ASB Securities Morning Brief for Monday, 06 July 2015
Monday, 06 July 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell as uncertainty over Greece's debt default sapped risk appetite and demand for equities. A2 Milk Co, Xero and Fletcher Building declined. Pumpkin Patch sank to a record low. The S&P/NZX 50 Index fell 0.58 points, or 0.01%, to 5840.89. Within the index, 26 stocks fell, 16 rose and eight were unchanged. Turnover was $165 million... Read more

The New Zealand dollar is heading for a 1.8% weekly decline as financial markets remain volatile ahead of Greece's referendum on whether to accept a bailout package from its European creditors and as the wheels start coming off the local economy. The kiwi dropped to 67.18USc at 5pm in Wellington from 68.42USc on Friday in New York last week. It was little changed from 67.26USc at 8am and 67.03USc cents yesterday. The trade-weighted index rose to 70.57 from 70.31 yesterday, and is heading for a 1.8% weekly decline... Read more

Bay job growth leads country. Tauranga job adverts for trade and service positions have jumped nearly 50 per cent as a booming local construction industry sees strong demand for skilled trade workers... Read more

Economic Development Minister Steven Joyce will present a new foreign investment strategy to the cabinet on Monday that involves partnering with Australia to create “a pipeline of private sector investment opportunities to international investors” aimed at the regions... Read more

Steven Joyce downplays economic recession talk... Read more

'Not hard to envisage a recession scenario'. BNZ's Stephen Toplis predicts a 'fun time ahead' for the RBNZ with the economy softening, the NZ dollar weakening, and inflation potentially rising. BNZ's economists have cut their Fonterra payout forecast as the GDP outlook dampens leading the bank's head of research Stephen Toplis to suggest it's not hard to envisage a scenario where a recession becomes imminent... Read more

Greek Crisis: It’s not like it's a shock, English says. New Zealand's finance minister is "not particularly concerned" about whether Greece's financial crisis will roll on to New Zealand... Read more

Wellington business confidence slips - Employers' Chamber of Commerce survey... Read more

Auckland house prices rise faster than Oz. Auckland house price growth is more similar to Sydney, Melbourne or Brisbane, than it is to Wellington or Christchurch... Read more

HomeStart credited with return of first-home buyers... Read more

Financial skills poor, says expert. Most people are pretty good at looking after their money on a day to day basis but make poorer decisions when it comes to planning for the future and choosing financial products, according to an expert in personal finance research... Read more

Is A2 milk about to leap forward? Keith Woodford assesses the major developments in Australia as A2 milk pushes into the big leagues, with a 'huge irony' that this opportunity has passed NZ and Fonterra by... Read more

Financial Markets Authority chief executive Rob Everett says the settlement with Milford Asset Management over market manipulation issues has been an uncomfortable wake-up call for the financial industry. "We have higher expectations of the industry than existed before," he says. "I think the reality of dealing with a more involved, interventionist regulator ... is a bit of a surprise to them."... Read more

Pumpkin Patch sees drop in 2016 earnings, citing challenging markets; shares drop... Read more

British American Tobacco Holdings (New Zealand), the nation's largest cigarette company, reported a 3.9 percent decline in annual profit as it absorbed the government's latest hike in excise tax. The local arm of British American Tobacco, whose brands include Pall Mall, Benson & Hedges and Dunhill, reported net profit of $126.5 million in calendar 2014, down from $131.6 million a year earlier, according to financial statements lodged with the Companies Office... Read more

Business looks beyond China factories. Kiwi high-technology firms are spurning China to bring their business home. Rising labour costs in Asia are putting Chinese firms under pressure to demand longer production runs from customers to stay competitive and maintain low prices... Read more

Medical innovation is a growing sector which is expected to add up to $700 million worth of exports for New Zealand when new figures are released later this year. New Zealand imports double the amount of medical devices it sends overseas, but the Medical Technology Association of New Zealand (MTANZ) has predicted that gap will narrow in the next decade. Chief executive of MTANZ, Faye Sumner, said: "Medical technology improves patient experience, but also makes healthcare more cost-effective too... Read more

Auckland's SkyPath has won resource consent but one councillor is sounding a warning. Cameron Brewer says the proposed covered pathway under Auckland Harbour Bridge could result in unforeseen costs for ratepayers if usage of the tolled route falls short... Read more

