ASB Securities Morning Brief for Monday, 01 February 2016
Monday, 01 February 2016

New Zealand Headlines

New Zealand Market Repot: New Zealand shares rose on higher volumes, with New Zealand Refining Co and Sky Network Television rising, while Intueri Education Group, Trade Me Group and Air New Zealand fell. The S&P/NZX 50 Index rose 20.52 points, or 0.3 percent, to 6170.22. Within the index, 31 stocks rose, 13 fell and six were unchanged. Turnover was $161 million, a step up from other trading days this week which have ranged from $87 million to $99.7 million... Read more

The New Zealand dollar is heading for a 1.4% fall on a trade-weighted basis this week after the Reserve Bank's acceptance that it may have to cut rates and Fonterra Cooperative Group's downgraded forecast for the farmgate payout this season eroded investors' appetite for the kiwi. The trade-weighted index fell to 71.05 at 5pm in Wellington from 72.08 last week, driven largely by a decline in the kiwi/Australian dollar cross-rate. The local currency was more muted against the greenback, heading for a 0.3% decline in the week to 64.70 US cents from 64.90 cents on Friday in New York last week. It traded at 64.69 US cents at 8am and 64.44 cents yesterday... Read more

Housing consents up, sections selling fast in Waikato region... Read more

New Zealand building consents rose in December with demand from Auckland and nearby regions increasing most, while annual dwelling consents reached an 11-year high. Seasonally adjusted consents for all dwelling types advanced 2.3% to 2464 in December, according to Statistics New Zealand. Housing consents increased 0.8% to 1717, following a 1% increase in November... Read more

Big job losses in the "depressed" Buller economy have been blamed for a glut of hundreds of properties currently for sale in Westport and surrounding areas. A total of 610 properties and subdivisions are listed on the Trade Me property website... Read more

An Auckland property specialist with close links to the Chinese investment community predicts a huge inflow of capital into Auckland's property market this year, despite China's financial crackdown... Read more

Auckland house prices catapulted record 52% in 4 years... Read more

Advisers who have signed up to distribute the new Lifetime Income Fund variable annuity are mostly running financial planning-style businesses with long-term relationships with their clients, the Retirement Income Group (RIG) says... Read more

Lifetime Income products are now available in New Zealand, signaling a significant development for the retirement sector. The fresh approach taken by Retirement Income Group overcomes the historical problems associated with old annuities offered in New Zealand, which suffered from inflexibility, poor tax treatment, low returns and high costs... Read more

The New Zealand deer velvet industry is "very positive", and the future is looking even brighter, an expert says. Timaru hosted the Elk and Wapiti Society of New Zealand (EWSNZ) Velvet Antler competition for the first time on Saturday, and industry insiders were more than impressed with the quality of South Canterbury velvet on display... Read more

Fletcher Building has completed the $A150 million sale of Rocla Quarry Products assets to Hanson Construction Materials following clearance from the Australian Competition Commission and the Foreign Investment Review Board... Read more

Wynyard Group chief executive Craig Richardson advises NZDF. Wynyard Group boss Craig Richardson is joining the national fight against terror and cyber attack, writes John Anthony... Read more

Rakon shares fell 6.7 percent after the high-tech components maker warned annual earnings will miss forecast because major network operators have delayed their spending on new equipment... Read more

Logistics and fleet management software and hardware developer Eroad doesn't expect to sell as many units in North America as previously forecast but is still optimistic new US federal rules on electronic logging devices will widen the company's market in the world's biggest economy. The shares rose 1% to $1.96, and have dropped 16% this year. The stock reached a high of $4.28 in November 2014 after listing in August that year.... Read more

Fliway Group's shares climbed 10 percent since announcing its first-half earnings beat prospectus forecasts, as the freight and logistics company contained costs in the face of falling revenue... Read more

NZ government keeping in touch with digital transformation of workforce... Read more

Building the Waikato Expressway has created thousands of jobs and slashed travel times, but political parties are divided over its overall benefits. The $2.1 billion roading project is forecast to be completed by 2020 and is one of seven roads of national significance... Read more

Hamilton's burgeoning population could prompt tough talks about how quickly the city invests in big capital projects. Councillors signed off on four major roading and water projects totalling more than $57 million. The projects are the latest in a string of multimillion-dollar spends as the council tries to meet the demands of a growing city... Read more

Labour launches new policy offering three years' free tertiary education... Read more

