ASB Securities Morning Brief for Saturday, 24 September 2016
Saturday, 24 September 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell, led by Orion Health Group as the export-focused software developer contends with a strong kiwi dollar, while Warehouse Group and Hallensteins Glasson Holdings gained on their earnings. The S&P/NZX 50 Index dropped 14.98 points, or 0.2 percent, to 7,296.73. Within the index, 24 stocks fell, 18 rose and eight were unchanged. Turnover was $154.6 million... Read more

The New Zealand dollar fell as the Reserve Bank lay the groundwork for lower interest rates later this year as inflation continues to be restrained by the strength of the currency. The kiwi slipped to 73.03USc at 8am in Wellington from 73.29USc yesterday. The trade-weighted index declined to 77.50 from 77.78... Read more

The Reserve Bank is pushing for a new disclosure regime for the way banks make financial information public outside their half-year and annual updates, which would see the central bank draw on data it's already privy to. The RBNZ is seeking feedback on whether to introduce a dashboard hosting all locally incorporated banks' key metrics, which it says would be a cost efficient way in maintaining market discipline... Read more

All systems go for NZ economy. New Zealand’s economy could be set for another surge as it benefits from the very things worrying the rest of the world, an investment conference has been told. Nikko Asset Management held its conference, called Finding Clarity – four global themes driving investments – in Auckland yesterday... Read more

Spending in Christchurch's shops, eateries, and hotels has jumped nearly 5 per cent in the past year. The city's retail and hospitality spending totalled $1.9 billion in the three months to the end of June, up 4.8 per cent from the same period last year, Statistics New Zealand figures show. This brought spending for the 12 months to middle of this year to nearly $8b, of which $6.8b was from retail... Read more

Significant increase in demand, following the announcement of new investor targeted LVRs, has led Resimac to make changes to its rules around investment lending. In July, the Reserve Bank announced it would be introducing a further round of LVRs, which enforce a 60% LVR for property investment loans nationwide... Read more

More than one million renters are locked out of the home ownership dream because they can not afford the deposit new data shows. New figures from Statistics New Zealand reveal 78 per cent of those currently renting - or 458,000 households - have a net worth of $120,000 or less which means they can not afford the 20 per cent deposit on the average New Zealand home... Read more

Fonterra re-jigs governance review allowing direct farmer nominations... Read more

Fonterra's latest milk price forecast increase means half of its farmers now won't have to go to the bank for extra money to get through this season - but it could be three years before most balance sheets recover from the severe dairy downturn. That's the calculation of DairyNZ economist Matthew Newman, who said Fonterra's surprise 50c lift in its forecast for the new 2016-2017 dairy season will take many farmers close to the industry-estimated $5.05/kg milksolids breakeven point. The latest boost will deliver about $1 billion to the dairy farming economy, he said... Read more

New Zealand wool prices generally advanced at the country's latest weekly auction, which featured the greatest number of bales on offer in the season so far. Some 7576 of the total 11,000 bales on offer were sold at yesterday's South Island auction, marking the highest number offered and sold since the new season started in July, AgriHQ said. Wool volumes fluctuate during winter and spring, especially in the South Island, often due to weather related reasons... Read more

New Zealand wood processors and manufacturers want the government to speed up a refreshing of the nation's trade policy as other countries offer more support to their forestry sectors. Trade Minister Todd McClay plans to tilt policy to focus on squeezing more from existing free-trade agreements rather than simply pursuing new deals. He argues this will be more effective in pulling down non-tariff barriers, government measures to either protect a domestic industry or prop up exports... Read more

Hemp poised to take off as New Zealand's next big industry. Commercial hemp could play a major role as a cash crop on farms as industries move from synthetic to more natural materials. The plant could be a major earner as countries start to shift towards a more plant-based economy, says grower David Jordan. "If you put yourself into the future and look at what is coming, hemp is one of those things that is coming of age in the new economy that's on the way."... Read more

The final price of New Zealand King Salmon shares has been set at $1.12 a share, near the bottom of the indicative range, valuing the company at $154.5 million. Initial indications had put the company’s worth at about $200 million.... Read more

