ASB Securities Morning Brief for Saturday, 23 July 2016
Saturday, 23 July 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, pushing the benchmark index to a new record as continued lower interest rates nudged investors to seek better returns from equities. Steel & Tube Holdings and Fisher & Paykel Healthcare gaining while Comvita and Restaurant Brands fell. The S&P/NZX50 Index gained 12.01 points, or 0.2 percent, to 7226.06. Within the index, 17 stocks gained, 31 fell and three were unchanged. Turnover was $108 million.... Read more

The New Zealand dollar is heading for a 1.5 percent weekly decline against the greenback, reflecting the Reserve Bank's signal that it needs to cut interest rates to drive down the currency and stoke inflation. The kiwi traded at 70.03 US cents at 5pm in Wellington, from 69.88 cents late yesterday and down from 71.09 cents a week ago. The trade-weighted index was at 75.06, little changed from 74.97 yesterday and down from 76.01 a week ago... Read more

Staff turnover is rising with more workers in New Zealand willing to risk taking on a new job in the current economic climate. Simon Bennett, chief executive of AWF Madison, the country’s largest recruiter and temporary labour provider, said anecdotally, average employee tenure was decreasing... Read more

Fallout from mortgage limits seen as threat to small firms. New lending restrictions for residential property investors will make it harder for small-business owners to access capital when they need it, a mortgage broker is warning. On Tuesday the Reserve Bank revealed plans for new restrictions on property investors, increasing the equity required to 40 per cent... Read more

Investors will soon be able to see what the Auckland Unitary Plan might mean for their properties and, potentially, the development of them. After years of controversy, the Independent Hearings Panel will hand over its report on the Proposed Auckland Unitary Plan (PAUP) to Auckland Council chief executive Stephen Town this afternoon. The Panel’s report will then be analysed by a select group of Council staff over the next few days... Read more

The residential real estate industry had its best quarter ever in the second quarter of this year, with estimating it earned a record $468.6 million from residential sales commissions in the three months to June, according to the latest Housing Market Activity Report. The report says the $468 million figure is conservative, because estimates industry commissions at 4% of the first $300,000 of the selling price and 2% of the balance (plus GST) which is at the low end of the commission scale... Read more

Britons and Americans hammering at the door, Immigration NZ figures show. There's been a massive increase in the number of Britons and Americans planning to come to New Zealand since Britain's Brexit vote and Donald Trump's political rise. The surge in interest in New Zealand was confirmed as the Real Estate Institute compiled a chart laying bare the strong connection between net migration and house price rises... Read more

Our comprehensive review of conservative KiwiSaver fund performance to June 30, 2016, identifying who has the best long-term returns... Read more

FAA review means advisers spend less time advising clients. Small financial advice firms who have only just finished getting their businesses in line with the current Financial Advisers Act now face a hefty bill to do it all over again... Read more

Fonterra Cooperative Group says the decline in milk collection last month wasn't as big as previously thought because the extra day of a leap year mucked up its modelling. The Auckland-based cooperative collected 9.9 million kilograms of milk solids in June, but revised down the year-earlier June collection to 10 million kgMS, meaning the monthly decline was only 1.4% and not the 10% drop it reported earlier this month... Read more

Silver Fern Farms’ Board remains unanimous in its view that the partnership with Shanghai Maling is in the best interests of shareholders and the co-operative. · The Special Meeting will be held at Silver Fern Farms’ Dunedin Corporate Office, 283 Princes Street, Dunedin at 1pm on Friday, 12 August 2016. The Notice of Meeting is now on-line at Shareholders will receive their Notice by mail over the next 7 days... Read more

Silver Fern Farms has got Grant Samuel to back its proposal to sell half its meat processing assets to China's Shanghai Maling Aquarius ahead of a second shareholder vote, which the board will ignore if support for the deal evaporates. In the notice to shareholders of the Aug. 12 meeting in Dunedin, Grant Samuel again said the terms of the transaction were "fair and reasonable" to shareholders, with the meat company still "undercapitalised and a financial restructuring is critical to its future."... Read more

Restaurant Brands New Zealand hopes to introduce home delivery for its KFC brand before the end of the year. The listed company, which operates the fast food chains KFC, Pizza Hut, Carl's Jr and Starbucks, has been working on home deliveries of KFC as a concept for the past 12 months. The shares fell 0.7 percent to $5.41 today and have gained 22 percent this year, outpacing the S&P/NZX 50 Index's 14 percent gain... Read more