Only half of New Zealand businesses would report an illegal demand from a customer or supplier, a recent study says. A Chartered Accountants Australia and New Zealand survey of 1000 businesses from throughout the country found just 51 per cent of businesses would definitely report an illegal request... Read more

A large dairy farm milking approximately 2500 cows in two herds has been placed on the market for sale by tender in a receivership process. The farm is situated at Rangitaiki – some 38 kilometres south-east of Taupo, and is made up of three combined landholdings totaling 1235 hectares of land, with an effective land area of 1004 hectares... Read more

Opinion - Liam Dann: New year sure to fire up China's economy... Read more

Opinion - Gareth Morgan: Why China is having a financial meltdown — and how it affects NZ... Read more

Opinion - Charles Finny: TPP deserves praise from Maori, not condemnation. Former MP Hone Harawira has stated some complete falsehoods about Trans Pacific Partnership, Maori and the Treaty of Waitangi. This coincided with publication of a paper by "experts" Dr Carwyn Jones, Associate Professor Claire Charters, Andrew Eruti and Professor Jane Kelsey on "Maori rights, Te Tiriti O Waitangi and the Trans-Pacific Partnership Agreement"... Read more

Opinion - Fran O'Sullivan: After TPP - fine-tuning to get full value. Trade liberalisation is an ongoing process and there is still much for NZ to aim for... Read more

Opinion - Rob Stock: Harmoney's top interest rates may feel loan-sharkish to some investors. How would making a profit by lending it to people at 39.99 per cent sit with your moral values? What about 28.7 per cent? Would rates like those make you feel a little bit … well … loan sharkish?... Read more

Australian Headlines

Australian Market Report: The Australian market looks set to open higher following gains on Wall Street amid a surge in world oil prices. At 0645 AEDT on Friday, the share price futures index was up three points at 4,928.... Read more

The Australian dollar has gathered steam as commodities rebound and the greenback weakens. At 0700 AEDT on Friday, the local unit was trading at 70.78 US cents, up from 70.40 cents on Thursday.... Read more

Why Australia Can Still Afford to Hold Rates. A stronger Australian jobs market and stimulus from a weaker currency give central bank Governor Glenn Stevens room to hold fire on further interest-rate cuts, even as his international counterparts scramble to calm markets upset by China’s slowdown... Read more

Australia’s mining equipment market is showing no signs of recovery after a 46 per cent fall in value of an average fleet in the 12 months through September. The big miners’ increased low-cost production of iron ore coming on stream has impacted high cost rivals, resulting in an oversupply of second-hand equipment in the market, EY has found... Read more

AAA credit rating warning issued by Treasury secretary John Fraser... Read more

No change in the RBA’s holding pattern... Read more

GST debate: Conroy challenges SA Premier Jay Weatherill to take support for increase to election. A senior Federal Opposition figure has challenged South Australia's Labor Premier to call a state election over his support for a GST increase. Labor's Jay Weatherill has said he would be prepared to accept a higher GST as a trade-off for more health and education funding... Read more

Treasury has estimated that capital gains tax exemptions on the family home will cost the budget well over $50 billion in 2015-16, with superannuation concessions costing almost $30 billion and GST exclusions around $21 billion. Commonwealth Treasury's annual tax expenditure statement attempts to quantify how much revenue the Federal Government will forgo from various exemptions or concessions... Read more

In a country spoilt for choice for food, there are surprisingly slim pickings for the average investor when it comes to agriculture and the Australian stock market. Respected WA agribusiness leader David Lock believes there is a growing appetite for investment in the sector, but entry is difficult... Read more

BusinessDay Economic Survey: Share market flat all year, economic outlook bleak... Read more

Dividends in focus as miners set to weigh on reporting season... Read more

Mineral Resources says it is moving closer to big cost savings through exporting its Yilgarn iron ore through Esperance rather than Kwinana. MinRes has long eyed Esperance as a cheaper export option for its Carina operation, 100km north-east of Southern Cross, believing it will shave as much as $10 a tonne from Carina’s costs... Read more

A war of words between the prime minister and Clive Palmer has done little to ease the minds of Queensland Nickel's creditors, particularly sacked workers. Malcolm Turnbull called the federal MP's management of the company "shocking" on Friday ahead of its creditors' first meeting with administrators after 237 workers were axed from the Yabulu refinery a fortnight ago... Read more

