ASB Securities Morning Brief for Tuesday, 24 November 2015
Tuesday, 24 November 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose to a new record close, led by a2 Milk Co as Australian investors continued to back growing demand for the milk marketer's infant formula, and as Ryman Healthcare extended its rally from upbeat earnings last week. The S&P/NZX 50 index rose 69.1 points, or 1.2 percent, to 6,077.62, outperforming other markets across Asia. Within the index, 41 stocks gained, four declined, and five were unchanged. Turnover was $170.2 million... Read more

The New Zealand dollar rose to a month high against the euro after comments by European Central Bank president Mario Draghi stoked expectations the bank may add more stimulus to boost the regional economy. The kiwi touched 61.77 euro cents, and was trading at 61.58 cents at 8am in Wellington, from 61.46 cents at 5pm on Friday. The local currency slipped to 65.56USc from 65.63USc at the New York close and 65.87USc cents on Friday in Wellington after New York Federal Reserve head William Dudley reiterated comments from other Fed officials that the US should "soon" be ready to raise interest rates... Read more

Migration inflow up – again. New Zealand’s net gain of migrants in the year to October 2015 smashed yet another record to hit 62,477, according to Statistics New Zealand’s latest data. This is up from last month’s net gain of 61,234 migrants... Read more

The grass is no longer greener in the Lucky Country with the latest migration figures showing a net gain of migrants from Australia for the first time in 24 years.... Read more

The New Zealand housing market may now be overvalued by as much as 40%, with an increasing risk of a sharp correction in prices, according to finance house First NZ Capital. First NZ director of economics and strategy Chris Green in a comprehensive NZ House Prices Strategy Update has gone back years through house pricing data and come up with three potential scenarios on the future direction of house prices - with the "medium scenario" suggesting a possible 11% drop in prices over a period of about two-and-a-half years up to June 2018.... Read more

ASB economists change call and now pick low point for official interest rates of 2% next year; rate cut next month 'a done deal'... Read more

SBS offers a home loan rate under 4%... Read more

ASB, BNZ rake in a combined NZ$900 million through bond issues... Read more

Leading academic joins chorus of calls for rental property warrant of fitness (WOF). Urgent and robust regulation of New Zealand’s private rental market is needed, according to University of Otago Professor Philippa Howden-Chapman. In a new publication, Home Truths: Confronting New Zealand’s Housing Crisis, Howden-Chapman said that, in the 2014 General Health Survey, almost half of New Zealanders living in rental housing reported that their houses were damp or mouldy.... Read more

Traditional living in for changes. Auckland councillors are going behind closed doors today to propose rezoning thousands more houses in the city's leafy suburbs for multiple townhouses and apartments.... Read more

The Government has put out a call for expressions of interest in buying states houses in Tauranga and Invercargill.... Read more

Housing Minister Nick Smith and Auckland Mayor Len Brown today announced an extension to the city's special housing areas, which they say will add potential for another 1,100 homes to be built in the fast-track zones... Read more

Fidelity Life is the latest insurance company to resign from the Financial Services Council.... Read more

SuperRatings Awards Platinum to all ANZ KiwiSaver Schemes... Read more

New Zealand is about to launch its first variable annuity with guaranteed lifetime withdrawal benefits. The product design is mindful of the lessons from the financial crisis in the US, Europe and Japan... Read more

AMP KiwiSaver Scheme receives Platinum rating... Read more

New Image Group seeks investment to expand infant formula manufacturing. NIG Nutritionals, the manufacturing arm of nutritional and health marketer New Image Group, is seeking to sell up to half the company to raise money to expand its infant formula manufacturing, following strong demand from China and wider Asian markets... Read more

Beef + Lamb New Zealand Ltd is calling for nominations to stand for two farmer-elected director positions on its board, and also as directors of the New Zealand Meat Board (NZMB). The positions are to be elected for the B+LNZ regions of the Western North Island and Central South Island... Read more

