ASB Securities Morning Brief for Friday, 14 October 2016
Friday, 14 October 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares were mixed as Air New Zealand hit a two-year low in the face of increased competition, while Tegel Holdings and Fletcher Building climbed. The S&P/NZX50 Index gained 12.6 points, or 0.2 points, to 7,120.05. Within the index, 25 stocks fell, 13 rose and 12 were unchanged. Turnover was $131.7 million... Read more

The kiwi hit a 10-week low against the US dollar in trading on Thursday, going as low as 70.36USc as economic data showed food prices in New Zealand fell and the pace of house price rises in Auckland eased off. The kiwi was trading at 70.57USc shortly after 5pm in Wellington, down from 70.72USc early this morning and 70.81USc yesterday. The trade-weighted index rose slightly to 76.04 from 76.03 a day ago... Read more

Finance Minister Bill English today announced a bigger surplus than expected in the last fiscal year as a growing economy underpinned by an expanding population delivered a bigger tax take than anticipated. The operating balance before gains and losses (obegal) was a surplus of $1.83 billion in the 12 months ended June 30, rising from $414 million a year earlier, and ahead of the budgeted $668 million surplus. Core tax revenue climbed 5.7 percent to $70.45 billion, beating the forecast $69.68 billion and outpacing a 2.2 percent rise in core Crown expenses to a smaller-than-expected $73.93 billion... Read more

New Zealand manufacturing activity bounced back in September, lifting expansion levels after two consecutive months of softening expansion. The Bank of New Zealand-BusinessNZ performance of manufacturing index rose to a seasonally adjusted 57.7 in September, from 55.2 in August and 55.6 in July. A reading of 50 separates expansion from contraction and the latest reading is above the long-term average of 53.2, and the highest level of activity in the sector since January this year... Read more

New Zealand food prices declined in September, impacted by cheaper bananas, lamb and chicken... Read more

Consumer confidence rises on back of house prices... Read more

LVRs starting to bite - REINZ. The national median house price has hit a record high in the latest REINZ data – but the data also shows that housing market activity has slowed... Read more

New Zealand's median house price hit a new record in September as Auckland's growth slowed while six regions hit all-time highs, according to the Real Estate Institute of New Zealand. The national median house price rose 6.3 percent to $515,000 in September from the same month a year earlier, ahead of the 5.8 percent pace in August, the institute said... Read more

Affordability levels causing buyer strain. Auckland’s affordability issues are starting to spill over to surrounding areas, the latest Massey University Home Affordability Report shows. Auckland and Central Otago Lakes continue to be, by far and away, the least affordable regions to buy a property, according to the September quarter’s Massey University Home Affordability Report... Read more

Number of houses for sale in Manawatu/Whanganui drops 50 per cent in a year... Read more

Apartment failures mean investing care needed. News that several high-profile apartment developments have failed has rocked Auckland’s apartment market – but experts’ advice is to simply tread carefully if investing in apartments. Reports that the Flo Apartments development in Avondale, which was touted as being an affordable purchasing option, had been shelved came first... Read more

Scott Technology has reported a record $11 million in full-year pre-tax profits as the industrial robotics firm benefits from rising interest globally in automation as companies seek to reduce costs and boost productivity. The Dunedin-based company reported a 36 percent increase in pre-tax profit for the year ended Aug. 31 while total revenue rose by 55 percent to $112 million. The board declared a 5.5 cents per share dividend for the year, taking total dividends to 9.5 cents per share fully imputed. The share price is trading unchanged today at $2.10, having risen 53 percent this year.... Read more

New Zealand Refining, which operates the country's only oil refinery, has decided to keep its lab testing unit that's been up for sale since last year. Whangarei-based Refining NZ has decided to keep its 74% stake in Independent Petroleum Laboratory, ending a sale process that began last year. The lab testing company's assets were valued at $5.2 million as at June 30, with liabilities of $1.5 million. BP Oil New Zealand holds the remaining 26%. Refining NZ shares were unchanged at $2.40, having slumped 36% so far this year.... Read more

New Zealand's biggest retirement village operator, Ryman Healthcare, is to redevelop a former school in the Coburg suburb of Melbourne. The 1.2-hectare site is about 10 kilometres from the central business district and next to the Coburg Lions AFL ground and a reserve, the Christchurch-based company said in a statement. The site had previously been approved for a large residential development. Shares of Ryman fell 0.1%, or 1c, to $8.93. They've risen 5.2% since the start of the year, underperforming the benchmark S&P/NZX50 index which has risen 12%... Read more