In what is claimed to be a world first, from today Aucklanders can top up their cars with Brewtroleum. Kiwis can now use a beer byproduct to fill their cars, with a new biofuel being unveiled at an Auckland service station today. The fuel, dubbed "Brewtroleum", is made by blending ethanol - extracted from yeast left over after beer is brewed - with normal petrol.... Read more

From humble Taco Truck to global Mexican super brand. Well, with your help. For the past eight months, the talented duo from one of New Zealand’s most successful food trucks - The Lucky Taco - has been working behind the scenes on a KickStarter campaign in a bid to raise $100,000 for their latest venture. Launched today (July 6) by Sarah and Otis Frizzell, the pair hopes to manufacture and produce two Lucky Taco Kits for retail - Sizzlin’ Steak & Chipotle Chicken - plus two Mexican pickles, Pink Pickle & Exciting Carrots - so everyone can enjoy Lucky Tacos at home, nationwide... Read more

Graeme Hawkins to step down from Ports of Auckland Board. Deputy Chair Rodger Fisher will take over as Acting Chair from 1 August 2015... Read more

Inland Revenue gives out $50m more in refunds... Read more

Opinion - Bernard Hickey: Rash spending a real risk. All the noise in the superannuation debate has been about the need to save and plan for increasingly long retirements, or at least long lives after 65. That was certainly the focus in the debate about the cancellation of the KiwiSaver kick-start in the Budget and the contribution freeze for the Superannuation Fund... Read more

Opinion - Christian Hawkesby: Greek dramas – lessons for New Zealand. As we wake up this morning, the result of the Greek referendum should start coming through on the newswires. Anything could happen, including a last minute cancellation of the referendum... Read more

Opinion - Brian Fallow: Reserve Bank's loan limits under attack. Where’s the evidence? asks expert critic of lending curbs... Read more

Opinion - Rodney Dickens: 'The fall in business confidence is more than suspicious'. Rodney Dickens thinks respondents are ticking the negative boxes in the ANZ survey to supply the "evidence" to justify OCR cuts... Read more

Opinion - Mike Butler: The right for Mana Ahuriri to buy half of the HB Airport, reported on Saturday, is the latest of a long line of government blunders over the airport. If the airport is important to the Hawke’s Bay economy, why would local and central government think it is a good idea to “sell”, which is more like “give”, half of the airport shares to a private organisation?... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket pared almost half its early losses after tumbling along with nose-diving Chinese stocks in morning trade. Caution ahead of the Greek referendum on Sunday got the market off to a weaker start but it fell to a 1.9 per cent loss as the Shanghai composite index fell 7.2 per cent. But the S&P/ASX 200 rebounded with Shanghai and closed down 61.6 points, or 1.1 per cent at 5538.3... Read more

The Australian dollar hit a two and a half month low after sluggish local retail spending figures disappointed the market. At 1700 AEST on Friday, the local unit was trading at 75.84 US cents, down from 76.34 cents on Thursday. It fell as low as 75.67 US cents in earlier trade, its weakest level since April 14... Read more

Australian dollar hits six-year low on back of poor retail figures... Read more

Academics doubt the unfolding events in Greece will result in lower interest rates when the Reserve Bank board meets on Tuesday. But governor Glenn Stevens will no doubt be keeping a wary eye on the global financial market reaction to Sunday's Greek referendum... Read more

The Abbott Government’s own independent fiscal cop fears the Federal Budget has been built on rosy assumptions that put the nation at risk of never running a surplus in the next decade. As the Government that pledged to tackle Australia’s “debt and deficit” crisis prepares this week to set its own $100 billion debt milestone, the Parliamentary Budget Office has warned some of the most important assumptions underpinning Treasurer Joe Hockey’s second Budget are already at risk just a few days into the new financial year... Read more

Federal Labor has fared well in two new polls, but it's a different story for Bill Shorten, whose approval rating according to one survey is at its lowest point since he became the party's leader... Read more

GST must be part of the mix: FSC. The financial services industry hopes the nation's leaders will take the opportunity to start renegotiating the terms of the GST at a planned retreat.... Read more

Business has backed the Abbott government's plans to invest in agricultural infrastructure and reduce red tape. But the Business Council of Australia believes the case for a specific consumer watchdog commissioner for the sector, as proposed in the newly released blueprint, was not compelling... Read more

Queensland’s LNG construction boom is finishing and oil price is down, so what’s left for energy contractors?... Read more