The board of Comvita, the manuka honey products company, is proposing to increase its pool for directors' fees so it can hire a new director with technology experience. In its notice of annual meeting, Comvita's board recommends increasing the maximum pool of total director remuneration by $60,000 to $610,000, the equivalent of an annual fee for one director. Comvita shares last traded at $11.35, down 1.3 percent today, and have jumped 37 percent this year.... Read more

Warehouse Group lifted its staff entitlements provisioning for 2017 by more than a third with the country's biggest listed retailer one of a number of big businesses trying to work out the impact of years of underpaying holiday pay. The Auckland-based company current provisioning for employee entitlements - which include annual leave and accumulated sick leave expected to be taken within 12 months - was $53.4 million as at July 31, up from $39.1 million a year earlier, its accounts published today show... Read more

Consumers wanting retailers to “show me you know me” is at the heart of a technology push under a new three-year strategy revealed today by Warehouse Group chief executive Nick Grayston, as the country’s largest listed retailer lifted annual earnings 12 percent. The Auckland-based company reported adjusted profit rose to $64.1 million in the year ended July 31 from $57.1 million a year earlier following tight cost control and a turnaround in the profitability of Torpedo7. Warehouse shares rose 1.7 percent in today's trading to $2.95.... Read more

Intueri Education Group is in a trading halt pending an announcement from the company. Since listing in 2014, the private training school operator has had to contend with a series of setbacks, including several probes into student enrolments, a student death at its dive school, the sudden exit of its chief executive, and more recently amended its lending covenants that were at risk of being breached... Read more

Wellington Drive Technologies, the maker of energy efficient motors for commercial refrigerators, has taken a $2 million facility from major shareholder SuperLife, the investment fund owned by NZX. The loan will give the company "additional working capital to support the company's growth initiatives", with a one-year term and a 14.75 percent interest rate calculated on a quarterly basis in arrears, it said in a statement. The shares dropped 9.7 percent, or 1.55 cents, to 14 cents, having gained 94 percent this year.... Read more

Tower's stock gained after a report the general insurer could be a takeover target but the insurer has shed half its value in the past 12 months on signs prolonged exposure to Canterbury earthquake claims has sapped its ability to pay dividends. The shares have tumbled 52 percent in the past 12 months, the worst performance on the NZX 50 Index. Some $36 million of provisions for Canterbury earthquake claims pushed it to a $7 million loss in 2015 and losses continued in the first half of this year on further charges and a $19.6 million IT system impairment... Read more

A warm autumn and management problems at Glassons are getting the blame for a drop in Hallenstein Glasson's profits. The clothing retailer said it had made $223.51 million in sales in the year ended August 1, just 1 per cent up on last year. But Hallenstein Glassons' profit was down 21.3 per cent to $13.68m... Read more

New Zealand internet provider Spark says some of its customers have been affected by a global breach at Yahoo. Global internet giant Yahoo said earlier on Friday at least 500 million user accounts had been hacked in 2014... Read more

Important security information for Xtra e-mail customers. Yahoo announced earlier today that a copy of some of its user account information was stolen from the company’s global network back in November 2014. They have confirmed that the information from some of Spark’s Xtra customers is included in the stolen data. We are working closely with Yahoo to identify any customers who may be affected... Read more

Veritas Investments says revenue will drop in 2017 as Mad Butcher sales continue to fall, while its bank has extended its lending facilities beyond next year. Revenue would be in a range of $50-55 million in the year ending June 30, 2017, compared with $56.5 million last year, the company said today. The shares last traded at 23c cents and have fallen 52.1% this year, having dropped sharply after the 2016 earnings were announced.... Read more

Coca-Cola Amatil has opened a $30 million manufacturing plant in Auckland for its non-fizzy drink brands. The Keri Juice plant was open on Friday at Timberly Road in Mangere by two-time Olympic gold medalist Mahe Drysdale and Minister for Economic Development Steven Joyce... Read more

Blue Sky Meats, the meat processor whose shares trade on the Unlisted platform, named former Fonterra Cooperative Group marketing executive Todd Grave as its new chief executive, replacing general manager Ricky Larsen who resigned in December... Read more

Some of New Zealand's biggest retailers have agreed to abolish expiry dates on gift cards in response to a Consumer New Zealand campaign. Earlier this month the Weekend Herald revealed 10 major operators including Briscoes, Countdown, Kathmandu and New World had been issued with a request by the independent watchdog, asking them to scrap expiry dates on gift cards because Kiwis are losing up to $10 million a year on expired credit... Read more

