ASB Securities Morning Brief for Tuesday, 21 April 2015
Tuesday, 21 April 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell, led by Xero, in a broad-based, global sell off, although Fonterra Shareholders' Fund units rebounded from a record low for the second consecutive day. The NZX 50 Index fell 37.205 points, or 0.6 percent, to 5824.277. Within the index, 25 stocks fell, 15 rose and 10 were unchanged. Turnover was $86 million... Read more

The New Zealand dollar gained on expectation the Reserve Bank will look through the impact of weak crude oil on headline inflation to focus on more-robust core prices and won't use today's consumers price index data as a reason to cut interest rates. The kiwi rose to 77.05 US cents at 5pm in Wellington, from 76.80 cents at the New York close on Friday. The trade-weighted index rose to 80.19 from 79.80 on Friday... Read more

Inflation slumps again - CPI dips 0.3pc... Read more

Petrol price falls main cause of second quarter of deflation... Read more

The New Zealand service sector, which makes up about two-thirds of the economy, expanded in March, after a drop in February, led by gains in new orders and stocks/inventories. The BNZ-BusinessNZ performance of services index increased 1.6 points to 57.6, with all five sub-indices remaining above the 50 level that separates contraction from expansion... Read more

Is investor confidence waning in Christchurch? Cracks are showing in the development of Christchurch's CBD, with key projects stalled or abandoned, investor confidence hitting dramatic lows, and completed buildings struggling to find tenants... Read more

China's biggest bank has begun making inroads into this country's mortgage market. Industrial and Commercial Bank of China New Zealand began lending last year and made $11.2 million in home loans in the 12 months to December 31, according to a disclosure statement lodged with the Companies Office... Read more

Are auctions the best option for sellers in Auckland?... Read more

Disclosing reserve price before auction boosts house price... Read more

Reserve Bank to crack down on reverse mortgages. Controversial "granny mortgages" are facing a crackdown by the Reserve Bank. The loans - also called "reverse mortgages or equity release" - have been criticised for being capable of wiping out the value of a family home and leaving relatives with nothing... Read more

Farm Prices Steady but Volumes Falling in March Quarter... Read more

The reduced dairy payout and the high Kiwi dollar are being carefully assessed by potential farm buyers, says the Real Estate Institute of New Zealand. Dairy farmers this season are faced with a farmgate milk price forecast of $4.70 a kg of milksolids, down from last year's record price of $8.40. At the same time, the New Zealand dollar has remained firm, trading yesterday at US76c... Read more

Pokeno's $212 million infant milk formula factory has hit an eight-month delay as it works its way through red tape. The Chinese -owned Yashili International Holdings plant was due to kick off production in February, and gradually build up to full operation over this year... Read more

New Zealand wool prices remained steady at the latest weekly auction as volumes decline following the end of the main shearing season. The price for clean 35-micron wool, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand's production, was unchanged at $5.35 per kg at last Thursday's North Island auction, according to AgriHQ. Lamb wool slipped 2.3 per cent to $6.30/kg but remains 30 per cent higher than it was a year ago... Read more

AMP pulls back from bonds. Cash is now providing a better insurance option for investment portfolios than bonds, says AMP Capital’s head of investment strategy... Read more

Tobacco tax edges out deflation. Were it not for the annual increase in the tax on tobacco the consumers price index would have recorded outright deflation for the year to March.... Read more

NZX's disciplinary arm to review penalties, flags director fines, infringement notices... Read more

Two years after receiving a $30 million handout from taxpayers the Tiwai Point aluminium smelter is "squarely in the black", says an industry analyst. The smelter, which employs more than 3000 people in Southland, had claimed its future was in doubt as it sought to cut the price of its electricity supplies through a contract with Meridian Energy... Read more

Comvita, the Te Puke based maker of health products based on manuka honey, affirmed its guidance for a 25 percent rise in full year earnings, saying it has sufficient supplies of honey to meet growing sales. The shares fell 0.8 percent to $3.97 and have gained 27 percent in the past 12 months.... Read more

Tower Limited has strengthened its reinsurance coverage relating to a "long tail" rebuild and repair period Christchurch is experiencing with the 2011 earthquakes. Tower chief executive David Hancock said Tower had secured an additional $50 million in reinsurance cover for any adverse developments associated with the quake sequence... Read more

Fundsource has announced it is partnering with Financial Express to provide a new product for advisers to compare managed funds. The NZX-owned research house supplies data primarily to financial advisers and wholesale clients... Read more

Educators fear profits are coming before kids as the number of commercial operators entering the early childhood market continues to grow. Critics say the large, for-profit franchises are driving out community organisations, including kindergartens... Read more

