ASB Securities Morning Brief for Thursday, 27 August 2015
Thursday, 27 August 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell as investors continued to fret over China's economic outlook. Auckland International Airport led the market lower, while Metlifecare declined after reporting its annual earnings. The S&P/NZX 50 Index dropped 33.41 points, or 0.6 percent, to 5577.78. Within the index, 31 stocks fell, 15 rose and four were unchanged. Turnover was $193 million... Read more

The New Zealand dollar held near the goldilocks level of 65 US cents as investors remained on edge as China's central bank cut interest rates in a bid to shore up sentiment after the stock market rout through the start of the week. The kiwi rose to 64.93 US cents at 5pm in Wellington from 64.78 cents yesterday, and was almost unchanged from 64.97 cents yesterday. The trade-weighted index was little changed at 70.12 from 70.01 yesterday... Read more

AA says petrol headed below $1.80 on back of stock market turmoil... Read more

Dairy downturn casts a dark shadow over economy- NZIER... Read more

New Zealand’s official cash rate will be reviewed less often in coming years. The Reserve Bank has released its schedule for OCR decisions in 2016 and 2017. Instead of reviewing eight times a year, it has signalled it will review it just seven... Read more

NZ trade deficit smaller than expected in July on gains in fruit, meat exports... Read more

The Reserve Bank is looking at policies governing banks' outsourcing of some services after a stocktake of lenders' practices last year found a range of interpretations of the rules. The central bank has issued a consultation document and wants feedback on proposals to more tightly define what functions should be covered by the outsourcing policy, how lenders should interact with the RBNZ, and whether the threshold used for the outsourcing policy should match the open bank resolution (OBR) policy... Read more

English says Government has room to loosen fiscal policy if hard landing in China increases risk of recession; also says RBNZ has much more room to cut given OCR is at 3%... Read more

IRD estimates Government's trumpeted new tax on properties sold within two years will raise just $5 million a year in extra revenue... Read more

Auckland house prices due for a 'relative fall'. ANZ economists see regional house prices as likely out-performing those in the country's largest city in the near term... Read more

Kiwis who have worked in Australia are being warned: Don't let your savings get sucked into an Australian Taxation Office (ATO) black hole. It is common for people who have worked across the ditch to have a number of superannuation savings accounts, from different employers. That has created a problem of "lost" accounts, those where contributions have stopped but the savers cannot be contacted... Read more

FSC takes issue with NZIER report showing KiwiSaver not delivering value. KiwiSaver's $1000 kickstart incentive was removed on the basis of inaccurate information, an industry lobby group has argued. It was announced in this year's Budget that the kickstart would be axed, after a Treasury report recommended a wider review of the scheme... Read more

NZ on track to fill US beef export quota for first time in 11 years... Read more

Consents lodged for Fonterra's Studholme plant upgrade... Read more

Sites earmarked for Auckland schools have been sold off for almost $20 million in the past two years, with much of the land going to housing developers. Information released under the Official Information Act to Labour shows four sites marked for educational use were sold since February last year, two on the North Shore and two in South Auckland... Read more

SkyCity Entertainment Group may raise more capital selling notes in the US private placement market after completing the sale of as much as $125 million of seven year bonds next month that it plans to use to repay bank debt. Standard & Poor's today assigned a BBB- rating to the casino operator's bond sale, which is to open on Sept. 3 and close on Sept. 22. That matches SkyCity's corporate rating, which S&P said reflected "the group's solid market positions underpinned by long-term exclusive casino licences in its key markets, good asset quality and resilience to economic cycles." SkyCity shares fell 1 percent to $3.95 and have gained 2.8 percent this year. ... Read more

Metlifecare lifts profit as property values jump... Read more

Kathmandu restructure could cut 10 percent of head office employees... Read more

TeamTalk, the listed telecommunications company, reported a 53 percent drop in annual earnings as sales fell across its radio and broadband network operations, in what it said was a "tough year." The shares were unchanged at 80 cents and have declined 53 percent since the start of the year. ... Read more

Air NZ boss labels Qantas 'Air Sydney', hails own airline's outstanding results. Air New Zealand boss Christopher Luxon has hailed the airline's "superior commercial results" after it increased earnings by 49 per cent to $496 million before tax for the 2015 financial year.... Read more