China Construction Bank, that nation's second-largest lender, has provided $140 million of equity capital to its New Zealand subsidiary to help fund lending growth, the biggest such infusion since the local unit was established with $58.6 million in 2014. China Construction Bank (New Zealand), which counts former prime minister Jenny Shipley and former PwC chair John Shewan among its five directors, issued 100 million to its parent this month, tripling shares on issue to 158.6 million, according to the Companies Office... Read more

Steel & Tube Holding's share price has recovered from a fifteen-year low after a flow of bad news ceased. The stock last traded at $2.20, having gained 18 percent so far this month, and rising 4.3 percent today, making it the top performer on the S&P/NZX 50 Index for this session... Read more

Country pubs in the South Island face closure unless they can reinvent themselves according to real estate agents. They say the days of just pulling pints are gone and rural hotels need good food, views, accommodation and to consider selling local artisan food products. Andrew Chisholm of Tourism Brokers said his firm has just sold the accommodation part of The Bealey Hotel near Arthurs Pass, but the separate bar business remains on the market... Read more

Insurance Council on why it's taking so long for quake claims to be settled; highlights inaccuracies in govt data on the matter... Read more

Education futurist Frances Valintine fears New Zealand risks being left behind in the global digital revolution. Valintine wants to create a technologically capable New Zealand, where we have a workforce skilled in the areas of massive growth around the world, like cybersecurity, data science and robotics... Read more

Wellington's Lyall Bay will be the new home of craft beer producer ParrotDog – but the exact date the doors will swing open will remain a closely guarded secret. The brewer has confirmed 60-66 Kingsford-Smith St will become its new base... Read more

Nirvana Health Group Director and Pakuranga resident Ranjna Patel is a finalist in the Ernst & Young Entrepreneur of the Year competition. The 18 finalists were announced during a special event at the ASB Cube in Auckland’s Wynyard Quarter last night. The EY Entrepreneur of the Year is one of the world’s most prestigious business awards... Read more

Man who used PAYE money for personal purposes jailed. A man who took tax from his employees' wages but didn't pass it on to the tax department has been sent to jail. Steven Wayne Morrow, 49, of Hamilton, owed Inland Revenue about $350,000 in PAYE and instead used the money for other purposes that included personal spending and shifting it between companies.... Read more

Thieves have made off with $500,000-worth of beehives from a pine forest in Northland. A public notice on Friday said 200 honey bee colonies - equating to 1 million bees - were stolen from the Topuni Forest, 10 Kilometres north of Wellsford some time in the week leading up to July 16... Read more

Australian-owned carpet maker Godfrey Hirst has been given a small window to appeal a High Court ruling as it continues efforts to stop New Zealand's largest wool scouring operations from merging. In the High Court in Auckland, Justice Murray Gilbert let Godfrey Hirst pursue its bid to overturn regulatory approval letting Cavalier Wool Holdings NZX: CAV buy New Zealand Wool Services International's wool scouring business and assets, a July 15 judgment released today shows... Read more

Agents await punishment over dodgy deals. Two Auckland real estate agents and their boss are awaiting punishment for their part in two deals where homes were on-sold - in one case on the same day - for huge mark-ups.... Read more

Kiwis thought to be less likely to help themselves at self-service checkouts. Waves of thefts from self-service checkouts overseas are less likely to be as common here, experts believe. A British criminologist Adrian Beck told Australian media this week that shoppers were very good at "neutralising" their moral concerns, and could be tempted to steal from a self-serve counter where they would never steal from a shelf... Read more

Opinion - Brian Gaynor: A growth industry you can bet on. The rapid rise of sports gambling means more money for sporting bodies -- and more scope for match-fixing... Read more

Opinion - Brian Fallow: Why the Reserve Bank shouldn't cut rates. Real danger is house prices, not low inflation. If the Reserve Bank cuts the official cash rate on August 11, as the financial markets expect, it will do more harm than good. It will make it more attractive to borrow at a time when household debt is already at a record high relative to incomes... Read more

Opinion - Gareth Morgan: Housing train wreck decades in the making... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has ended the week on a sour note, finishing in the red for just the second time in 12 sessions after a lacklustre lead from offshore markets. At the closing bell, the benchmark S&P/ASX 200 index had dipped 14.2 points, or 0.26 per cent, to 5,498.2, while the broader All Ordinaries index eased 14.4 points, or 0.26 per cent, to 5,574.3.... Read more