NZ websites face getting bumped. Thousands of New Zealand businesses could have their websites bumped down Google's search rankings if they have not met the requirements for mobile from today. However, tech commentator Peter Griffin says the search engine giant is likely to tread cautiously... Read more

New Zealand broadcasters have confirmed they've launched legal proceedings against internet service providers who give customers' access to "global mode", which allows customers access to offshore online content, claiming it breaches the local content providers' copyright... Read more

Mt Albert residents who feared an 80-unit Housing NZ scheme in their neighbourhood have been told of much smaller plans.... Read more

The Cornwall Park Trust Board has proposed sweeping changes to the leases on 110 Auckland properties it owns, including axing five-yearly mandatory house repainting demands... Read more

ASB introduces temporary "block" for misplaced cards.... Read more

Michelle Xie has joined Mortgage Express's Auckland-based team of mortgage advisers... Read more

Mussel processor Sanford has shut its plant in Christchurch at a cost of more than $2 million in exit pay. Production stopped at the seafood company's plant at Matipo St in Riccarton just after midday on Monday. The 232 staff were told their jobs were in the balance on April 9 and they had confirmation of that at 1pm.... Read more

Workers on controversial "zero-hour" contracts are not only missing out on stable hours - they're also handing over too much of their pay to the taxman. The employment agreements, which give workers no guarantee how many hours they will get each week, are under close scrutiny from unions and politicians... Read more

Opinion - Roger J Kerr: Two-speed economy re-emerging. Roger J Kerr says in 12 to 18 months lower rural incomes will start feeding through to the 'bubble sub-economies' of Auckland and Christchurch... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket closed substantially softer as worries about a Greek debt default and Chinese central bank actions caused investors to pull out of the local market. At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index had fallen 44.8 points, or 0.76 per cent, to 5,833.1, while the broader All Ordinaries index was down 44.4 points, or 0.76 per cent, at 5,807.1.... Read more

The Australian dollar continued to trade around its highest levels in a month today supported by news over the weekend of more stimulus for China’s economy, and a widening view that an interest-rate cut locally may not be needed in May. At 4pm (AEST), the Aussie was trading at US78.17, compared with US77.91 on Friday.... Read more

The head of the Reserve Bank says the booming Sydney property market gets far too much attention, and further interest rate cuts are possible. Two years of double digit home price growth in Sydney have heightened fears of a property bubble, which may prove a deterrent to cutting record low interest rates... Read more

New economic reports validate Tasmanian Government policy: Premier... Read more

The ACT economy is lacking momentum with unemployment more than 26 per cent above its decade average, according to a new report. CommSec's quarterly State of the States report found that on economic performance the ACT economy was ranked sixth compared to other states and territories, ahead of only South Australia and Tasmania... Read more

WA's economy faces its toughest period in more than a decade, with growing fears there are no new major projects to prop up the State... Read more

New South Wales has reclaimed the title of the nation's best performing economy as the strong housing market props up the state's finances. CommSec's latest quarterly State of the States report shows the Northern Territory, which shared the top spot with NSW three months ago, now takes second place, followed by the former mining powerhouse of Western Australia... Read more

Super savings are on track for their best run of growth since the pre-GFC era despite concerns about Greek debt and an economic slowdown in China. Double-digit returns are likely for this financial year, investment research group Chant West says... Read more

Premier Colin Barnett says he still supports the development of a multibillion-dollar iron ore project in the West Pilbara, despite threatening to withhold support for further expansions by BHP Billiton and Rio Tinto... Read more

Evolution Mining has snared the West Australian gold assets of an Egyptian billionaire and picked up a $100 million cash injection to put towards future acquisitions.... Read more

Stonehenge Metals’ shares have risen steadily following its acquisition of wave energy company, Protean Wave Energy... Read more

Glencore has been frozen out of negotiations with the traditional owners of the Aurukun bauxite deposit over which it has been granted preferred developer status. It is understood the company has been issued with a legal letter telling them that under an indigenous Land Use Agreement the Ngan Aak Kunch, which represents the Wik and Wik Way native titleholders, that there will be no negotiations with anyone other than Australian Bauxite Developments... Read more

MinQuest Limited has been granted an ASX trading halt in relation to a capital raising.... Read more

Oz Minerals will move beyond its traditional copper and gold mining operations as it looks to take advantage of the resources sector's slump and hits the acquisition trail. The miner is overhauling its business under a new corporate strategy that will likely see it expand into other metals. Oz Minerals shares fell two cents to $3.89 on Monday.... Read more