Air NZ fare cuts point to domestic battle with Jetstar... Read more

Wellington Drive narrows first-half loss as Latin America, weak kiwi drive sales growth. The shares rose 3.3 percent to 6.2 cents, valuing it at $13.9 million... Read more

Ebos posts gain in full-year profit... Read more

University of Canterbury (UC) announces half-year result. The University of Canterbury’s six-monthly result to the end of June shows sound financial performance as it continues to deliver research excellence and high-quality education to students, while managing many diverse issues arising from remediation, recovery and rebuild projects... Read more

Goodman Property Trust has put five of its Christchurch sites up for sale as the listed property investor embarks on up to $150 million worth of new development. Goodman units rose 0.4 percent to $1.195 and have gained 4.4 percent since the start of the year. ... Read more

Lyttelton Port says it is hoping a new owner will take charge of Solid Energy's Stockton mine, with the miner put into voluntary administration earlier this month. Peter Davie, chief executive of Lyttelton Port of Christchurch, said volumes of coal flowing through the port had remained steady since the announcement of administration on August 13. The Christchurch City Council-owned port company is a creditor of Solid Energy, which continues to be controlled by administrators as agreed by creditors at a meeting in Christchurch this week... Read more

Marsden Maritime Holdings, formerly Northland Port Co, reported a flat annual profit as the volume of logs it processed was little changed from a year earlier. The Whangarei-based company’s profit was $8.39 million in the year ended June 30, from $8.33 million a year earlier. Revenue rose 2.1% to $10.8 million... Read more

Coast trust grows fund to $126m. The trust tasked with maintaining a major West Coast compensation fund grew its total assets by over $5 million and made loans of $7m this year. Development West Coast (DWC) released its annual report on Tuesday at a public meeting in Westport... Read more

Richard James, chief executive of NZ Funds, said New Zealand's regulatory focus needed to shift away from scrutiny of the suitability of individual products to look at portfolios in their entirety.... Read more

Spark boss Simon Moutter rewarded after another 500 staff leave business. Spark has axed more than 500 jobs during the past year and chief executive Simon Moutter has been rewarded for the cost-savings through his bonus. Spokesman Andrew Pirie said more job cuts were possible after the company releases tools that will let customers do more self-service online... Read more

Metro Performance Glass expects first-half profit to be below its prospectus forecast as capacity constraints in New Zealand's construction industry weighs on the country's largest glass processor. Profit will be between $10 million and $11 million in the six months ending September 30... Read more

The Commerce Commission has published a statement of preliminary issues relating to an application from B100, a newly incorporated subsidiary of Swedish refrigeration group Beijer Ref AB (Beijer), to acquire the business and assets of Realcold Limited (Realcold).... Read more

Wellington city councillors' travel perks to come under greater scrutiny... Read more

Penalised South Canterbury farming syndicates named. Land Information New Zealand (LINZ) has named the South Canterbury farming syndicates which paid $173,400 in foreign investment penalties. Overseas Investment Office team manager Samantha Naidoo confirmed on Tuesday the names of six farming syndicates which broke the Overseas Investment Act 2005 and Overseas Investment Act 1973... Read more

Opinion - Roger J Kerr: Low spread to US bonds unsustainable. Roger J Kerr sees a potential double-whammy interest rate risk with NZ Govt bond yields rising from 3.25% to over 4.75% over the next year... Read more

Opinion/Analysis - Rob Stock: KiwiSaver and ethical investing... Read more





Australian Headlines

Australian Market Report: The Australian market rose in tandem with its Chinese peers today after fresh stimulus from the People’s Bank of China. Overnight, the People’s Bank of China cut interest rates by 25 basis points, bringing down the one-year lending rate to 4.6 per cent and the deposit rate to 1.75 per cent. It also cut the reserve requirement ratio, which sets how much capital banks must hold. At the official 4.15pm (AEST) official market close, the benchmark S&P/ASX200 had gained 35.5 points, or 0.69 per cent, to 5172.8, while the broader All Ordinaries had lifted 35.1 points, or 0.68 per cent, to 5178.9.... Read more

The Australian dollar has moved further below US72 cents despite briefly surging as high as US72.5c on news of a rate cut in China. At 7.15am (AEST), the local unit is trading at US71.27c, down from US71.82c at the close of local trade... Read more

National Reform Summit: We are 'sleepwalking into a real mess', says ex-Treasury boss Martin Parkinson... Read more

Reserve Bank boss Glenn Stevens believes the budget debate should focus on how to increase tax revenue by lifting economic growth, rather than the distribution of the proceeds... Read more