Today, following the close of voting in the 2015 Fonterra Elections, which saw record Shareholder voting, it has been confirmed that one new Director and two new Shareholders’ Councillors will take office following the Fonterra Annual Meeting on Wednesday... Read more

Fonterrra chairman John Wilson comfortably re-elected... Read more

Intueri says Tertiary Education Commission review may dent 2015 earnings by $5M... Read more

Bunnings NZ reports big uplift in annual profit on DIY and building boom... Read more

Retirement village repays debt and is now set for grand expansion. Holly Lea, the Fendalton retirement village which attracted publicity earlier this year around its financial difficulties, has fully re-paid its debt to the bank. After realising other investments, The McLean Institute Charitable Trust recently repaid all monies owed by Holly Lea to the Southland Building Society... Read more

The New Plymouth District Council has bought a fight with ASX listed TasFoods after cancelling the sale of Australia's largest dairy supplier, which the district council owns, in favour of a foreign buyer that emerged after a sale to TasFoods had been announced... Read more

Evolve Education Group shares jumped to a five-month high after the childcare operator said its first profit was in line with forecast annual earnings... Read more

Tourism Holdings is scouting for new investment opportunities in campervans overseas and is starting a shared economy service matching any RV owner with renters. The company said New Zealand makes up about 50 per cent of its business now but that was likely going to decline as a percentage. The company's shares have performed strongly during the past year rising from $1.60 12 months ago to a high of $2.30 earlier this month. They closed yesterday at $2.28... Read more

Tourism Holdings sees 10% lift in 2016 profit... Read more

Metro Performance Glass, the country's biggest glass processor, reported first-half earnings in line with its reduced guidance as capacity constraints in the construction sector squeezed its margins, even as sales came in better than expected. Net profit was $11 million, or 5.9c per share, in the six months ended September 30, the top end of the $10-11 million range projected at its August annual meeting when it said it would miss the $12.1 million forecast in its prospectus last year. That was on sales of $94.9 million, beating the $94.1 million forecast... Read more

The outcome of Scentre New Zealand's application for non-notified consent to almost double the size of Westfield St Lukes could be revealed today. Linda Cooper, chairperson of the Auckland Council hearings committee, said there was a seven-day decision period after last week's hearing... Read more

Cloud accounting software company Xero is ramping up its efforts to build a "financial web" that will provide its small business customers with options for financing their growth. Xero is in a unique position to know about its customers' funding needs: all of their financial data sits in the Xero cloud... Read more

NZX listed company Orion Health has announced the employment of globally renowned partnership and healthcare expert Kate Reid, as its Director of Strategy and Partnerships, New Zealand. Reid joins the organisation from Atlantis Healthcare, where she was Managing Director of the New Zealand business for the past two and a half years and was responsible for overall logistics, programme implementation and ROI. Prior to this, she was Managing Director for Atlantis Healthcare in the United Kingdom... Read more

Darren Linton has been appointed Chief Marketing Officer (CMO) of Yellow. He has returned home to New Zealand for the role after 16 years in the United Kingdom where he held senior level marketing positions with some of world’s biggest brands... Read more

Queenstown Lakes District Council chief executive Adam Feeley is quitting his job to become a consultant. The sometimes controversial former head of the Serious Fraud Office has told staff in a memo his three-year anniversary at the council has prompted a lifestyle re-think. He cited the demands on personal and family life... Read more

Auckland's central business district is home to 8500 businesses and about 65,000 jobs, making it the largest employment centre in New Zealand. Forming an integral part of Auckland's innovation corridor, this year's Westpac Auckland Business Awards Central award winners provide an indication of the great things we can expect in the near future from emergent, entrepreneurial and innovative businesses that call Central Auckland home... Read more

Megaupload defence 'an answer to nothing' - US. There is no “rot” and Kim Dotcom and his fellow Megaupload co-accused wanted to make money from copyright infringement, meaning their extradition remains a simple exercise, the lawyer for the US has told the Auckland District Court.... Read more

