ASB Securities Morning Brief for Tuesday, 27 September 2016
Tuesday, 27 September 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell in light trading, with Ebos Group, Tower and A2 Milk leading the index lower. The S&P/NZX 50 Index fell 31.88 points, or 0.4 percent, to 7,264.86. Within the index, 28 stocks rose, 17 fell and five were unchanged. Turnover was $106.7 million... Read more

The kiwi dropped to 72.28USc as at 8am in Wellington, having touched 72.22USc in late New York trading on Friday, the lowest since August 31 and down from 72.74USc in Wellington at the end of last week. The trade-weighted index declined to 76.87 from 76.90 in New York and from 77.20 in late Asian trading on Friday... Read more

New Zealand's trade deficit widened to the biggest monthly gap since September 2014 as dairy and meat exports slumped in August. The deficit of $1.27 billion in August was larger than the deficit of $351 million in July and $1.09 billion in the same month a year earlier,... Read more

Stalled TPP 'biggest concern' in growing tide of trade protectionism, Key says... Read more

Bill English - 'We're not a rock star economy'... Read more

New Zealanders grew more optimistic about employment prospects in the September quarter with confidence lifting across age groups, regions and income categories, although workers weren't so upbeat about wages growth. The Westpac-McDermott Miller Employment Confidence Index rose 8.5 points to 110.1 in the quarter, the highest level since September 2014... Read more

Concerns about corporate tax avoidance are no longer the concern of only Thomas Piketty-reading May Day protesters, with nearly three-quarters of New Zealand chief executives now saying multinational companies do not pay their fair share of tax globally. The results, from the Herald's Mood of the Boardroom survey, shows two-thirds (65 per cent) of business leaders think the issue is a problem for the New Zealand tax base -- with specific concerns flagged around digital businesses like Google, Facebook and Apple -- and only 16 per cent think the Government is making progress in addressing the problem... Read more

New Reserve Bank mortgage lending data leaves little doubt that the new investor-targeted LVRs have had a significant impact on bank lending to investors - lending to Auckland landlords dropped by almost 20%. The Reserve Bank’s new LVRs, which require investors seeking new property loans nationwide to have 40% equity or deposit, were announced back in July... Read more

A mortgage adviser has backed calls from the Property Institute of New Zealand for first home buyers to be exempt from loan-to-value restrictions. On Monday, the group which represented property valuers and commercial property managers said the restrictions had been a devastating failure which allowed property investors to snap up homes which families might have otherwise bought... Read more

The housing market will correct, but it will take a few years, Wespac's David McLean tells Anne Gibson. Top banking chief executive David McLean says the fortunes of residential property are "cause for some concern" but pose no widespread risk... Read more

It's time the Government did more to dampen house price inflation, say 70 per cent of NZ chief executives. They are concerned that owning a house is becoming out of reach for younger people... Read more

Concern non-underwritten products not well explained. A lack of information may have caused some customers to take out expensive, non-underwritten insurance policies, when they would easily have qualified for normal cover, it has been claimed. There are a number of non-underwritten products now available in the market.... Read more

New Zealand advisers are backing a prediction that there will be a global ban on commission within five years – but one fund manager has described it as "nonsense”. JPM Asset Management head of UK funds Jasper Berens said regulation was moving at such a pace worldwide that a blanket ban seemed inevitable... Read more

Merino sales were boosted again by 450 bales pre-sold before the auction began at Melbourne. The pre-sales were part of a five-year, $45 million deal by the New Zealand Merino Company (NZM) to supply fine wool to Italian luxury fabric manufacturer Successori Reda. The Reda bales averaged a greasy price of $15 a kilogram... Read more

European farmers scaled back their milk production in June, the first time they've done so since March 2015, Fonterra Cooperative Group says. European Union production fell 2 percent in June from the same month a year earlier, continuing the reduction in output as farmers culled stock, spent less on supplementary feed, and poor weather weighed on the region's producers, Fonterra said in its monthly update... Read more