The Australian dollar has recouped some losses as the greenback slides. At 0630 AEST on Friday, the local unit was trading at 74.95 US cents, up from 74.88 cents on Thursday.... Read more

Benign price pressures are tipped to push the Reserve Bank to slash the cash rate to a new record low of 1.5 per cent next month. The Consumer Price Index (CPI) is expected to have risen 0.5 per cent in the June quarter for an annual rate of 1.1 per cent, according to an AAP survey of 10 economists... Read more

Economists this week turned their attention to the inflation figures due on Wednesday and the strong chance of another interest rate cut next month. HSBC economists Paul Bloxham and Daniel Smith said the consumer price index numbers are always important for the Reserve Bank... Read more

How to prepare now for age pension rule changes in Australia. Pensioners and people nearing retirement are being urged to check their assets ahead of rule changes that will affect hundreds of thousands of Australians. Changes to the age pension assets test come into force in less than six months, and advisers believe many people are unaware of their impact... Read more

Ramelius Resources Ltd's shares have recently been trading at 12-month highs, as the gold producer continues to benefit from the high price of the yellow metal in Australian dollars Ramelius is now taking the opportunity to increase its cash position, and the ASX has granted the company a trading halt pending capital raising details... Read more

Under pressure to find growth, Woodside Petroleum yesterday declared its flagship Pluto LNG plant near Karratha was freezing gas at more than 16 per cent above its installed capacity. The 5mtpa run rate achieved in the June quarter compares with Pluto’s 4.3mtpa design and continues the outperformance of Woodside’s 90 per cent-owned asset since first LNG output in 2012... Read more

Struggling steelmaker Arrium will secure a $49 million federal government lifeline under a loan that Prime Minister Malcolm Turnbull's government says will protect thousands of at-risk jobs. Friday's announcement comes after the Coalition made a pre-election pledge to loan Arrium the money for new machinery that will allow it to produce a higher grade of steel and boost the company's profitability... Read more

Arrium workers in South Australia have signalled they won't accept a 12 per cent pay cut to help save the Whyalla steel plant. Administrators KordaMentha have proposed a three-year pay reduction for workers across the mining and steelworks operations which would include a two per cent increase in the final year... Read more

Pioneer Resources has raised $4.8 million for the drilling programs at its most advanced lithium projects.... Read more

Paladin Energy Ltd granted ASX trading halt... Read more

Gold and copper producer OZ Minerals says it is on track to achieve its full year production guidance, despite an unscheduled plant closure and bad weather during the June quarter. The miner's copper production in the three months slipped nearly 12 per cent from the previous quarter to 27,350 tonnes, although gold production was higher at 30,099 ounces. OZ Minerals shares gained six cents to $6.51... Read more

BHP Billiton will walk away from its Kurra Village fly-in, fly-out camp in Newman, delivering Nationals leader Terry Redman a political win over Premier Colin Barnett in a bitter stand-off over the contentious workers camp... Read more

Record first half production from oil and gas producer Santos has eased the pain of a 29 per cent slide in realised prices. Santos produced 31.1 million barrels of oil equivalent (mmboe) in the first half of the year, up 10 per cent on the previous first-half result... Read more

Alicanto Minerals Ltd has a project acquisition update to provide, with the ASX granting the company a trading halt to prepare details.... Read more

The owners of third-ranked mobile player Vodafone say they are committed to the Australian market amid mounting speculation that telco provider TPG Telecom could make a play for the group. Vodafone Hutchison Australia chief executive Inaki Berroeta said the group's two owners, Vodafone Group and Hutchison Whampoa, are "committed" to the business, which has made strides since a string of network outages in late 2010 and 2011 that became known as "Vodafail"... Read more

Poker machine reform raises stakes for Woolworths supermarket chain... Read more

Macquarie Atlas Roads increased weighted average toll revenue and traffic for the June quarter by 5.2% and 2.1% respectively. This reflected the increased traffic levels and revised toll schedules implemented over the past 12 months... Read more

The WA-arm of global agribusiness giant Bunge reported a loss of $2.1 million in the second year of operations at its Bunbury Port grain terminal and two receival sites in the Wheatbelt. It has racked up combined losses of $3.4 million in two years after investing $40 million in the port terminal... Read more