Van Heeren should have to appear, court told. Forcing Huka Lodge's owner to appear in the High Court and be questioned before a judge will get to the bottom of his financial affairs, says his former business partner's lawyer... Read more

The Supreme Court has given Mobil Oil leave to challenge a Court of Appeal decision that made it liable to pay $10 million to publicly-owned Waterfront Auckland for the cleanup of a heavily contaminated area of Wynyard Quarter in downtown Auckland... Read more

Opinion - Liam Dann: Counting cranes with the kids. 'Look at all the cranes," said the 10-year-old on the ride into the city. We counted about nine across the Auckland skyline. There's likely a few more obscured by buildings and hiding in the gullies. Regardless, it is a good sign that Auckland is feeling confident. Or at least that it is forging on with its property-led boom regardless of the downturn risk throughout the rest of the country.... Read more

Opinion - Philip Macalister: MJW report scores a D. Despite all the money spent on the MJW report and all the discussion the authors had with people in the life insurance industry its conclusions are flawed. Unfortunately though some may take the findings seriously... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has built on last week’s gains, closing higher as improvements in financial and consumer stocks outweighed resource sector selling. At the 4.15pm (AEDT) official market close, the benchmark S & P/ASX200 index was up 20.3 points, or 0.39 per cent at 5276.4, and the broader All Ordinaries index lifted 21 points, or 0.4 per cent, at 5326.5.... Read more

The Australian dollar has lost ground against a stronger greenback as traders become more comfortable with the likelihood of a US Federal Reserve rate hike next month. At 5pm (AEDT), the local unit was trading at US71.77 cents, down from US71.99 cents on Friday. Late on Friday night, it peaked at US72.51, its highest level since October 27... Read more

Turnbull returns to more questions on GST... Read more

Australia could learn from New Zealand’s lesson in the GST. People who fear that raising or broadening the GST will hurt Australians are being urged to look at our nearest neighbour. Despite anti-GST scare campaigns from Labor and the Greens, a News Corp Australia analysis has found that New Zealand — which increased its GST from 12.5 per cent to 15 per cent five years ago — has survived and thrived to be in better economic shape than Australia.... Read more

The Turnbull government is maintaining a healthy lead over Labor while Opposition Leader Bill Shorten's popularity continues to slump, the latest Newspoll shows... Read more

New rules boosting scrutiny of foreign investment in farms have passed the Senate after the Turnbull government struck a deal with the Greens. The deal clears the way for laws making the Foreign Investment Review Board screen investments in agricultural land worth more than $15 million, down from a threshold of $252 million... Read more

Australian housing affordability has deteriorated significantly as record low interest rates fail to offset rapid growth in house prices, a new report has found. Australian households with two income earners now spend more than 29 per cent of their monthly income on mortgage repayments, the report by ratings agency Moody's shows... Read more

Homeowners are enjoying the lowest interest rates on record, but housing affordability has worsened because of soaring prices in Sydney and Melbourne. And things could get even tighter for those with mortgages after the recent interest rate hikes by the big banks, credit agency Moody's warns... Read more

A pair of neighbours have become instant millionaires four times over after selling their parcel of three Melbourne properties to an investor. Two modest houses plus a vacant block on two titles at 671 and 673-675 Waverley Rd, Glen Waverley, delivered a $4.428 million payday to the owners when a local investor with plans to build townhouses swooped... Read more

New foreign investor rules pass Senate... Read more

Australia and India have cleared the way for uranium exports.... Read more

Latin Resources shares spiked as much as 43% Friday on the back of some encouraging traction in its efforts to establish a copper production business in Chile. The stock last closed 14.3% stronger at A$0.008... Read more

Metals X won’t back down on Aditya... Read more

Shares in Cove Resources were trading 33.3% higher than their opening price today as the company requested a trading halt regarding an acquisition. Cove stock was last trading at A$0.012, which represents a level 300% higher than at the beginning of September... Read more