Enprise Group CEO Elliot Cooper says the decision to pay the dividend, which follows a 6% dividend announcement in June 2016, signals an intention to pay dividends regularly. “Enprise Group will now get into a routine of paying interim and final dividends,” he says. “We have sufficient cash to pay regular dividends and still reinvest in the business.”... Read more

Samsung Galaxy Note 7 customers on Spark or Vodafone will receive a $100 'stress' payment. Yesterday, after a botched recall and replacement programme, Samsung axed the Note 7 altogether... Read more

NZ Post tells Samsung Note 7 owners not to put them in the mail... Read more

Rocket Lab founder Peter Beck has been crowned EY New Zealand Entrepreneur of the Year and will head to Monaco to battle for the world title. Beck founded the Auckland-based company in 2007 and is planning to launch the company's Electron rocket from Mahia Peninsula later this year in what will be the first commercial space launch from New Zealand... Read more

Sileni Estates has announced the appointment of a new CEO for their award-winning New Zealand winery. Nigel Avery has recently returned to New Zealand from the United States and his role as CEO of Sileni Estates’ U.S operations. He has been involved in the family business in various capacities since its inception in 1997, but joined full time in 2008 as General Manager of New Zealand and Asia... Read more

Valocity, New Zealand’s first locally-built digital property valuation platform, has appointed New York-based technology start-up entrepreneur, Jonty Kelt to its advisory board. The savvy ex-pat Kiwi has spent almost two decades working in the technology sector as an entrepreneur, CEO and investor. He currently works as an executive at Palantir Technologies, a big data analytics company, and is also an investor in early stage technology companies out of his fund, Fantail Ventures... Read more

After 25 years, Farmers boss Rod McDermott has quietly left the nationwide department store. Farmers Trading Company operates 58 stores and is owned by New Zealand's James Pascoe Group. McDermott had been with Farmers for 25 years and was chief executive for the past 10 years... Read more

No new Toyota Prius vehicles sold in New Zealand are affected by a global recall due to a parking brake defect. But Toyota New Zealand is working with its parent company in Japan to assess if any used cars imported to this country were caught up in the recall of 340,000 vehicles worldwide including around 300 in Australia... Read more

Workers strike at aluminium firm. Nearly 150 workers at an aluminium company have walked off the job in protest over a pay offer, says the union that represents them. E tū, the union which represents workers in the manufacturing industry, said 147 of its members have taken strike action for 24 hours and walked off the job at McKechnie Aluminium Solutions in New Plymouth... Read more

Chicken producer Tegel has taken court action after a trampoline centre set up next door to a factory and complained about odours. Mega Air complained nine times about "offensive or objectionable odours" coming from the Hornby, Christchurch chicken factory while the trampoline centre was under construction earlier this year, High Court documents show. They were elevated to, or investigated by, the regional council. Meetings were held... Read more

Data, not intent, key to expert analysis. Intent behind Mark Warminger’s trades was not part of the analysis, confirms defence expert witness in the country’s first market manipulation trial.... Read more

Mark Warminger rejects market manipulation accusations. "I never intended in any of these transactions to manipulate the market," says Mark Warminger, the Milford Asset Management portfolio manager facing accusations of market manipulation over 10 trades in 2014... Read more

A Kumeu strawberry grower has been penalised $6000 after being caught a second time by a Labour Inspector failing to provide written employment agreements, or keep accurate holiday and leave records. The Employment Relations Authority (ERA) found that strawberry grower A and J Zaknic & Sons Limited had a long history of failing properly to pay seasonal workers or keep accurate records, despite receiving warnings... Read more

Opinion - Kirk Hope: Unskilled workers hit harder by workforce changes than strong migration. One in four people in New Zealand is foreign-born, and many New Zealanders routinely leave to live in other countries. This is what New Zealand is like – it's 'migration central', awash with people coming and going, and it has always been this way... Read more

Opinion - Vernon Small: Where did all that surplus cash come from? And where is it going? So how did that happen? How did the Government's books go from a wafer slim surplus in 2015, amid dire warnings it may be a one-off, to a $1.8 billion surplus?... Read more