Bountiful overseas harvests put pressure on domestic prices... Read more

Ravensdown screws down debt levels for the betterment of farmers. Ravensdown isn't expecting a rush of farmers ordering fertiliser as a result of a 50c lift by Fonterra on the milk price. That's because there has already been an increase in sales this spring with one day's result lately topping 10-year records for daily sales. Rather, the fertiliser co-operative believes a more measured response is likely as dairy farmers put deferred maintenance back on the radar after the forecast farmgate milk price increased to $5.25 per kilogram of milksolids - and beyond the break even point of $5.05... Read more

The Chinese Chamber of Commerce is hosting a tourism investment summit to help New Zealand businesses better capitalise on burgeoning growth in the Chinese tourism market and encourage Chinese investment in this country's stretched tourism infrastructure. The chamber, which counts many prominent Chinese companies among its members, is organising the inaugural New Zealand Tourism Investment Summit, set to take place in Auckland on October 31 and Queenstown on November 2... Read more

IkeGPS, the laser measurement toolmaker, has completed $3 million of capital raising to help fund its push into international markets, with about three-quarters picked up by the sub-underwriters. The company raised $5.25 million in August selling more than eight million shares at 60c each, and completed a share purchase plan, selling five million shares at the same price to raise a further $3 million. Shares of ikeGPS last traded at 60c , down 14% since the start of the year.... Read more

Energy Mad has warned lower prices for carbon dioxide offsetting certificates in Australia mean its sales volumes are likely to drop. Most of the energy efficient light-bulb maker's business is selling LED bulbs to Australian state government energy efficiency schemes, including the Victorian Energy Efficiency Target (VEET) scheme, where certificates representing carbon dioxide savings are issued and can be traded. Today, Energy Mad said the market price of the certificates had fallen to A$14 per certificate from A$30. The shares last traded at 5.4 cents and have gained 35 percent this year.... Read more

Warehouse Group lifted its staff entitlements provisioning for 2017 by more than a third with the country's biggest listed retailer one of a number of big businesses trying to work out the impact of years of underpaying holiday pay... Read more

Westpac keeping eye on Australian sales incentive change. Westpac is removing sales incentives for its frontline staff in Australia as part of its work to rebuild trust with customers – but says the situation is different in New Zealand. It was revealed this week that the bank wanted to change practices that could be seen to be creating conflicts of interest... Read more

Stride Property Group, the NZX-listed property investor, has sought resource consent to redevelop the Johnsonville Shopping Centre in Wellington's northern suburbs. Shares in Stride were unchanged at $2.00, and have risen 9.6 percent since the start of the year... Read more

Augusta Capital paid 14% above the market price to take a 9.3% stake in listed property investor NPT.... Read more

Privacy commissioner John Edwards weighs in on Yahoo hack... Read more

Pyne Gould Corp and Bath Street Capital won't go to court over what's owed in relation to Pyne Gould's sale of Perpetual Trust. In September last year, Guernsey-based Pyne Gould said it was seeking damages of not less than $22 million, with interest and costs, from Bath Street... Read more

Warminger faces $1m penalty per trade. The Financial Markets Authority’s case against a Milford Asset Management portfolio manager accused of market manipulation has begun.... Read more

The High Court will today hear claims that a former senior Auckland Transport manager was corrupted by a roading maintenance contractor who bribed him to the tune of $1.2 million. The trial of Murray John Noone and Stephen James Borlase on charges of corruptly taking and receiving bribes begins today in the High Court at Auckland... Read more

The man who hired disgraced Blue Chip founder Mark Bryers to work at his Australian accountancy group, Stephen Peter Lacy, has been declared bankrupt owing $A12.8 million ($13.1 million). His main creditors are banks, led by National Australia Bank owed $A3 million... Read more

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. The regulator brought 10 charges under the Fair Trading Act against the local division of the consumer goods business, eight of which claim the packaging and promotion of four Nurofen products were misleading, and two that the online advertising of the range was likely to mislead or deceive consumers, it said in a statement... Read more

Opinion - David Hargreaves: The Government needs to get involved in helping to provide a level playing field for entrants into the housing market... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket reversed early weakness in thin trade to close flat as global markets weighed up low interest rates and struggling global growth. Following the 0.6 per cent loss on Wall Street on Friday, the S&P/ASX 200 index opened 0.5 per cent down. But it rallied to close 0.1 points firmer at 5431.4 on volume 28 per cent below average as banks and miners bounced... Read more

