ASB Securities Morning Brief for Monday, 18 May 2015
Monday, 18 May 2015

New Zealand Headlines

New Zealand Market Report: Nuplex Industries climbed to a four-year high after it upgraded its profit guidance. Freightways, Mainfreight and Air New Zealand advanced as cheaper global oil prices meant lower input costs. The NZX 50 Index rose 21.972 points, or 0.4%, to 5760.376. Within the index, 22 stocks rose, 16 fell and 12 were unchanged. Turnover was $99.4 million... Read more

The New Zealand dollar is set to end the week largely unchanged, belying the volatility that saw it fall to a two-month low midweek as expectations grew that the Reserve Bank may cut interest rates as early as next month. The kiwi was trading at 74.74USc at 5pm in Wellington, from 74.86USc at the New York close last week and 75.03 cents at 8am this morning. At the start of the week, nine currency advisers in a BusinessDesk survey predicted the kiwi would fall, while three said it would probably remain largely unchanged, and none picked it to rise... Read more

PMI slips in April as Australian weakness weighs on manufacturers. New Zealand manufacturing activity fell for the second consecutive month in April, while still remaining in expansion, as slowing economic growth in Australia weighed on trans Tasman firms... Read more

Budget 2015: Cuts to ACC levies tipped to relieve pressure on pockets... Read more

New tax measures aimed at speculators, overseas buyers. This week’s Budget will contain a suite of measures to bolster tax rules on property transactions and fund the enforcement of them – but will they have any impact on Auckland’s house prices?... Read more

PM makes major move on housing profits and foreign buyers. A capital gains tax on residential property sold within two years of buying it is being seen as a step in the right direction, but not far enough, with few expecting the new tax to have a big effect on Auckland property prices. Prime Minister John Key announced the plan this morning as part of the Budget package... Read more

Aucklanders about to lose equity in homes, Winston Peters says... Read more

Property Institute supports policy ‘tweaks’. Property Institute of New Zealand Chief Executive, Ashley Church, has applauded the suite of tax and property measures announced today – but says that they are more in the nature of welcome ‘tweaks’ than major policy changes and cautions that they will not impact on house price inflation in Auckland... Read more

Crackdown on money launderers by REINZ. Real estate companies are cracking down on money laundering after several buyers tried to purchase Auckland homes with cash deposits worth hundreds of thousands of dollars each. Industry leaders have agreed to halt sales to any buyer who does not have proper identification at the time of purchase... Read more

Commerce Commission to hold conference on wool scouring authorisation. The Commission will hold a one day conference on Wednesday 10 June 2015 to discuss matters relating to Cavalier Wool Holding Limited’s application for authorisation to acquire New Zealand Wool Services International's wool scouring business... Read more

New Zealand wool auction volumes are set to increase 83 percent next week as farmers who had been holding out for better prices put their bales on the market. Some 10,000 bales of wool are scheduled to be offered at next week's South Island auction, up from 5,469 bales at this week's auction in the North Island yesterday and 6,346 bales on offer in the South Island last week, according to AgriHQ... Read more

'They've lost my vote' - taxpayers not happy with Government over Saudi sheep fiasco. Taxpayers have been "kicked in the guts" by the Government after it was revealed a proposed rule about animal safeguards was deleted when requested by a Saudi businessman. The story comes after ONE News previously revealed taxpayers gave the same Saudi businessman $6 million worth of farm equipment for his sheep breeding operation.... Read more

Meat processor Alliance Group aims to slash energy use... Read more

Fonterra told to step up to plate. Fonterra's strategy has to start delivering or its market share will shrink further, says Federated Farmers Otago dairy chairman Stephen Crawford... Read more

NZX halts trading in dairy derivatives on information errors over GDT forecast offer. NZX Regulation, the supervisory arm of the stock market operator, has placed a trading halt on dairy futures and options after technical errors led to discrepancies in information detailing how much product Fonterra Cooperative Group plans to offer in next week's GlobalDairyTrade auction, a benchmark for the derivatives... Read more

Domestic New Zealand wine sales soared 18 per cent in the year to March following a bumper 2014 vintage. New Zealand Winegrowers figures show nearly 60 million litres of New Zealand wine was sold domestically. New Zealand Winegrowers has about 850 grower members and 700 winery members... Read more