Opinion - Janine Starks: Saving for retirement is only half the battle.... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket joined the global sell-off as a stronger US dollar and weak Chinese trade data hit the commodity market outlook. US stocks were slightly firmer last night, but after defying global weakness yesterday, the S&P/ASX 200 index dropped 39.1 points, or 0.71 per cent, to 5435.5 as miners and financials were hit.... Read more

The Australian dollar has lost more ground after the release of disappointing data from China, the country's biggest trade partner. At 1700 AEDT on Thursday, the local unit was trading at 75.31 US cents, down from 75.78 US cents on Wednesday... Read more

Australians, economists and financial markets could be left in the dark about how the economy is performing for longer periods, with the federal government's statistician threatening to cut back on its publications because of budget restrictions. The Australian Bureau of Statistics says its present work program may not be affordable beyond 2016/17 and is consulting with its partners and stakeholders on some statistical series... Read more

A housing market downturn is the main threat to credit stability in Australia, according to investors. A survey of local fund managers by Fitch Ratings and fixed income researcher KangaNews shows they view the housing market as a bigger risk than China's transition away from heavy industry, manufacturing and exports towards consumerism and services... Read more

Australia's apartment building boom poses a "moderate risk" to mortgage-backed securities, Moody's warns. The ratings agency says 230,000 new apartments are due to be completed by 2018, according to CoreLogic, which is double the annual average of sales over the five years to April 2016... Read more

Queensland confidence in property sector takes biggest dip in Australia, survey shows. A new report reveals Queensland has experienced the biggest shift in confidence in the property sector of any Australian state in the past 12 months, dropping 12 points since December 2015. The latest ANZ-Property Council survey for the December quarter released today said confidence in the property sector rose across most states and territories, except in South Australia and Queensland... Read more

Australia’s shadow banking sector: Mum and Dad. Have Australia’s youth finally come up with a brilliant ploy to reverse the intergenerational inequity of the housing market? This graph certainly suggests so. Asking mum and dad for help to buy a house is surging. Parents are not only shelling out for deposits, but also helping kids pay back their loans.... Read more

Economic growth not always the best gauge. Growth in gross domestic product (GDP) is often, maybe too often, used to gauge the economy's progress. Commonwealth Bank senior economist Gareth Aird prefers income per capita - and he has a point.... Read more

The Reserve Bank will pay the federal government its biggest dividend since the global financial crisis, transferring $3.22 billion to the Treasury's coffers, after its profits were helped by a drop in the Australian dollar... Read more

Perth Mint posts record profit. A surging gold price drove the Perth Mint to a record pre-tax profit of more than $41 million last year and there is now more than $3 billion of precious metal locked in the Mint’s vault... Read more

Former Labor treasurer Wayne Swan has taken a huge swipe at the mining giant BHP Billiton, accusing the company of tax evasion and lying to the former Labor Government during the height of the mining tax debate. Mr Swan told Parliament yesterday that BHP employed the practice of transfer pricing, or profit shifting to lower-tax overseas jurisdictions, to avoid paying taxes on billions of dollars in profits between 2005 and 2014... Read more

A major split has opened up in the National Party after Brendon Grylls claimed Barnaby Joyce’s new-found criticism of his proposed mining tax demonstrated the Deputy PM “doesn’t care about WA”. Mr Joyce, who previously said he would not “run down” any policy by the WA Nationals to benefit their constituency, this morning came off the sidelines to urge his friend Mr Grylls to drop the plan... Read more

Cue Energy Resources subsidiary Cue Exploration has farmed out its North West Shelf exploration permits WA-409-P and WA-359- P in the Carnarvon basin to BP Developments Australia.... Read more

Leaf gets $500k under R&D tax incentive... Read more

Kin Mining Ltd has a new substantial shareholder, with Michele Canci holding a 7.72% stake.... Read more

Lucapa Diamond Company will acquire an 80% interest in Leopolds diamond exploration project in the West Kimberley lamproite province, WA... Read more

Goldphyre Resources has made progress at its Lake Wells potash project in WA, with the first two of four planned test production bores successfully installed... Read more

Contractor ECM is set to take a bigger stake in thermal power company Enerji at a heavily reduced price under a proposed revamp of their partnership deal. Enerji today said ECM would likely subscribe to a $4.5 million share placement, up from a previously agreed $2.5 million. Enerji’s shares were down 0.2¢, or 33 per cent, to 0.4¢ at 10.46am.... Read more