Bunnings could soon have a new rival in the $46 billion home improvement market, with Metcash poised to merge its Mitre 10 business with Woolworths’ Home Timber and Hardware business. The competition watchdog yesterday announced it would not oppose Metcash’s bid for HTH after the supermarket wholesaler promised to let stores buy products from suppliers other than Mitre 10, making Metcash the front runner to buy the hardware store chain... Read more

Collapsed Eagle Boys pizza chain had been in dire financial straits since 2012 due to a serious case of short-term debt indigestion, the group's accounts show. Auditors to the majority private equity owned chain have been questioning the viability of Australia's third largest pizza chain for years, according to company documents... Read more

The Australian arms of the world's biggest record companies could secure themselves an easy win against the operator of an alleged piracy site, after the US government forced Kickass Torrents offline. The music industry took to the courts in April to get local access to the Kickass Torrents torrent directory blocked by Australia's internet service providers... Read more

Danakali Ltd outlines parties for non-binding off-take... Read more

LandCorp has signed a deal with Lendlease to begin work on developing a 145ha site at Alkimos on the coast north of Perth for a residential development. The development, to be known as Alkimos Central, will eventually be home to 4650 people... Read more

The six Jamie Oliver Italian franchise restaurants caught up in the collapse of one of the country’s biggest hospitality companies will be be offered for sale as a single lot. The outlets, including WA’s lone Jamie’s Italian in William Street in Perth, are amongst 17 venues to be sold by property agents CBRE on behalf of the administrators of Keystone Hospitality... Read more

NAB landmark court case could have far-reaching consequences for consumer banking. A court has ruled National Australia Bank did not properly inform a customer who went guarantor for $8 million in loans, meaning he would not have to pay back money still owed. In a decision that could have wide-reaching ramifications for banking, the Supreme Court of Victoria has upheld a decision that banks are legally bound to adhere to an industry code of practice, even though it is voluntary... Read more

A sweeping reorganisation of National Australia Bank's top leadership will see the bank's most senior technology executive depart at the start of next month and IT given elevated prominence in the executive ranks... Read more

Brierty’s chief operating officer Ray Bushnell will replace Peter McBain as chief executive of the troubled contractor immediately, following his resignation. Mr McBain's departure follows several blowouts on a problematic road project and impairments to assets that have dogged the contractor for the past few months. Brierty shares were steady at 8.5 cents at the close... Read more

The operators of a prominent recycling company have sought to escape massive penalties for the death of an employee after shutting down the business and resurrecting it under another name. AB Recycling - listed as a cardboard recycler for Coles, IGA, Foodworks, Bunnings and Westfield - was found guilty of grave safety violations that led to the 2014 death of worker Steve Bower... Read more

Opinion - Roger Wilkins: Survey says: Still static after all these years. conomic wellbeing is no longer advancing as it was prior to the global financial crisis, but the effects of the slowdown have been relatively equitably distributed. The challenge for Government is to ensure they continue to be, writes Roger Wilkins... Read more

Opinion - Jessica Irvine: All eyes on inflation next week, but not everything is as it seems...... Read more

International Headlines

U.S. Market Report: Wall Street rose on Friday, clinching the fourth straight positive week for the stock market, boosted by strength in telecom stalwarts AT&T and Verizon. A U.S. manufacturing report also came in above expectations, building on upbeat data from earlier in the month. Gains were limited by weakness in reports from industrial companies including General Electric... Read more

North/South Americas Market Report: North and South American markets finished mixed as of the most recent closing prices. The Bovespa gained 0.64% and the S&P 500 rose 0.46%. The IPC lost 0.30%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The FTSE 100 gained 0.46% and the CAC 40 rose 0.11%. The DAX lost 0.09%... Read more

Asian Market Report: Asian markets finished broadly lower today with shares in Japan leading the region. The Nikkei 225 is down 1.09% while China's Shanghai Composite is off 0.86% and Hong Kong's Hang Seng is lower by 0.16%... Read more

Amazon to enter student loan business... Read more

Yahoo's days as an independent company may be nearing an end. After a much publicized sale process that dragged on for months and drew interest from parties as diverse as Warren Buffett and The Daily Mail, Yahoo may finally have found a match: Verizon.... Read more