Jervois Mining adds NT copper-gold to growing portfolio... Read more

NRW Holdings chief executive Julian Pemberton is looking forward to getting on with business after resolving a costly, protracted rail contract dispute with Samsung C&T over the Roy Hill iron ore project.... Read more

Avalon Minerals' substantial shareholder, Marilei International, has demonstrated its support for the company through the recent capital raising... Read more

Harvey Norman executive chairman Gerry Harvey has mounted a spirited defence of the retailer's board structure and executive remuneration ahead of a possible second strike and spill motion at the annual meeting on Tuesday. The Australian Shareholders Association has advised shareholders to vote against the remuneration report, citing unsuitable hurdles for short term and long term incentives and a lack of independent directors on the nine-person board... Read more

Freelancer completed the acquisition of California based earlier in the month, which is the leading provider of secure online payments and online transaction management for consumers and businesses on the Internet... Read more

Aspen Parks Property Fund (APPF) has pulled its endorsement of Aspen Group and recommended acceptance of Discovery Parks' rival all-cash offer. The turnaround follows Discovery's move on Friday to increase its offer by 5c to 63c a unit... Read more

Uber is closer to becoming legalised in NSW, but the state government says it's in no rush to regulate the controversial ride-sharing service. The NSW government has confirmed it has received the recommendations from an independent taskforce into the taxi industry and transport providers such as Uber... Read more

Shares in novelty confectionery group Yowie were higher after it signed a licensing agreement with the Finnish entertainment company responsible for the popular Angry Birds computer game... Read more

American data analytics giant Equifax appears set to swallow Veda Group after the Australian credit information provider's board unanimously backed its $2.4 billion takeover offer. Veda's board is urging shareholders to accept the Equifax's offer of $2.825 per share after entering into a binding agreement with Equifax... Read more

Former Woolworths boss Roger Corbett has been brought back into the fold as an adviser to the struggling retailer's board. Woolies announced Mr Corbett's appointment on Monday, saying he would be a mentor to senior managers as well as advise the board on the company's performance and ways to improve... Read more

A leading defence strategist has urged the Foreign Investment Review Board (FIRB) to consider national security, not just economics when it considers bids for the nation's largest electricity grid. The sale of the New South Wales poles and wires, or Transgrid, is estimated to raise $9 billion for the State Government... Read more

Goldman Sachs has secured the mandate to sell TPG and Carlyle’s stake in Healthscope for $2.77 per share. The $853.7m deal means the private equity giants will end their association with the business they brought back to the public markets in 2014... Read more

How companies survive and thrive in the often-brutal fight for a government contract... Read more

Troubled education provider Vocation hopes it might be able to settle three class actions outside the courtroom. The legal actions were launched in reaction to the company's massive share price slide after the Victorian government withdrew $20 million in funding amid criticism of the education services provided by Vocation... Read more

Macquarie Bank clients who lost life savings in scandal largely denied compensation, process 'farcical', critics say... Read more

Opinion - Alex Evans: Tax has a role to play in driving innovation... Read more

International Headlines

U.S. Market Report: US stocks have opened a holiday-shortened week slightly lower, with a record-breaking $US160 billion drug merger deal between Pfizer and Ireland-based Allergan drawing attention... Read more

North/South Americas Market Report: North and South American markets are mixed. The S&P 500 is higher by 0.14%, while the Bovespa is leading the IPC lower. They are down 0.19% and 0.10% respectively... Read more

European Market Report: European markets finished lower today with shares in London leading the region. The FTSE 100 is down 0.46% while France's CAC 40 is off 0.44% and Germany's DAX is lower by 0.25%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.10%, while the Shanghai Composite led the Hang Seng lower. They fell 0.56% and 0.39% respectively... Read more