New P2P lender LendMe eyes 'golden years loans', farmers lending to farmers & ethnic Chinese lending to Chinese... Read more

A 9.9 per cent average rates rise for Auckland households from July is going down badly with residents and ratepayer groups. Several groups believe the council sprang a targeted rate for transport on ratepayers without fairly signalling it during consultation on the new 10-year budget... Read more

Auckland firm Healthpoint says an online emergency planning tool it has developed for small businesses fills a gap that the Government was warned about three years ago. But another company which helps larger companies get back up and running after crises, Plan B, feared Healthpoint might be banging its head against a brick wall of complacency getting small businesses to take emergency planning seriously.... Read more

Mega's legal guns shoot down claims of 'content theft'. Mega, the file storage and encryption firm, has rebutted claims that it operates as a 'cyberlocker' profiting from "content theft" with a legal opinion by Olswang calling the allegations "defamatory"... Read more

Choice Hotels CEO Trent Fraser impressed with New Zealand hotel trade. NZ hotel trade best in a decade.... Read more

Compressed air comes to fore as method of storing wind, solar energy. A technology used in ancient Greece to power clocks and fire a cannon is undergoing a revival as a way to store energy from wind turbines and solar panels... Read more

Hi-Tech Awards 2015 winners named... Read more

CyberArk Helps Vodafone Secure & Manage Privileged Accounts... Read more

Former Rich Lister Michael McGurk's appeal bid fails... Read more

Opinion - Andrew Bascand: Banks at a turning point. At the height of the GFC, in the eye of the storm, banking stocks were hardest hit. Since then, Australian bank shares have bounced back strongly, buoyed by strong earnings growth and the ability to pay generous dividends. However, the environment for banks is becoming more challenging, and perhaps less certain for equity investors... Read more

Opinion - Bernard Hickey: Watch that LVR twist. Watching the Reserve Bank grapple with the housing market over the past two years has been like watching someone blowing up a long, thin party balloon and trying to twist it into one of those sausage dogs... Read more

Opinion - David Farrar: Treasury on ETS vs carbon tax... Read more

Opinion - Rodney Dickens: The growing calls for OCR cuts... Read more

New Zealand Herald Editorial: Two Budgets ocean apart in message. A lack of confidence is not commonly associated with Australians. In that particular trait, they usually leave New Zealanders trailing in their wake... Read more

Australian Headlines

Australian Market Report: The Australian share market is expected to open the week flat ahead of the first surveys of consumer confidence since the federal budget. The market gained nearly 0.7 per cent on Friday but it was considered disappointing given the stronger leads provided by European and US markets... Read more

Australian dollar slips back below US81c... Read more

Federal budget 2015: Cut income tax, says Treasury Secretary John Fraser... Read more

Economists struggled to find much economic meaning in the budget this week.... Read more

The coalition says Labor's proposed five per cent corporate tax cut and HECS-free science degrees will put at least a $54 billion hole in the budget. In his budget reply speech, in a bid to kickstart innovation, Opposition Leader Bill Shorten offered a bipartisan deal on a 25 per cent corporate tax rate and pledged 100,000 science and maths students would not have to pay HECS under a Labor government... Read more

Budget 2015: Will the small business tax breaks boost economic growth? There are doubts about whether the Federal Government's $20,000 instant asset tax write-off for small business will have the hoped for economic benefits and accountants are urging small business owners not to rush into new purchases... Read more

House prices in Sydney and Melbourne are reaching worrying territory, says the head of Australia’s corporate watchdog. Australian Securities and Investments Commission (ASIC) chairman Greg Medcraft told The Australian Financial Review the self-managed super industry is especially exposed to a correction in property prices... Read more

Home loan size surges as buyers pile on debt. First home buyers in NSW are loading up on nearly 25 per cent more debt than they were when the Reserve Bank began cutting official interest rates, as buyers scramble to get a foot in the door as house prices soar... Read more

Iron ore inquiry push divides federal Cabinet; two ministers fear damage to trading relationships... Read more

Despite a downturn in commodity prices, the Queensland government will still heavily rely on the emerging $70 billion liquefied natural gas industry to boost state coffers.... Read more