Affco Holdings, the meat company owned by Talley's Group, demanded that the Meatworkers Union cease badmouthing members of the Talley family as a precondition of resuming contract negotiations at its Land Meats subsidiary, an Employment Relations Authority ruling says. The determination, dated Sept. 22, says Land Meat (LMNZ) breached its duty of good faith to the union and imposed a fine of $15,000 and ordered the company to use its best endeavours to begin the process of bargaining in an effective and efficient manner... Read more

Aggrieved Trustpower customers told to talk to the retailer... Read more

Opinion - Brian Gaynor: Learning the hard lessons of backdoor listings. After long decline, there's a glimmer of good news from Mad Butcher owner... Read more

Opinion - Shamubeel Eaqub: Health driving an unhealthy generational wedge... Read more

Opinion - Fran O'Sullivan: Fonterra emerging from long winter... Read more

Opinion - Brent Sheather: Are fund fees fair? The first thing you read on the Financial Markets Authority's (FMA) webpage is that its overarching objective is "promoting fair, efficient and transparent financial markets"... Read more

Australian Headlines

Australian Market Report: Sentiment was subdued in other Asian markets, but after lagging yesterday, the S&P/ASX 200 index follow the strong lead from Europe last night and closed up 56.8 points, or 1.06 per cent, at 5431.3. Bullish sentiment took hold as market pundits suggested there little likelihood of news to upset markets until after the US Presidential election in November and the run-in into the Federal Reserve’s December board meeting... Read more

ASX boss Dominic Stevens has apologised for the “unacceptable” outage that stopped trading on the Australian stock market on Monday, but defended its handling of the situation... Read more

Fiscal boost a common theme for economists. One highlight of the new Reserve Bank governor Philip Lowe's testimony to a parliamentary committee this week was his repeated mention of the need for more use of fiscal policy, notably government spending on infrastructure, to keep the economy ticking over... Read more

Detailed jobs data show professional services up, sales staff out.... Read more

Social welfare organisations have raised concerns about the State Government’s proposal to sell off part of the Keystart loan book. Under the plan, $1.6 billion worth of loans would be transferred to a third party via equitable assignment by the end of this year... Read more

Cash is on its way out and cards could soon follow. Australians made $8.7 billion in non-cash payments in 2014/15, up from $8.1 billion in the prior year, according to the latest world payments report from technology consultants Capgemini. That puts Australia in the world's top 10 cashless payment markets by volume, and in the top five countries for cashless payments per person... Read more

Shenghe takes 12.5% stake in GGG... Read more

Breaker Resources NL has been granted a trading halt by the ASX, with its shares placed in pre-open... Read more

Focus Minerals shows no sign of rushing back into production as the Chinese-controlled gold miner reveals it is in discussions with “multiple parties” for the possible sale of the Jasper Hill project near Laverton. Exploration has been the name of the game since Focus mothballed its Laverton and Coolgardie operations in the wake of the 2013 gold price collapse. Focus shares were trading 1.78 per cent higher at 57 cents at 10.30am, down from a 12-month high of 74 cents on August 1.... Read more

Minotaur Exploration Ltd has been granted a trading halt by the ASX, with its shares placed in pre-open... Read more

Red Mountain to raise $1.65m... Read more

US private equity player Resource Capital Fund (RCF) will boost its stake in Vimy Resources from 7.9 per cent to 29.9 per cent as part of a $20 million funding package for the uranium explorer. Vimy emerged from a trading halt this morning to announce plans to convert a $15 million unsecured bridging loan from RCF into equity at a discounted 26 cents a share. Vimy shares were up half a cent, or 1.85 per cent, to 27.5 cents.... Read more

Anson Resources Ltd has been granted a trading halt by the ASX, pending details of an agreement to farm-in to a project... Read more

Shares in Mark Calderwood’s Tawana Resources have soared after the WA lithium hopeful added a project in Africa to its portfolio, just days after drilling began at its newly acquired Cowan project in the Goldfields... Read more

Ram Resources has received commitments to raise $1,190,000 which will be employed towards working capital, maintenance of the companys existing assets and the review of new opportunities... Read more