Clive Palmer's company Queensland Nickel is more than $100 million in debt and will need "tens of millions" injected into the company to continue trading beyond April 30, administrators say. The Townsville refinery went into voluntary administration last week just days after it laid off more than 237 people... Read more

Low prices for commodities such as oil and coal continue to make it challenging for mining and energy companies and hence, explosives supplier Orica. Orica chief executive Alberto Calderon told shareholders at the company's annual general meeting on Friday that since early September 2015, the thermal coal price had fallen by around 16 per cent, iron ore by 20 per cent, copper by 20 per cent, and oil by 49 per cent... Read more

Wheatstone slips by six months. Chevron has confirmed major delays at its second budget-busting Pilbara LNG project, telling investors overnight that Wheatstone would not start up until the middle of next year... Read more

Cauldron Energy wins legal proceedings... Read more

BHP, Rio Dodge Worst as Cyclone Stan Misses Major Australia Port... Read more

Triton Minerals appoints Garth Higgo managing director... Read more

Blackmores' stock has risen a staggering 1268 per cent over the past ten years. For eight of those years, the stock went practically nowhere, then rose tenfold in the space of two. A chart of the vitamin maker's share price looks eerily like a hockey stick... Read more

Electronic security technology provider MaxSec has launched a fully-underwritten rights issue to raise about A$4.1 million to expand company headcount, global sales footprint and working capital for product orders. Expansion of international business activities is expected to include developments in security transportation and logistics verticals... Read more

Federal Health Minister Sussan Ley has demanded private health insurance companies provide more information to justify premium increases. The Health Department has ordered funds to reduce their proposed fee hikes or provide evidence of any extenuating circumstances as to why the proposed increases should be given the green light... Read more

Robot races: Can big banks hold off the fintech start-ups?... Read more

Gage Roads Brewing has seen sales of its own brand craft beer more than double, while contract brewing revenue has fallen. The Palymra brewer said total sales volume for the first half of the financial year fell 14 per cent from a year earlier to 743,000 carton equivalents... Read more

Fresh questions are being asked about the extent the State Government cites “commercial-in-confidence” to keep information secret.... Read more

Opinion - Ross Gittens: The mining industry's drag on the economy won't last forever... Read more

Opinion - Jana Matthews: A happy medium will drive economic growth... Read more

International Headlines

U.S. Market Report: Stocks Post Worst January Since 2009. Maybe the best thing you can say about the worst January for stocks in seven years is that an excess of optimism won’t be a problem for equities in 2016. Even with the Standard & Poor’s 500 Index’s rebound in the final two weeks, it wasn’t enough to reverse a selloff that at its lowest point erased $2.5 trillion from American shares. It could’ve been worse... Read more

North/South Americas Market Report: North and South American markets closed sharply higher on Friday with shares in Brazil leading the region. The Bovespa is up 5.29% while Mexico's IPC is up 2.92% and U.S.'s S&P 500 is up 2.48%... Read more

European Market Report: European markets closed sharply higher on Friday with shares in London leading the region. The FTSE 100 is up 2.56% while France's CAC 40 is up 2.19% and Germany's DAX is up 1.64%... Read more

Asian Market Report: Asian markets closed sharply higher on Friday with shares in China leading the region. The Shanghai Composite is up 3.09% while Japan's Nikkei 225 is up 2.80% and Hong Kong's Hang Seng is up 2.66%... Read more

U.S. corporations to report best and worst of times. Stock market investors who spent January swayed by oil prices, economic weakness in China and central bank speculation may continue to do that next week, even though it should be a dramatic one for earnings reports and economic data... Read more

Venezuela Tries to Convince Oil Nations to Cut Production... Read more

Economic Growth Cools as U.S. Consumers Temper Spending... Read more

The Federal Reserve probably needs to keep U.S. interest rates lower for longer given headwinds from weak global economic growth, a stronger dollar and an unexpectedly sustained drop in oil prices, a top Fed official suggested on Friday. San Francisco Federal Reserve Bank President John Williams told reporters he now sees slightly slower growth, slightly higher unemployment, and about a tenth of a percent lower inflation this year than he had expected in December, when the Fed raised rates for the first time in nearly a decade... Read more

General Electric, Verizon, Boeing: Bernie Sanders says he’s coming after you. Sanders, the Independent senator from Vermont, is naming some of the companies he’d go after to pay more corporate taxes if he’s elected president of the United States... Read more