Kimberley Diamonds was threatened with the loss of its main WA mining tenement four times over the past two years for failure to pay mining royalties to the State Government. The Department of Mines and Petroleum confirmed yesterday the company still owed the Government about $750,000 in March-quarter royalty payments, based on a 5 per cent royalty levied on the $15.2 million worth of diamonds sold from its Ellendale operation... Read more

The Woodside Petroleum-led Browse joint venture has wasted no time getting on with the job of finalising the make-up and cost of the world’s biggest floating LNG development, awarding key contracts to Technip and Samsung... Read more

EPA not ruling out legal action over Lithgow coal mine pollution... Read more

The operators of a fuel transport tanker berthed at Devonport, in Tasmania's north-west, have defended plans to replace the Australian crew with international workers. The Alexander Spirit was due to leave Devonport on Thursday... Read more

INT Corporation is raising up to $19.9 million through a fully underwritten issue of shares to fulfil one of the conditions required for the merger with AHAlife... Read more

P2P lending no threat to banks. Australians could be borrowing an estimated $22 billion from each other rather than banks within five years, but experts say the rise of peer-to-peer lending shouldn't bother the country's major banks... Read more

Orion Health has secured two new strategic deals in Vietnam, building its market presence in South East Asia. It will provide its enterprise software solution to Vinmec International Hospital, a premium healthcare provider headquartered in Hanoi... Read more

Growing demand for dairy in Asia’s dining boom coupled with aggressive price wars could create a milk shortage in Queensland. As producers seize hold of export opportunities from a number of newly inked free trade agreements, local farmers warn low domestic prices will force more producers to look for greater riches overseas... Read more

SA puts $100m on the table in tech EOI free-for-all... Read more

Traditional Therapy Clinics seeks up to $15M under IPO... Read more

The son of the man who gave rise to the Mr Fluffy asbestos crisis says he is "so sorry" for the heartache it has caused. Paul Jansen, who is one of Dirk Jansen's eight children, is the first descendent to speak out publicly... Read more

Opinion - Michael Howes: Climate policy is in the media yet again, but this time it might be different. The set of policy principles released by the Australian Climate Roundtable yesterday are extraordinary for two reasons... Read more

Opinion - Matthew Hassan: Weekend Economist: Debt blinders. The first quarter financial accounts released last week add an important balance sheet perspective to recent trends in household income, spending and saving flows... Read more

International Headlines

North/South Americas Market Report: North and South American markets finished mixed as of the most recent closing prices. The S&P 500 gained 23.27%, while the Bovespa led the IPC lower. They fell 1.10% and 0.24% respectively... Read more

European Market Report: European markets finished mixed to lower as of the most recent closing prices. Shares in France fell as the CAC 40 dropped 0.57%. The DAX lost 0.37% while the FTSE 100 in London closed unchanged... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.08%, while the Shanghai Composite led the Hang Seng lower. They fell 5.77% and 0.84% respectively... Read more

Spot gold ends week steady as U.S. dollar softens... Read more

The weather is warming up in America and so is the economy. U.S. unemployment fell to 5.3%, its lowest level since April 2008, according to the latest government data released Thursday. It was an even healthier rate than many economists predicted and brings America back to a rate last seen before the financial crisis... Read more

Bitcoin Group is raising up to $20 million as it seeks to become the world’s first Bitcoin initial public offering on a major global exchange. The company is a Bitcoin Mining operator that currently produces about 1.45% of the global output of the digital currency... Read more

Fiat Chrysler CEO says no news on approach to GM but consolidation good... Read more

Alcoa Inc. throws open the door to the next round of quarterly corporate reports on Wednesday, July 8, when it releases its second-quarter results after the closing bell. Investors will be scrutinizing the report for signs the aluminum maker is finally getting the upper hand on several fronts that have proven especially vexing over the past year... Read more

H.J. Heinz Co on Thursday completed its purchase of Kraft Foods Group Inc, creating the third largest food and beverage company in North America and fifth largest worldwide. The new company, Kraft Heinz Co, will have roughly $28 billion of annual revenue from brands such as Oscar Mayer, Philadelphia, Velveeta, Maxwell House, Ore-Ida and Jell-O, as well as Kraft cheese and Heinz ketchup... Read more

Aetna to buy rival health insurer Humana for $37 billion... Read more

Greece Heads for ‘No’ Vote, Raising Risk of Departure From Euro... Read more

EU warns of Armageddon if Greek voters reject terms. "Without new money, salaries won't be paid, the health system will stop functioning, the power network and public transport will break down," warns President of European Parliament... Read more