Oil prices fell in Asia on Monday, extending their slide as a stronger dollar and news that world stockpiles have reached a record high put pressure on futures... Read more

Venezuela Sees Crude in Mid-$20s If OPEC Doesn't Act... Read more

Epic oil glut sparks super tanker 'traffic jams' at sea... Read more

Fed's Tarullo urges rates caution... Read more

US existing home sales slide 3.4%... Read more

US manufacturing activity sank to a two-year low in November, according to a new report, suggesting a setback in the struggling sector that has shown recent signs of stabilisation in some parts of the country... Read more

Shares in Chipotle have slumped more than 12% after US health authorities reported more cases of E. coli linked to the Mexican restaurant chain. The Center for Disease Control (CDC) said 45 people had been infected with a strain of E. coli, 43 of whom reported eating at a Chipotle restaurant... Read more

Will rivals benefit from Chipotle E. coli scare? Chipotle's stock rebounded Monday morning, following a 12% plunge Friday due to new fears about an E. coli outbreak that may have originated in its restaurants. Shares were up 5%. But Chipotle (CMG) may have bigger problems than E. coli... Read more

In one of the biggest corporate deals ever, Pfizer and Allergan announced Monday that they would combine to create the world's largest pharmaceutical giant. The merger, which still needs regulatory approval, would bring blockbuster drugs like Pfizer's Lyrica, Enbrel and Viagra and Allergan's Botox and Restasis under one corporate roof... Read more

Hedge fund Elliott Management Corp disclosed a 6.4 percent stake in "undervalued" Alcoa Inc on Monday, sending the aluminum producer's shares up as much as 6.3 percent. Elliott, run by activist investor Paul Singer, sees opportunities for Alcoa to improve its profit margins, a source familiar with the matter told Reuters... Read more

Eurozone composite PMI hits its highest in 4 years. France's economy slowed following the Nov. 13 terror attacks in Paris and a subsequent tightening of security around the country, but it continued to grow, according to surveys released Monday. However, that slowdown in the eurozone's second-largest member wasn't sharp enough to retard the currency area as a whole, which recorded its strongest expansion in more than four years... Read more

German economy to slow next year: IW institute... Read more

U.S. automated teller machine maker Diebold Inc. and its German rival Wincor Nixdorf AG said Monday they have agreed on the core elements of a merger, with Diebold offering Wincor Nixdorf owners a cash and share deal. The transaction values Wincor Nixdorf WIN, +1.73% at around $1.8 billion, including net debt, the two companies said. The deal will result in around $160 million in annual cash savings, they said... Read more

President-elect Mauricio Macri promised on Monday to correct the errors of Argentina's outgoing leftist government but urged patience while he defines his strategy to liberalize the ailing economy... Read more

Austria's highest court to decide whether to allow class action vs Facebook... Read more

Shareholders would back banking giant HSBC if it decided to move its headquarters out of the City, according to one of its bigger investors. David Cumming, head of equities at Standard Life Investments, said that HSBC was being put at a "competitive disadvantage" by "ever-increasing capital requirements"... Read more

IKEA to give cut of its profits to refugees... Read more

Latin America's worst year since global recession... Read more

This Could Be the Last Decent Shot at Making 680% on China IPOs. What once looked like long odds of securing shares in Chinese initial public offerings now look too good to pass up... Read more

China IPOs to resume next week... Read more

Alibaba's Jack Ma said to be in talks to buy stake in South China Morning Post... Read more

1Malaysia Development Bhd. agreed to sell its power assets to China General Nuclear Power Corp. for 9.83 billion ringgit ($2.3 billion) as the state investment company moved one step closer to winding down operations after its mounting debt raised investor concern. China General Nuclear will assume all gross debt and cash of Edra Global Energy Bhd. and its subsidiaries, according to a joint statement released Monday. The transaction is expected to be completed in February... Read more

Opinion - Simon Kennedy: The Case for How the Fed Has Already Made Its Policy Mistake... Read more

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