Arrium lost almost $9 per tonne on iron ore in March quarter... Read more

Rail and port operator Asciano expects to grow its 2015 underlying earnings before interest and tax at a faster rate than the five per cent achieved in 2014, on the back of higher volume growth and efficiencies from the restructure of its Pacific National rail haulage business... Read more

Rail and port operator Asciano's chief executive John Mullen is predicting stronger profit growth this year and says the underlying Australian economy is still strong... Read more

James Packer's Melco Crown Macau joint venture faces structural decline: analysts... Read more

Cell Aquaculture has completed the acquisition of the Haikou Project within the Haikou Integrated Free Trade Zone in China. The company will be changing its name to CAQ Holdings Limited and will be reinstated under its current ASX code “CAQ”... Read more

Ochre Group Holdings has been granted an ASX trading halt in relation to a significant and material corporate transaction... Read more

Telstra slams ACCC for “baffling” control of wholesale access pricing... Read more

Australia's second largest telco Optus has opened up the issue of net neutrality in Australia by suggesting over-the-top content players like Netflix pay a fee to ensure quality of service... Read more

NBN Co to start second FTTN trial... Read more

Holden has announced up to 270 jobs will go from its South Australia Elizabeth plant next month, citing a reduction in demand for locally made cars. The plant will reduce production from 290 to 240 cars per day as of May 25, leading to more than 250 redundancies, Holden director of communications Sean Poppitt says... Read more

Name and shame the 'worst offenders' dodging tax: Greens. Companies would be forced to reveal any arrangements that are used to avoid tax, and those not paying their fair share of tax would be named and shamed on a "worst offenders" list, under a plan by the Greens... Read more

A bid to recover proceeds of crime money from former timber boss John Gay can go ahead, but for a lesser amount than the original $3.1 million sought, the Supreme Court has ruled. The former chairman of the now collapsed company Gunns was convicted in 2013 of insider trading and fined $50,000 for selling Gunns' shares in 2009 when he had price-sensitive information... Read more

Opinion - Elizabeth Knight: China's cash flood floats local shares... Read more

Opinion - Callam Pickering: Australia needs a super reform plan... Read more

Analysis - Stephen Letts: China slowdown to leave Australia in 'dire' fiscal position... Read more

International Headlines

U.S. Market Report: U.S. stocks rose on Monday, reversing much of the previous session's sharp decline, as China's steps to stimulate its slowing economy and as earnings lured money back into equities. At 11:30 a.m. EDT the Dow Jones industrial average .DJI rose 241.7 points, or 1.36 percent, to 18,068, the S&P 500 .SPX gained 21.39 points, or 1.03 percent, to 2,102.57 and the Nasdaq Composite .IXIC added 59.37 points, or 1.2 percent, to 4,991.19... Read more

North/South Americas Market Report: North and South American markets are mixed today. The S&P 500 is up 0.94% while the IPC gains 0.14%. The Bovespa is off 0.54%... Read more

European Market Report: European markets finished broadly higher today with shares in Germany leading the region. The DAX is up 1.74% while France's CAC 40 is up 0.86% and London's FTSE 100 is up 0.82%... Read more

Asian Market Report: Asian markets finished broadly lower today with shares in Hong Kong leading the region. The Hang Seng is down 2.02% while China's Shanghai Composite is off 1.64% and Japan's Nikkei 225 is lower by 0.09%... Read more

Oil prices rose on Monday after data showing a partial draw in stockpiles at the delivery point for U.S. crude helped steady a market weighed earlier by near record highs in Saudi production... Read more

BP says taking more oil from Iraq as payment... Read more

It’s what is feared by markets and by Federal Reserve officials alike — a rerun of the May 2013 taper tantrum, when yields spiked higher on the suggestion of an imminent reduction in bond purchases... Read more

Fed funds rate holds at 0.13 percent... Read more

Economic performance will determine when the Federal Reserve finally raises U.S. interest rates from near zero, an influential Fed official said on Monday, adding he hopes to tighten policy later this year. "We have to see what unfolds," New York Fed President William Dudley said in a speech that repeated cautious optimism that the U.S. economy will continue to expand and that inflation will begin to firm later this year... Read more

Elon Musk negotiated a sale of Tesla to Google and shook hands on the talks, but a deal never came together in the end, according to a new book about the Tesla CEO... Read more

General Electric Co is in early-stage talks with Wells Fargo & Co about selling its entire $74 billion U.S. commercial lending and leasing portfolio to the bank, according to a source familiar with the situation... Read more

Comcast, Time Warner Cable to meet regulators in bid to save merger... Read more

Halliburton Co's quarterly profit beat analyst expectations by the biggest margin in at least eight quarters as cost cuts helped the oilfield services provider offset a steep fall in drilling in North America, its biggest market. The company's shares rose as much as 4.4 percent to $48.93 on Monday... Read more