Venus Metals Corporation has raised $1.2 million through a placement of up to 8 million shares at an issue price of 15 cents per share... Read more

Listed mining contractor Hughes Drilling has called in administrators after suggestions by its auditors that it may have been trading while insolvent. The Queensland-based company, which owns JSW Australia based in Bibra Lake, has appointed McGrathNicol to manage its affairs... Read more

GR Engineering Services has won a $12.5 million contract with Michael Fotios’ Eastern Goldfields to refurbish the 1.2mtpa Davyhurst gold processing plant near Menzies. GR shares were off two cents, or 1.29 per cent, to $1.53 at 9.40am while Eastern Goldfields shares were up one cent, or 2.63 per cent, to 39 cents.... Read more

Ausgrid receives new unsolicited bid for 99-year lease. IFM Investors and AustralianSuper have both submitted an unsolicited proposal to acquire a 50.4 per cent interest in a 99-year lease of Ausgrid, just over a month after Treasurer Scott Morrison blocked its sale to Chinese bidders. The Government is reviewing the proposal and will make a decision later in the year, the consortium said... Read more

Shares in Tom Sanders’ Breaker Resources have been placed in a trading halt pending a “clarification” announcement from the gold explorer regarding media commentary. Breaker’s stock last traded at 60 cents after hitting an all-time high of 63 cents yesterday after Mr Sanders told investors the company could be on the verge of a “tier one” discovery... Read more

Two of the key architects of Fortescue Metals Group’s revival are quitting, with chief financial officer Stephen Pearce leaving the WA iron ore miner and operations director Nick Cernotta stepping aside for former Rio Tinto executive Greg Lilleyman... Read more

Intueri Education Group Ltd has been granted a trading halt by the ASX, with its shares placed in pre-open.... Read more

Telstra will put 1000 extra communications technicians into the field over the next six months to reduce installation and fault repair times. The new workforce will also be put to work “performing basic tasks at the exchange as part of the NBN network”... Read more

MNF Group is looking to reverse its “sub-scale” NBN reach by increasing its national coverage and potentially buying “additional subscriber bases”. The telco is struggling against the same challenges as many of its fellow smaller ISPs, in an NBN market seen to favour big players... Read more

A new spirit distillery in South Australia's Riverland region will help put the state's whiskey and brandy on the map, its owners say. Bickford's has opened the doors to its new 23rd Street Distillery in Renmark, developed at a cost of $6.6 million at the century-old Renmato winery site... Read more

Resonance Health Ltd has initiated international regulatory submissions for its new technology for assessing bone marrow iron using magnetic resonance imaging (MRI). Resonance Health specialises in the delivery of quantitative MRI techniques for the diagnosis and clinical management of diseases... Read more

The Australian Bureau of Statistics (ABS) has targeted service provider IBM in its submission to a Senate inquiry into the handling of the botched census. Thousands of Australians were prevented from taking part in the census last month after the site was pulled down due to numerous attempted denial of service attacks, which overload a website by simulating lots of users trying to access the site at the same time... Read more

Committee wants heads to roll over WA Health contracts saga. WA’s education and health committee has demanded to know if any public servants or agency bosses will face sanctions over the $81 million mismanagement of one of the state health department’s biggest IT contracts... Read more

Westpac boss Brian Hartzer vows to win back customers’ trust. It's the single most annoying part of going to the bank. All you want to do is get in, get out and go on with your day, but the teller is pushier than a used-car salesman, hell bent on signing you up for life insurance, home and contents protection or a new credit card. But this about to change, with one of the big four banks about to put an end to the staff incentive scheme that’s behind the sales push.... Read more

The Western Australian Government believes there will be growth in the taxi industry under its new regulatory system, despite fears over the presence of increased competition and claims of inadequate compensation. The remarks by transport parliamentary secretary Jim Chown came as legislation allowing $20,000 assistance payments to taxi plate owners cleared its final hurdle by passing the Upper House late yesterday... Read more

Regional NSW households are set to save up to $165 a year on their gas prices with the state government confirming the market will be deregulated from July 1 next year. Residents who previously had only one retailer available will now be able to choose from up to three gas companies... Read more