A WA-focused explorer has been convicted and fined following an ASIC investigation. Sydney-based Global Metals Exploration has been fined $8400 for failing to meet its obligations as an ASX-listed company.... Read more

Sandfire Resources has revealed that POSCO Australia has sold its 15.2% stake in Sandfire via an institutional block trade completed this morning at an average price of $5.43 per share. The stake is worth circa $129 million... Read more

Atlas strikes deals to resume mining. Atlas Iron will resume operations at all its Pilbara iron ore mines after striking deals with its contractors to cut costs and securing some relief from a slightly higher iron ore price... Read more

Stratum Metals has been granted an ASX trading halt in relation to a capital raising... Read more

Mining billionaire Andrew Forrest has emerged as a new investor in rival Atlas Iron, despite continuing to serve as the chairman and major shareholder in Fortescue Metals Group. Speaking after Atlas announced a strategy to restart mining through lower contracting fees and an equity raising of up to $180 million, the miner's chairman David Flanagan revealed that Mr Forrest had promised to participate in the raising... Read more

Rio worries what signal ore inquiry sends. PM says government is 'not in the business' of interfering with free markets... Read more

Suncorp bank chief John Nesbitt says outsourcing to India helps protect Aussie firms, Finance Sector Union slams overseas contracting. Suncorp's banking chief has defended outsourcing work to India, saying a failure to embrace globalisation would ultimately cost more jobs for Australia. John Nesbitt, speaking at a Trans-Tasman Business Circle function in Brisbane on Friday, described how firms had masses of data but needed overseas partner companies who could crunch that data in different ways... Read more

The Abbott Government has struck a $19-billion deal for pharmacies to dispense taxpayer-subsidised medicines for the next five years. Government sources have confirmed a letter of intent has been signed with the Pharmacy Guild of Australia that sets out the major elements of the sixth Community Pharmacy Agreement... Read more

Children of working mothers do better, says Harvard Business School study. Working mums have daughters who are better educated and higher earning while their sons do more housework and childcare, according to analysis of gender divisions in 25 developed countries including Australia.... Read more

Queensland's environment department has hired a private investigator to find the source of an alleged leak of government information to the ABC. The investigator, Bryan Cook of Ashdale Workplace Solutions, contacted the broadcaster this week seeking to interview Mark Willacy of the ABC's National Reporting Team... Read more

Covino Farms: Food company at centre of 'slavery' scandal continues to work with disgraced contractor... Read more

Opinion - Bill Evans: Weekend Economist: Short-circuiting the dollar's surge... Read more

Opinion - Alan Kohler: Budget 2015: You call yourself an 'infrastructure prime minister'? For an "infrastructure prime minister", Tony Abbott's efforts have been pathetic, especially since paying back borrowed money has never been quicker and he could do it all without hurting the budget bottom line, writes Alan Kohler... Read more

Opinion - Marcus Padley: Deadly sharemarket sins... Read more

International Headlines

U.S. Market Report: May Selling on Hold With U.S. Stocks at Record After Weekly Gain. Equities traders aren’t quite ready to sell in May. The Standard & Poor’s 500 Index climbed to a record as U.S. stocks eked out a weekly gain after a weaker dollar boosted shares of multinational companies and a selloff in global bond markets eased... Read more

North/South Americas Market Report: North and South American markets finished higher on Friday with shares in Brazil leading the region. The Bovespa is up 0.80% while Mexico's IPC is up 0.46% and U.S.'s S&P 500 is up 0.08%... Read more

European Market Report: European markets finished mixed to lower as of the most recent closing prices. Shares in Germany fell as the DAX dropped 0.98%. The CAC 40 lost 0.71% while the FTSE 100 in London closed unchanged... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 1.93% and the Nikkei 225 rose 0.83%. The Shanghai Composite lost 1.59%... Read more

Outlook brighter, but not enough yet for higher rates. Prospects for a step-change in global economic growth are better than they have been in many years, but much depends on solid evidence that an awful first quarter for the United States is far in the rear-view mirror... Read more

Analysts slash US growth forecasts. Forecasters have sharply lowered their outlook for US economic growth after a raft of weak data, according to a survey of economists from the Federal Reserve Bank of Philadelphia released Friday... Read more