Groupon to sell 46 percent stake in Ticket Monster for $360 million... Read more

Morgan Stanley posts highest profit since financial crisis... Read more

A union representing Wal-Mart workers who lost their jobs when the retailer suddenly closed five stores last week said it would seek an injunction on Monday from the National Labor Relations Board to have them rehired. Wal-Mart announced last week that it was closing five stores in Texas, Oklahoma, Florida and California temporarily to fix plumbing issues. It said it would seek to reopen the stores, which employed about 2,200 people, as quickly as possible... Read more

'This is a new low even for Walmart,' say fired workers... Read more

Cirque du Soleil being sold to private-equity group led by TPG. Cirque du Soleil said Monday that its founder has agreed to sell his controlling stake in the Canadian circus company to an investor group led by U.S. private-equity firm TPG.... Read more

The U.S. Supreme Court on Monday left intact the 2012 insider trading conviction of former Goldman Sachs Group Inc director Rajat Gupta... Read more

Greece asks public agencies to hand over reserve cash. Greece has ordered its public sector bodies to hand over any reserve cash to help it meet a payment due to the International Monetary Fund. The country is running out of cash and must repay the IMF nearly €1bn in May... Read more

Greece needs to urgently do much more to present an acceptable plan to gain further EU financing, European Central Bank chief Mario Draghi says.... Read more

Were Greece to leave the euro, it would not have the same impact on the euro zone as it would have had two years ago, an ECB policymaker said on Monday, urging the Greek government to provide "numbers" to qualify for further aid... Read more

The yield on the Greek 3-year bond passed back above 28 percenttoday (it had briefly gone above 28 percent on an intraday basis last Thursday)... Read more

Russian billionaire Mikhail Fridman must sell his North Sea gas fields within six months, the UK has ordered. His LetterOne Group acquired the assets as part of a €5.1bn acquisition of the oil and gas arm of Germany's RWE... Read more

The company behind the Birds Eye and Findus brands, Iglo Group, is being sold for €2.6bn (£1.9bn) to US investment vehicle Nomad Holdings. Iglo Group, Europe's biggest frozen food business, has been owned by the private equity firm Permira for the past eight years after it bought the business from Unilever... Read more

Item Club predicts UK economic growth of 2.8% this year... Read more

Margrethe Vestager, Europe’s powerful antitrust chief, is expected on Wednesday to charge the Russian gas exporter Gazprom with abusing its dominance in natural gas markets to raise prices and quash competition. The move should please countries like Lithuania and the United States that have been pushing the authorities in Brussels to crack down on Gazprom, a state-controlled company that the Kremlin depends on for significant export earnings... Read more

As Petrobras scandal spreads, economic toll mounts for Brazil... Read more

Turnover explosion at Shanghai stock exchange has too many zeros for software... Read more

Hutchison Whampoa Ltd, controlled by Asia's richest man Li Ka-shing, and CK Hutchison Holdings Ltd said on Monday their shareholders have approved their reorganization proposal, bringing it a step closer to completion. Li's property flagship Cheung Kong had in February sought shareholders' approval for part of the restructuring plan that changed the company name and switched its incorporation base to the Cayman Islands... Read more

President Joko Widodo urged investors on Monday to come to Indonesia, promising "incredible profits" and assuring them that if they run into any problems they can give him a call. Widodo, who was elected president six months ago amid hopes that he would bring much-needed reform to Asia's fifth-largest economy, has come under fire recently for failing to deliver radical change and a series of policy reversals... Read more

Indonesia seeks to lure investors at 'Asia's Davos'... Read more

Japan and the United States continued the second of two days of tough trade talks on Monday that could pave the way for a broader trans-Pacific agreement, although Tokyo shrugged off expectations of a bilateral deal in time for a summit next week... Read more

Japan's Daiichi Sankyo Company Ltd is selling shares worth up to $3.6 billion in Indian drugmaker Sun Pharmaceutical Industries Ltd, setting it on course to retreat from India after a rollercoaster seven years... Read more

Pakistan lands $46 billion investment from China... Read more

Xiaomi to Unveil its Newest Phone in India First... Read more

India's central bank is working on improving the integration between e-commerce firms and the country's banking systems, a deputy governor of the Reserve Bank of India said on Monday. "One area which we will now be looking at very closely, which is emerging, is how to provide integration between e-commerce platforms and banks," Deputy Governor H.R. Khan said at a banking industry event... Read more

Opinion - Nils Pratley: Lloyds share sale is a bung to those who can afford it... Read more

Opinion/Analysis - Silvia Merler: The bright spots in a bleak Greek budget... Read more

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