The Supreme Court has added Gina Rinehart’s children as defendants to a simmering feud between the WA mining magnate and the descendants of her father’s business partner, Peter Wright. Wright Prospecting made the application to join John Hancock, Bianca Rinehart, Ginia Rinehart and Hope Welker to its suit claiming part-ownership of the Hope Downs 4 mine in the Pilbara and royalty payments from the Hope Downs group of mines... Read more

Opinion - Michelle Grattan: Treasurer Scott Morrison posted a this-was-mine claim on Facebook after Social Services Minister Christian Porter promoted what was received as a fresh approach to welfare reform in his Tuesday speech to the National Press Club. Morrison's post noted: "When I was Social Services Minister we picked up a new approach from New Zealand, to help get our welfare system under control … It was called 'the investment approach'." He added some detail of the background and said "Christian Porter is now leading the next phase of 'investment approach'." He also referred to his role in interviews... Read more

International Headlines

U.S. Market Report: Wall Street retreated on Friday as lower oil prices weighed on energy shares and Facebook and Apple declined, but major indexes still posted gains for the week... Read more

North/South Americas Market Report: North and South American markets finished mixed as of the most recent closing prices. The IPC gained 2.23% and the Bovespa rose 0.52%. The S&P 500 lost 0.57%... Read more

European Market Report: European markets finished lower today with shares in France leading the region. The CAC 40 is down 0.47% while Germany's DAX is off 0.44% and London's FTSE 100 is lower by 0.03%... Read more

Asian Market Report: Asian markets finished lower today with shares in Japan leading the region. The Nikkei 225 is down 0.32% while Hong Kong's Hang Seng is off 0.31% and China's Shanghai Composite is lower by 0.28%... Read more

Oil prices tumbled on Friday following signs that Saudi Arabia and Iran continue to disagree over output limits ahead of a meeting next week aimed at freezing production, while energy shares weighed on global stock indexes... Read more

Gold futures on Friday settled with a loss, but booked the strongest weekly advance in about two months as the precious metal scored a boost from central-bank moves, including the Federal Reserve’s decision to hold off on hiking interest rates in September... Read more

Fed's internal split tied to dueling views on jobs outlook... Read more

Apptio shares surge 44% in trading debut... Read more

Shares in Twitter jumped more than 20% after a report said the home of the 140-character tweet had received takeover approaches. Twitter, which has been the subject of takeover rumours before, is getting closer to a sale, according to the US business news channel CNBC... Read more

Elon Musk to detail plans for colonizing Mars. Elon Musk has talked a lot about going to Mars. Now he wants to colonize it. Musk, the CEO of SpaceX and Tesla Motors, will speak Tuesday about the technical challenges that industry, government and science need to solve to establish a permanent, self-sustaining human presence on Mars.... Read more

Tesla falling behind rivals among key segment: the super rich. Tesla facing ‘stiff competition,’ UBS says... Read more

Shares of Apple Inc. took a nosedive in afternoon trade Friday, after a report that Japanese regulators are considering taking antitrust action against the technology giant. The stock was trading little changed at a round 1:30 p.m. ET, then tumbled to a 2.3% loss over the next half hour before bouncing slightly... Read more

What's next for Apple's €13bn tax battle? Margrethe Vestager is on a US charm offensive, making the case about recovering alleged unpaid taxes – but she has been met with more offense than charm... Read more

Shares of Caesars Entertainment Corp slid on Friday, a day after hitting a 16-month high, as investors awaited a midnight deadline for creditors to accept a sweetened $5 billion deal that could finally extract the casino company from a costly bankruptcy... Read more

Wells Fargo & Co's board hired law firm Shearman & Sterling LLP to advise on executive compensation and potential clawbacks, the Wall Street Journal reported, citing people familiar with the matter. Robert Mundheim, a lawyer at the firm, is advising the bank's board on whether it should claw back pay of Chief Executive John Stumpf, Chief Operating Officer Timothy Sloan and former retail banking head Carrie Tolstedt, according to the WSJ report... Read more

The European Commission has ruled that a controversial EU-Canada free trade deal - CETA - cannot be renegotiated, despite much opposition in Europe. "CETA is done and we will not reopen it," said EU Trade Commissioner Cecilia Malmstrom... Read more