The U.S. dollar has slumped lately following a breath-taking rally. Since mid-April, the dollar has declined by 7% versus the euro and 6% versus the British pound, moving back to levels last seen around January. The greenback enjoyed its fastest rise in 40 years in the back half of 2014 and early 2015... Read more

Stocks leave consumers in the dust. But can it last? The stock market is powering ahead, without waiting for slow-poke consumers to catch up. Wall Street advanced to fresh all-time highs last week despite mounting evidence that the American economy isn't all it's cracked up to be... Read more

What to look for in Wal-Mart earnings... Read more

Amid boom, fears of too many $20 million Manhattan apartments. It’s getting crowded at the top of Manhattan’s apartment market. As condo developers chase billion-dollar paydays through the construction of luxury dwellings, the cranes dotting the city are sparking fears of a supply glut.... Read more

Maryland regulators Friday voted 3 to 2 to approve Chicago-based Exelon’s proposed $6.8 billion acquisition of utility company Pepco Holdings, ending a year-long battle between state officials, environmentalists and the companies... Read more

Shares of the maker of popular mobile game Candy Crush fell as much as over 14% in after hours trading after it warned of weaker profits. King Digital said it expects fluctuations in foreign currency and a lack of new releases to hold back its earnings in the current quarter. The big drop in its shares came despite the release of first quarter sales figures that beat market expectations... Read more

Blue Bell Will Lay off 1,450 Employees. Texas ice-cream maker will put another 1,400 workers on partially paid furlough, cut pay for others... Read more

Greece’s government said it won’t back down on election pledges to end austerity even while seeking to agree on a deal with creditors as soon as this week to unblock financing and avert a default... Read more

Nomura Holdings Inc. and Royal Bank of Scotland Group Plc were ordered to pay $806 million in damages to government-owned mortgage companies over misleading securities pitches. A federal judge in New York on Friday ordered the banks to pay the full amount requested by the Federal Housing Finance Agency. U.S. District Judge Denise Cote earlier found the banks liable for “enormous” deception in the sale of mortgage-backed securities... Read more

Pound’s Post-Election Rally Is Seen Challenged Into Second Week... Read more

The Co-operative Group is to relaunch its membership programme next year with the aim of making its customers more engaged with the business, which runs supermarkets and funeral homes. Speaking at the Co-op’s annual general meeting, Richard Pennycook, the chief executive, said a series of pilot programmes would begin around the country during the summer with a view to making customers want to take out membership... Read more

Israeli Banks’ Rally at Risk as Price Chart Defies Bullish View... Read more

The Russian economy has contracted in the first three months of 2015 because of low oil prices, weaker spending and sanctions from the West. It shrank by 1.9% between January and March compared with the previous year, according to the Russian statistics agency. That compares to annual growth of 0.4% in the previous quarter.... Read more

Foreign direct investment into China jumped more than 10 percent year-on-year in April, the commerce ministry said Friday, accelerating significantly from previous months despite slowing growth in the world's second-largest economy... Read more

Alibaba sued over alleged counterfeits... Read more

Air bag manufacturer Takata Corp and Japanese carmakers including Honda Motor Co are locked in the commercial equivalent of a bad marriage; not entirely happy in each other's company but unable to break apart and wary of potentially costly court battles... Read more

Indonesia posts trade surplus but growth outlook bleak... Read more

India has signed trade and economic co-operation deals worth $22bn ($14bn) in Shanghai as PM Narendra Modi's visit to China draws to a close. The agreements cover a range of industries including renewable energy, the financial sector and ports... Read more

Modi Makes it Easier for Chinese Tourists to Travel to India... Read more

India beats own target to contain fiscal and revenue deficits. India's government said on Sunday it managed to better its target for containing the fiscal and revenue deficits in the last financial year... Read more

Opinion - Barry Eichengreen: Wanted: a new economics to fit the facts. Effective policies today require increasingly complex models that can more fully capture the chaotic dynamics of the twenty-first-century economy... Read more

Opinion/Analysis - Allan Sloan: Be mindful of fees when investing in a hedge fund or private equity fund... Read more

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