7 key things to know about Greece’s debt crisis and what happens next. Greece appears to have voted "no" on Europe's bailout terms. What follows is a dangerous chapter... Read more

Greeks are hoarding cash and food amid mounting fears the economy could collapse, cracking open their wallets only to stock up on essentials and stripping supermarket shelves in the process. Mothers, elderly men and university students were spotted on Saturday pushing heavily overloaded trolleys or coming out of shops weighed down by bags of food, with essentials such as sugar, flour and pasta top of the list... Read more

Chancellor George Osborne needs to carry out an "ambitious" tax reform agenda in his Budget on Wednesday, the Institute of Directors (IoD) has said. Simplifying the "painfully complex" tax system would allow him to "deliver an investment-boosting Budget", said IoD director Simon Walker... Read more

Germany pleads with UK to remain in EU to fight red tape. Michael Fuchs, senior ally of German Chancellor Angela Merkel, describes Brexit as "unimaginable". A British exit from the European Union is "unimaginable", according to a senior German politician, who urged the UK to stay in the bloc to help resist a lurch towards interventionist policies.... Read more

Chancellor George Osborne says he has identified how the government will make the £12bn of welfare cuts promised in the Conservative election manifesto. He will announce the bulk of the savings in his Budget on Wednesday, the BBC understands... Read more

U.K. Chancellor of the Exchequer George Osborne said the Greek crisis justifies his push for further austerity as he prepares to meet Prime Minister David Cameron and Bank of England Governor Mark Carney to assess any fallout... Read more

Sainsbury's and M&S under fire over executive and staff pay disparity... Read more

Marks & Spencer ‘suffers clothing setback’. Marks and Spencer is expected to have suffered another blow in its attempts to get its clothing business back on track, after cool weather in May and June dampened sales... Read more

Rip-off rents hit the Home Counties as unaffordability contagion spreads out of London. The cost of renting in the Home Counties has risen 5.4pc over the last six months to June, driven up by international tenants and a surge in demand from companies relocating employees and their families to the London commuter belt... Read more

Uber to suspend Uberpop service in France... Read more

Fitch leaves Russia's sovereign ratings at BBB-, outlook Negative... Read more

Brazil's antitrust body has announced a probe into alleged foreign exchange market rigging by 15 banks including Citigroup and HSBC, accused of colluding to form a secret cartel. "There are strong indications of anticompetitive practises of price fixing" and other manipulations between the banks, the watchdog known as Cade said late on Thursday. The alleged cheating lasted from 2007 until at least 2013, authorities said... Read more

China’s Market Rout Is a Double Threat. For nearly three years, President Xi Jinping of China has crushed opposition by silencing and often locking up anyone who dares defy the government. But that aura of invincibility has been shaken by stock market speculators who have made a mockery of efforts to halt a steep slide in share prices... Read more

China Blames Rout on Short Sellers Who Bought as Stocks Tumbled... Read more

China's 21 largest brokerage firms have announced they will invest at least 120 billion yuan in the country's stock markets in order to curb its precipitous fall over the last three weeks. The brokers will spend the funds on so-called "blue chip" exchange traded funds (ETFs), the Securities Association of China said on Saturday in a statement after an emergency meeting in Beijing... Read more

Toshiba Corp. is likely to mark down its past operating profit by at least Yen100 billion (US$814 million) -- almost double its earlier estimated restatement--as a result of accounting irregularities, a person familiar with the matter said Saturday... Read more

Julie Hamp, the first western woman to be named a senior executive at Toyota, has resigned her post after being arrested last month in Japan for allegedly importing oxycodone. Toyota (TM) "has accepted her resignation after considering the concerns and inconvenience that recent events have caused our stakeholders," the company said in a statement... Read more

Why Indian Companies Looking for Cash Are Bypassing Banks... Read more

Is India's economy safe from the Greece crisis? Newspapers and experts have urged the Indian government to be prepared to offset any negative impact of the deepening economic crisis in Greece. Eurozone finance ministers on Thursday ruled out any further talks on a fresh bailout for Greece until the country holds its referendum on Sunday... Read more

Opinion - Matt Egan: Who will get hurt if the startup bubble bursts? The possible bubble brewing in the startup market could pop faster than you can say "Snapchat." When and if that happens, real people will be hurt... Read more

Speaking with: Anthony D'Costa on the challenges facing India’s economy (audio only)... Read more

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