UK visitors handed over £1.8bn in July as weak pound fuels spending spree. First official figures on tourism trends since Brexit vote also showed that Britons cut their spending overseas by 1%... Read more

Germany, France hit back at Boris Johnson's 'baloney' jibe. Germany and France brushed aside comments from Foreign Secretary Boris Johnson suggesting there was no link between the EU's principle of free movement and access to its single market, saying they could send Johnson a copy of the Lisbon Treaty and even travel to London to explain it to him in English... Read more

Millions of BT and Sky Broadband customers could be affected by Yahoo hack. The ISPs, which outsourced their webmail to Yahoo, have yet to directly notify users whether their accounts are affected... Read more

British supermarket Iceland could face a legal battle to save its name after the Icelandic government confirmed it is considering launching legal action. The firm, which specialises in frozen food and has its head office in Deeside, Flintshire, has been trading under the name for 45 years. It owns the European trademark for using the name Iceland, which would be the focus of any legal challenge... Read more

French state-controlled utility EDF has agreed to sign contracts with the British government for its Hinkley Point nuclear project on Thursday, French financial daily Les Echos reported. The signing ceremony will take place in London, not in Somerset as it had been planned in July before the British government asked for a delay. Chinese utility CGN, which has a one-third stake in the project, will also be present, the paper said... Read more

Easyjet pilots have suspended their plans to strike, while new proposals on tackling fatigue are considered. Members of the British Airline Pilots Association (Balpa) said talks had been held to try to resolve the row. The union said proposals to mitigate pilot fatigue would now be put to members in a ballot... Read more

Rogue trader's fine to Societe Generale cut by 99.98%. Jérôme Kerviel just caught a break. He's the infamous rogue trader who racked up one of the biggest losses in history at the bank Societe Generale in 2008, and he just saw his 4.9 billion euro fine (billion with a 'B') slashed to a mere 1 million euros. In short, his fine was reduced by 99.98% by a French civil court on Friday... Read more

10 features that define Russia’s economic crisis. Russian Prime Minister Dmitry Medvedev has published an article about the causes and results of the economic crisis in Russia in which he outlines the situation and the options facing Moscow. RBTH presents the 10 key points of Medvedev’s article... Read more

Russia is open for business post-Brexit. British firms can reap rich benefits from bold and resolute moves to capitalize on Russia's vast market.... Read more

China spends more in the world than the world spends in China. For the first time, Chinese companies have invested more abroad than foreign companies have invested in China, data for 2015 showed this week. Overseas investment rose 18.3% to a record $145bn (£111bn), compared to $135.6bn of foreign investment. It comes as China's economy last year grew at its slowest pace in 25 years.... Read more

IBM, China UnionPay complete block chain pilot project on bank loyalty points... Read more

The former chairwoman of bankrupt Hanjin Shipping is under investigation for alleged insider trading. South Korea's Financial Supervisory Service confirmed to the BBC that the investigation into Choi Eun Young was handed to prosecutors on 9 May... Read more

Hanjin says cargo owners withholding $80 million in payments... Read more

Southeast Asian ride-hailing company Grab has partnered with start-up nuTonomy which last month launched a driverless taxi trial in Singapore. Grab users will be able to use the app to book nuTonomy cars for driverless rides in a small district of the city only. The cars still have a backup drivers... Read more

Japanese air bag supplier Takata Corp said it failed to inform U.S. auto safety regulators of a 2003 rupture of one of its air bag inflators in Switzerland, according to an internal report released on Friday. Takata also said its U.S. arm, not the parent company, was largely responsible for designing, testing and producing tens of millions of defective air bag inflators,... Read more

Opinion - Larry Elliott: Jim O'Neill is just the latest business leader to have his fill of politics. Theresa May’s penchant for grammar schools is just one issue that may have riled the comprehensively educated peer... Read more

Opinion - Allister Heath: Whatever his faults, Carney should stay in charge at the Bank of England. Will he stay, or will he go? That is the question facing Mark Carney, the Governor of the Bank of England... Read more

Analysis/Opinion - Seth Fiegerman: Did Yahoo do enough to prevent the massive hack?... Read more

Opinion - Jason Notte: Beer industry lobbies for a marijuana buzzkill. Massachusetts beer distributors and Boston Beer Co. fight against legalization... Read more

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