Australian mortgage delinquency rate falls... Read more

Mining towns feel pain of rising mortgage arrears: Fitch Ratings. Job cuts in the resources sector are causing more households in mining regions to fall behind on their home loans, highlighting the risk to banks from the commodities slump. Mortgage arrears rates are rising in mining regions across Queensland, Western Australia and the Northern Territory, Fitch Ratings said, due to deep costing cutting by miners... Read more

Pilot Energy receives US$3.7M payment from Alaska... Read more

Pacific Niugini director Peter Cook in $235,000 share purchase... Read more

Foy Group, formerly Foyson Resources, has advised that acquiree company Integrated Green Energy has executed a non-binding agreement with a U.S. company to provide technology for construction of a Waste Plastics to Fuel facility in Houston, Texas. The facility is being planned to process 1,500 tonnes per day of waste plastics... Read more

Fresh from exiting WA, Apache has taken Woodside Petroleum to court seeking at least $90 million it alleges is owed on the sale of a 13 per cent stake in the Wheatstone LNG development... Read more

The head of Woodside Petroleum’s technology arm says he has been stunned by the sudden scale and penetration of technology within the business, with the oil and gas giant now hosting bigger data platforms than Silicon Valley heavyweights such as Twitter... Read more

Write-downs of almost $200 million have dragged the global resources engineering business Worley Parsons to a net full-year loss of $54.9 million. The loss compared to last year's $249 million net profit... Read more

The pressure is mounting on retailing giant Woolworths to provide some detail on its progress in overhauling the board as the betting intensifies on who might take the all-important role as the new chairman. Woolworths has confirmed it was holding a board meeting on Wednesday afternoon but wouldn't be drawn on whether board succession was on the agenda. Chairman Ralph Waters is reported to have said he wants to make the announcement before Friday... Read more

The Commonwealth Bank got close to the benchmark a few months ago, but yesterday vitamin maker Blackmores punched through the $100 share price.... Read more

Shopping centre operator Westfield will meet its full year guidance despite a delay in opening its World Trade Center flagship. Westfield Corporation, which spun off the now separately listed Scentre Group in 2014, made a net profit for the six months to June 30 of $US466 million. Funds from operations of $US380.3 million were in line with its forecasts. Westfield shares dropped four cents, or 0.4 per cent, to $9.48.... Read more

Greencross shares dive after shock resignation of CEO Jeffrey David. Shares in Greencross took a beating after the shock resignation of the vet clinic and pet shop operator’s chief executive. CEO Jeffrey David, who owns $45 million worth of Greencross shares, announced on Wednesday he’ll be stepping down from the top job “effective immediately” and will be replaced by chief financial officer and Greencross veteran Martin Nicholas... Read more

Packaging company Orora has lifted full year profit 25.9 per cent, on a pro forma basis, and forecasts improved earnings... Read more

Packaging group Pact eyes more buyout deals as profit grows. Pact Group is mulling further buyouts after posting a strong lift in full-year profit and flagging an increase in revenue and earnings this financial year. Australia's biggest plastic packaging manufacturer has posted a profit of $67.63 million for the year to June — a 17.2 per cent increase on $57.69 million a year earlier. Revenue in the period rose 8 per cent to $1.253 billion... Read more

Year of transformation for Seven Group. The mining slump has contributed to Kerry Stokes' Seven Group Holdings posting a 19 per cent fall in underlying profit to $204 million.... Read more

The ramp-up of defence shipbuilding programs in the United States and Australia has bolstered Austal’s annual profit by 67 per cent to $53 million. The company had record revenue of $1.41 billion, up 26 per cent... Read more

Jumbuck Pastoral is taking the shears to its vast land holdings with the sale of one of WA’s last great sheep stations. Madura Plains, covering an area bigger than Brunei and straddling part of the Eyre Highway mid-way between Perth and Adelaide, is expected to fetch about $10 million... Read more

NewSat: Leaked video reveals NewSat board room stoush.... Read more

Opinion - Antony Cahill: Australia's infrastructure challenge requires serious reform... Read more

Opinion - Malcolm Maiden: There are two market slumps: only one matters. The Chinese sharemarket can turn down without sinking the global markets. It's China's economy that needs propping up... Read more