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

Australia's largest chicken company Ingham's Group is set to list on the share market with a value of up to $1.5 billion. The chicken and turkey breeder's owner, private equity firm TPG, which bought the business from the Ingham family for $880 million in 2013, plans to sell between 50 to 70 per cent of its stake in a public offer... Read more

Brierty has won an $8 million contract working on transport infrastructure for Perth Stadium. The 10-month job for Multiplex involves constructing car parks and access roads for the Burswood project. The announcement was made after the civil and mining contractor’s shares closed down 0.2¢ to 7.9¢.... Read more

Toll road operator Transurban's first-quarter revenue has increased by 12.3 per cent, with Melbourne's Citylink again the company's biggest earner. The company, which operates tolls in Sydney, Melbourne, Brisbane and Washington DC, booked revenue of $513 million in the three months to September 30... Read more

ACCC considers Pillar-Link merger. Australian Competition and Consumer Commission has issued a statement of issues on the possible acquisition of the Superannuation Administration Corporation (trading as Pillar) by Link Administration Holdings.... Read more

Qantas will relaunch its daily service from Sydney to Beijing in January as it targets a larger share of the burgeoning Chinese travel market. The January 25 resumption of the Sydney to Beijing route - which Qantas scrapped in 2009 because of the fallout from the global financial crisis - will boost the carrier's total capacity into China by 18 per cent. Qantas shares were up four cents at $3.17 at 1310 AEDT, in a lower Australian share market.... Read more

Thousands of Qantas workers accept 18-month pay freeze... Read more

Airfares on the rise... Read more

Organic food: Producers claiming food organic despite not meeting standards. Companies are "greenwashing" their food by claiming their products are organic when they fail to meet industry standards, a leading consumer group says... Read more

The Commonwealth Bank is exploring ways to bring the 19 instances of Salesforce spread across the bank under a central governance structure. Senior business analyst Brenden Wells told Salesforce’s annual Dreamforce conference that the bank is “looking at a centre of excellence setup” to centralise governance, and may seek to consolidate some smaller Salesforce instances, depending on the outcome of discussions... Read more

Search Party Group beats guidance for September quarter. The company is a recruitment services marketplace that connects employers and recruiters to make hiring faster, easier and more effective... Read more

Masters staff claim they are treated badly by angry customers. Masters is being bullied by gangs of angry customers and has called in back-up to help deal with the fallout of its fire sale. Customers have been outraged by poorly discounted products and customer service, taking to Facebook to accuse staff of treating customers like thieves and liars... Read more

Reserve Bank governor Philip Lowe got a pay rise of almost a quarter of a million dollars when he was promoted to replace Glenn Stevens in September.... Read more

Tagara Builders liquidators alert watchdog after poring over books... Read more

ASIC cancels Macpherson ‘Ponzi’ firm’s licence. The corporate watchdog has cancelled the financial services licence of a company directed by the Pilbara property developer accused of running what might be a $190 million Ponzi scheme... Read more

Hackers have stolen the personal details of customers of a health fund used by Commonwealth Bank employees. Customers of the CBHS Health Fund recently reported receiving unsolicited emails from suspicious email addresses... Read more

International Headlines

U.S Market Report: The S&P 500 and the Dow Jones Industrial average touched three-month lows on Thursday, dragged down by weak Chinese economic data and a potential U.S. interest rate hike by the end of the year. Data showed China's exports fell 10 percent in September, far worse than the markets had expected, while imports unexpectedly shrank, reviving concerns about the health of the world's second-largest economy... Read more

North/South Americas Market Report: North and South American markets are mixed. The Bovespa is higher by 0.12%, while the IPC is leading the S&P 500 lower. They are down 0.76% and 0.51% respectively... Read more

European Market Report: European markets finished broadly lower today with shares in France leading the region. The CAC 40 is down 1.06% while Germany's DAX is off 1.04% and London's FTSE 100 is lower by 0.66%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.09%, while the Hang Seng led the Nikkei 225 lower. They fell 1.61% and 0.39% respectively... Read more

Jobless Claims at 42-Year Low as U.S. Employers Shun Firings... Read more

World's billionaires lose £215m each as global economy struggles. Study finds billionaire population grew in 2015, but total wealth of this group fell by nearly £250bn as economic growth stalled... Read more