Apple Watch sales are down 55%... Read more

Months after TiVo Inc. awarded its former chief executive officer a $23.4 million golden-parachute payment, shareholders got a chance to express their opinion, and it was a resolute thumbs down.... Read more

Jeff Bezos passes Warren Buffett to become third richest person in the world... Read more

Fox News boss Roger Ailes resigns amid sexual harassment charges. Roger Ailes, the long-time boss of Fox News, has resigned after a number of female employees accused him of sexual harassment. The network's parent company, 21st Century Fox, announced his resignation.... Read more

European Central Bank policy makers currently see no urgent need to adjust or expand their bond-buying program in September, according to euro-area officials familiar with the matter. The Governing Council, which met in Frankfurt on Thursday, views its 1.7 trillion-euro ($1.9 trillion) quantitative-easing plan as effective even after the U.K.’s vote to leave the European Union, and at no immediate risk of running into a shortage of assets, the people said... Read more

Sainsbury's gets all-clear to buy Argos. Supermarket chain to put Argos stores on its premises, adding to its own range of homeware, after green light from watchdog... Read more

L’Oreal SA agreed to acquire IT Cosmetics for $1.2 billion in its largest acquisition in eight years, adding more than 300 skin-care and makeup products to its lineup. IT Cosmetics, backed by TSG Consumer Partners, will become part of the Luxe division of L’Oreal as part of the all-cash transaction, according to a statement on Friday. IT will continue to operate out of its headquarters in Jersey City, New Jersey... Read more

Ouch! Brexit leads to 'dramatic deterioration' of UK economy. t's been one month since the U.K. voted to leave the European Union and British businesses are already taking a major hit. An early reading of factory and services activity in July revealed the sharpest decline in output since the height of the global financial crisis, new data from IHS Markit showed on Friday.... Read more

Jitters in London luxury flat market as investors sell for 'bargain' prices Apartments bought off-plan offered for sale at less than price originally agreed with developers as data suggests Brexit vote could lead to housing sales slump... Read more

Sir Philip Green's knighthood under review as tycoon braces for potentially damning report from MP's... Read more

MPs have accused one of Europe's biggest retailers of not treating its workers like humans. A report by the Business, Innovation and Skills committee states Sports Direct founder Mike Ashley must be held accountable for company failings. Evidence suggested Sports Direct's working practices were similar to those of a Victorian workhouse, one MP said... Read more

IMF's Christine Lagarde to stand trial over fraud case... Read more

Lagarde Seen Likely to Avoid Jail Time, Keep IMF Job Amid Trial... Read more

Rocket Internet SE, Germany’s highest-profile startup investor, contributed 68 million euros to a 330-million-euro ($364 million) funding round for its startup Global Fashion Group, completing a deal first announced in April. The financing values Global Fashion Group at 1 billion euros, less than half what the holding was worth last year. Rocket said three months ago that it planned to invest more in the startup at the lower valuation... Read more

Emerging markets are suddenly hot. A "stampede" of cash recently rushed into emerging markets -- to buy both stocks and bonds -- according to Bank of America and research firm EPFR. A record $4.9 billion flowed into emerging market bond funds between July 14 and July 20 and another $4.7 billion into stocks of developing countries like Brazil, South Africa and India. That's the largest one-week inflow in a year... Read more

Russian airlines have resumed regular passenger flights to Turkey, after a temporary suspension in the wake of the failed coup in Turkey was lifted by Russia's transport ministry. The ministry lifted restrictions "after receiving assurances from the Turkish side on urgent measures taken for the increased security of Russian citizens," it said (in Russian). Turkey's tourism relies on Russians... Read more

Chinese flock to America to work for companies they've bought. China is sending thousands of executives to the U.S. to work for companies bought by their Chinese rivals. The number of Chinese expat employees working in the U.S. has spiked dramatically over the last decade, a trend experts say is linked to the explosion in takeovers of American firms... Read more

North Korea economy shrinks most in eight years... Read more

Japanese Splurge on Foreign Bonds as U.S. Yields Near Record Low... Read more

Opinion/Analysis - Peter Spence Szu Ping Chan: How could Philip Hammond 'reset' the UK's economic policy?... Read more

Opinion - Fiona Brandhorst: House prices: What have the Romans ever done for us? What have the Romans ever done for us? So asked Reg in Monty Python’s Life of Brian. Well, quite a lot, and their prolific construction skills continue to give back to those who own property in their settlements... Read more

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