markets... Read more

Turkish Bank Postpones $300 Million Bond Sale Meeting on Unrest... Read more

Lira Drops Most in 8 Years as Stock Futures Sink on Turkey Clash... Read more

The Turkish government moved swiftly to calm investors before financial markets reopen Monday after a failed coup, with the central bank promising unlimited liquidity to lenders and the deputy prime minister posting on Twitter that there’s “no need to worry.” Turkey’s lira plunged the most against the dollar in eight years on Friday as tanks rolled through the streets of Ankara and Istanbul, and warplanes and helicopters circled overhead... Read more

Iran seeks more aircraft as questions linger over earlier deals... Read more

Chinese Cities’ Expansion Plans Could House 3.4 Billion People... Read more

A group of Chinese investors will invest more than 40 billion rand ($2.8 billion) in an energy and metals-related industrial park in South Africa, giving a boost to the country’s government as it seeks to grow the manufacturing industry and ease unemployment... Read more

Total SA’s specialty chemicals division Atotech has attracted interest from companies including China’s Sinochem Group and buyout firms such as CVC Capital Partners, people familiar with the matter said. A sale could value the business, which supplies electroplating and surface treatments used by the electronics industry, at as much as 4 billion euros ($4.4 billion), the people said, asking not to be named because the deliberations are private... Read more

Singapore's central bank is scrutinizing several banks, including UBS (UBSG.S) and DBS Group Holdings (DBSM.SI), to see if they broke anti-money laundering rules in handling transactions linked to scandal-hit Malaysian state fund 1MDB, three people with knowledge of the matter said... Read more

Singapore developers sold the fewest new homes in four months in June as a lull in new launches crimped sales. Developers sold 536 units last month, down from a revised 1,058 in May, according to data released Friday by the Urban Redevelopment Authority. That’s the lowest since February, when 303 units were sold... Read more

India’s Job Market Is Looking Up, Report Says. Telecommunications, information technology and healthcare led hiring growth... Read more

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