China tops US in numbers of billionaires... Read more

Those cheering the early exit of Wells Fargo CEO John Stumpf may want to hold their applause. Stumpf opted for early retirement amid controversy, but the longtime bank boss is walking away with around $130 million, according to a CNNMoney analysis of SEC filings.... Read more

Amazon to create more than 120,000 seasonal jobs for the holidays... Read more

Elon Musk teases new Tesla product reveal. Tesla CEO Elon Musk is at it again. In a classically cryptic tweet to his more than 5.5 million followers earlier this week, Musk teased that a new product announcement was coming on October 17. What made the tweet even more intriguing is the fact that Musk said the new Tesla product was "unexpected by most."... Read more

System expected to launch in 2018. Facebook Inc. and Google owner Alphabet Inc. GOOG, will join with a little-known Chinese company to lay an ultrafast internet cable between Los Angeles and Hong Kong, the latest sign of its U.S. backers’ insatiable appetite for bandwidth... Read more

Ocular Therapeutix stock up 26% on $10 mln Regeneron drug development deal... Read more

German top court backs EU-Canada trade deal Ceta. Germany's Constitutional Court has rejected a legal challenge to the EU-Canada free trade deal (Ceta) from campaigners who call it undemocratic. The campaigners object to the fact that parts of Ceta will be implemented before all national parliaments in the EU have voted on it.... Read more

The British Broadcasting Corp. is cutting about 300 positions from its in-house production arm as the public broadcaster eliminates costs amid rising competition with the private sector. The world’s oldest national broadcaster said the BBC Studios unit is moving toward a staffing model “more in line with the wider industry,” including employing workers on fixed-period contracts for specific programs, according to a statement on Thursday... Read more

Hundreds of properties could be seized in UK corruption crackdown. New criminal finances bill will include ‘unexplained wealth order’ forcing suspects to disclose source of their assets... Read more

You can call it "the Brexit tax." U.K. shoppers are paying more for wine, food, gadgets and vacations thanks to a huge slump in the value of the pound brought on by Britain's vote to leave the European Union. The currency has lost 18% against the U.S. dollar and 15% against the euro in less than four months... Read more

Broadcaster Sky has reported a rise in revenues, but UK advertising sales dipped and subscriber growth slowed. Sky said like-for-like revenues - which strip out the impact of currency movements - rose 5% in the three months to 30 September. Subscriber numbers rose by 106,000 over the period but that was lower than last year's rise of 134,000... Read more

Chelsea FC is getting a new jersey. Nike (NKE) and Chelsea FC officially announced the deal on Thursday, but didn't specify how much it was worth or how long it would last.... Read more

Netflix paid less than £400,000 in UK corporation tax last year. Entertainment firm, which is set to make $8bn in global revenues this year and has 80m subscribers, employs 13 staff in UK... Read more

British Panic Over Marmite Shows Brexit Just Got Real. Brits love or hate Marmite. Just like Brexit... Read more

Issues surrounding the supply of leading brands including Marmite to Tesco have now been resolved, Unilever has said. The supermarket giant and the UK's largest food manufacturer had been locked in a battle over wholesale prices. Unilever wanted to raise its prices by about 10% to compensate for the steep drop in the value of the pound... Read more

Scotland Poses New Brexit Issue for May With Referendum Bill... Read more

Shares in Hanjin Shipping surged by as much as 25% after the indebted firm announced that it was beginning the process to sell its US assets. In a regulatory filing, Hanjin said it would look for letters of intent from buyers by the end of the month... Read more

The death of King Bhumibol Adulyadej is raising new questions about Thailand's economy, a tourist hotspot where growth has been derailed time and again by political instability and violence. The king's 70-year reign came to an end on Thursday, and mourning began immediately. The 88-year-old was revered by his people, the vast majority of whom have known no other monarch... Read more

India's startup bubble has already burst. India's great startup boom has come to an end. After a sustained funding frenzy, investor enthusiasm for the country's tech startups has fallen sharply this year. Weaker firms are laying off employees and some have closed up shop altogether... Read more

Opinion - Shelley Armstrong: Love it or hate it, Marmite-style price increases may be unavoidable. There have been warnings of post-Brexit job losses and a hit to the UK economy. But nothing galvanised Brits like the threat of Marmite being pulled from the shelves... Read more

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