International Headlines

U.S. Market Report: U.S. stocks jumped higher on Wednesday even as deep concerns about China's impact on the global economy continue to hang over the market. The Dow was up about 400 points with less than two hours of trading remaining. Investors are wondering whether the big gains will stand -- or whether a repeat of Tuesday will occur. That's when a 442-point surge on the Dow turned out to be a big head fake, with the rally turning into a selloff by the end of the day... Read more

North/South Americas Market Report: North and South American markets are mixed. The S&P 500 is higher by 2.46%, while the Bovespa is leading the IPC lower. They are down 0.73% and 0.26% respectively... Read more

European Market Report: European markets finished sharply lower today with shares in France leading the region. The CAC 40 is down 2.81% while London's FTSE 100 is off 1.68% and Germany's DAX is lower by 1.29%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 3.20%, while the Hang Seng led the Shanghai Composite lower. They fell 1.52% and 1.27% respectively... Read more

Oil prices turned higher Wednesday but remained near six-year lows ahead of the latest US energy report after jitters over China's faltering economy spurred heavy losses this week, analysts said. US benchmark West Texas Intermediate for October delivery rose 28 cents to $39.59 and Brent crude for October added 29 cents to $43.50 in late-morning Asian trade. Both contracts gained on bargain-hunting Tuesday, after plummeting to their lowest levels since early 2009 a day earlier as investors fret about falling demand in the face of a world supply glut... Read more

Copper tumbles below $US5000 mark... Read more

Ray Dalio, the billionaire founder of Bridgewater Associates, said he expects the U.S. Federal Reserve to resume quantitative easing even if it first raises benchmark rates by a fraction of a percent... Read more

A top Federal Reserve official says the economic turmoil in China has eroded the argument for raising interest rates in September. The need to begin normalising monetary policy next month "seems less compelling to me than just a few weeks ago", William Dudley, head of the Fed's New York branch and a voting member of the rate-setting Federal Open Market Committee, said... Read more

Federal Reserve official, William Dudley, has said that a rate rise in September now "seems less compelling" than it was a few weeks ago. New York Fed president Mr Dudley said economic turmoil in China had made the case for a rate rise harder to make... Read more

Federal Reserve Bank of New York President William Dudley said Wednesday the region his bank watches over is doing well economically. ... Read more

$2.1 trillion erased from U.S. stocks in 6 days... Read more

Wal-Mart to Stop Selling Military-Style Guns After Demand Drops... Read more

Schlumberger to acquire Cameron in $14.8 billion deal... Read more

Google's stock upgraded to buy at Goldman Sachs... Read more

The European Central Bank is ready to expand or extend its quantitative-easing program if needed as a slump in commodity prices and risks to global economic growth threaten its inflation goal, said Executive Board member Peter Praet. “Developments in the world economy and in commodity markets have increased the downside risk of achieving the sustainable inflation path toward 2 percent,” Praet told reporters on Wednesday in Mannheim, Germany. “There should be no ambiguity on the willingness and ability of the Governing Council to act if needed.”... Read more

The risk of a lengthy period of very low inflation in Europe has intensified due to falling commodity prices and slower growth in emerging markets, European Central Bank chief economist Peter Praet has said... Read more

Greek president expected to call election on Friday... Read more

McDonald's UK boss says zero-hours contracts are fair... Read more

Paddy Power and Betfair Group have agreed to a near $US8 billion merger to create an international sports betting and online gambling group with leading positions in the UK, parts of Europe and Australia... Read more

Bonuses paid to UK workers during the year 2014-15 were close to the level they had been at before the financial crisis, new official figures show. The Office for National Statistics (ONS) says that in cash terms, bonuses were just 0.1% below their record level reached in 2007-08. In the finance and insurance sector, they were below pre-downturn levels... Read more

Airbnb to start collecting tourist tax in Paris... Read more

Don't panic! China has problems, not a crisis. What's happening in China is worrisome. But many economists say there's no reason to panic. Sure, stock markets are very ugly. The Shanghai Composite has plunged more than 40% from its mid-June peak. Its little brother, the Shenzhen Composite, has fared even worse. While Beijing has tried very hard to stop the bleeding, nothing seems to be working... Read more

China August official factory PMI seen shrinking to three-year low... Read more

China signs deal with Africa's richest man, Aliko Dangote. A Chinese state-owned engineering company has signed a deal worth $4.3bn (£2.8bn) to build factories for a Nigerian cement company run by Africa's richest man, Aliko Dangote.... Read more

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