Are you ready to go to Mars? SpaceX CEO Elon Musk said he's hoping to send people to Mars by "around 2025."... Read more

Over 1,000 workers at the Port of New York and New Jersey -- the largest on the East Coast -- went on strike Friday morning. One problem with the strike: the Port Authority, which operates the port, says it isn't sure why workers decided not to show up... Read more

Are mining shares the steal of the century? Shares in miners are at their cheapest for almost 12 years having collapsed by 76pc since early 2011, but there are important reasons to stay cautious... Read more

GM pitches new product strategy to skeptical investors... Read more

Border woes are another blow for Greece. Pity the irony. Just months after Greece struck a third bailout deal to remain in the European Union, it sits at the pointy end of threats to revoke its Schengen membership... Read more

Euro-area inflation accelerated in January, providing a reprieve for European Central Bank officials that may prove temporary as commodity prices continue their descent and emerging markets slow... Read more

The UK economy grew at its slowest rate since mid-2013 in the three months to January, according to the CBI. Its survey of manufacturers, retailers and the services sector showed a balance of 6% reporting increased business, the lowest since May 2013... Read more

Google Inc. denied it reached a “sweetheart deal” with British tax authorities as a dispute continued over the 130 million-pound ($185 million) settlement, which was called a victory by the U.K. Treasury and dismissed as "derisory" by opposition lawmakers... Read more

Google tax: Settlement 'not a glorious moment' for government... Read more

Corporation tax should be replaced with a levy on firms' UK sales, according to the former Chancellor Lord Lawson. It was "unsatisfactory" tax had to be collected from big firms through "ad-hoc" deals, he told the Telegraph... Read more

Europe's largest lender, HSBC, is imposing a hiring and pay freeze across the bank globally in 2016, two sources familiar with the matter told Reuters. An email was sent to staff on Friday detailing the latest cost-saving measures, according to the sources who spoke on condition of anonymity... Read more

Barclays, Credit Suisse Said to Pay $154.3 Million On Dark Pools... Read more

The Hounslow man accused of making spoof trades that helped destabilise the financial markets during the Flash Crash in 2010 will appear in court this week to fight extradition to the United States. Navinder Sarao, a 37-year-old who traded the Chicago markets online from his parents’ home in West London, was arrested last April and charged with 22 criminal counts including wire fraud and commodities manipulation... Read more

Britain's fourth-largest supermarket operator Morrisons on Sunday said it was cutting the price of more than 1,000 products, with an average drop of 19 percent across fruit and vegetable lines. The firm said it was launching a rolling program of reductions that will see the price of selected items cut for a minimum of three months. Morrisons said it would use it own fresh food manufacturing business to help keep prices down... Read more

Volkswagen is not under pressure to sell its trucks business to raise cash as it faces billions of euros in costs after admitting to rigging emissions tests, management board member Andreas Renschler told a German newspaper... Read more

Brazil's Petrobras to reduce investment plan by 5 percent... Read more

China May Resume U.S. Beef Imports in 2016, Ending 12-Year Ban... Read more

Mid-sized Chinese lender Citic Bank has been defrauded of up to $148 million, the company and media reports said, the second such incident in the industry to come to light in a week... Read more

PetroChina Co., the country’s biggest oil and gas producer, expects its 2015 profit to have fallen 60 percent to 70 percent from a year earlier because of the slump in energy prices... Read more

Foxconn's Gou Confident of Winning Bid to Take Control of Sharp... Read more

BoJ's negative interest rate: how it works. The Bank of Japan on Friday adopted a negative interest rate policy to spur lending and help drive inflation towards its two-percent target. The -0.1 percent interest rate introduced by the BoJ means that banks parking their money with the central bank are actually charged for doing so.... Read more

Sony swings to $1.95 bn net profit as PlayStation sales soar... Read more

About $4bn (£2.8bn) may have been stolen from a fund owned by the Malaysian state, a prosecutor says. The 1MDB fund was set up in 2009 to pay for major new economic and social developments in Malaysia. Last year, Swiss authorities opened an investigation into 1MDB after it amassed more than $11bn (£7bn) of debt.... Read more

Ten Million Reasons Why Falling Oil Might Hurt The Philippines... Read more

Opinion - Chuck Jaffe: Bill Ackman actually had a point with his index fund bubble theory. His argument might have been a smokescreen to cover up his own bad performance, but index investors ought to hear him out... Read more

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