The Australian dollar is down against the greenback amid a fading risk mood and falling oil prices. At 0700 AEST on Monday, the local unit was trading at 76.16 US cents, down from 76.49 cents on Friday.... Read more

Former resources minister Ian Macfarlane says new mining job complies with code of conduct. Australia's longest-serving federal resources minister, Ian Macfarlane, has rejected suggestions of a conflict of interest after taking up a job with Queensland's peak mining group... Read more

Predictive Discovery Ltd's shares hit an intra-day high of $0.013 today, or 44% higher than last Thursday's closing price, on high volume... Read more

White Rock Minerals Ltd has been granted a trading halt by the ASX this morning, pending details of a capital raising.... Read more

Windward bidder reveal a week off. The identity of a mysterious suitor seeking to trump Michael Fotios’ bid for a sizeable stake in Fraser Range explorer Windward Resources will remain a secret for at least another week... Read more

The Queensland Government has secured $3.6 million from failed resources company Linc Energy to begin rehabilitation efforts on the western Darling Downs. Linc Energy, now in liquidation, is accused of contaminating large swathes of prime cropping land on and around its Hopeland underground coal gasification plant, near Chinchilla... Read more

MOD Resources has touted a “substantial” maiden copper/silver resource at a Botswana deposit within six months of discovery. The Subiaco-based explorer reported 350,000 tonnes of contained copper and more than 14 million ounces of silver at the T3 deposit in the Kalahari Copper Belt. MOD Resources’ shares closed up 0.2¢, or 5 per cent, to 4.1¢.... Read more

Australian miner Lucapa Diamond Company has unearthed a large almost pure diamond at its main Angolan mine. The 172.67 carat diamond weighs about 35 grams and Lucapa says it is a Type IIa D-colour stone, meaning it's almost entirely devoid of impurities and colourless... Read more

RungePincockMinarco Ltd has been granted a trading halt by the ASX this morning, pending details of a capital raising.... Read more

Transport and logistics provider Centurion has taken on a five-year freight contract supplying BHP Billiton’s Nickel West sites. The Cardaci family’s business is servicing Nickel West through its Perth Airport and Kalgoorlie distribution centres... Read more

Contracting and surveying company OTOC is targeting further acquisitions after raising $12 million from institutional investors. OTOC said the placement issued at 27¢ a share was oversubscribed. The stock had last traded at 28¢ before the raising. OTOC’s shares closed up 1¢, or 3.6 per cent, to 29¢.... Read more

A ratings agency has given the thumbs down to mining equipment supplier Emeco Holdings' deal to merge with two private contractors, calling it a de facto default on its debt. The company has entered a complex agreement with Orionstone, Andy’s Earthmovers and lenders of all three companies, which includes a $20 million rights issue, debt-for-equity swap and refinancing of debt. Its shares soared today in response to the deal, unveiled late Friday. The stock hit a high of 8.4¢, before closing at 7.3¢, up 2¢, or 38 per cent.... Read more

Industry standards and compliance company SAI Global has agreed to a $1 billion takeover bid from Hong Kong private equity firm Baring Private Equity Asia. SAI Global said its directors unanimously supported the $4.75 per share cash takeover bid, which is a 32.3 per cent premium to SAI's closing price of $3.59 on September 23... Read more

Updater Inc Ltd has been granted a trading halt by the ASX this morning, pending details of a capital raising.... Read more

MSM Corporation International Ltd has partnered with marketing platform ToneDen to support the launch of its Megastar Millionaire talent discovery competition. Megastar Millionaire is a talent discovery platform where artists and viewers connect with each other using a mobile app... Read more

The new owners of Pizza Hut are sizing up the troubled Eagle Boys business as part of plans to build a stronger player in the Australian pizza market against market leader Domino's. Less than a month after buying the Australian Pizza Hut business, private equity firm Allegro and three former McDonald's executives are now in takeover talks with Eagle Boys... Read more

‘I didn’t have a crystal ball’: Dick Smith chairman Rob Murray defends his leadership... Read more

The remaining workers at troubled Tasmanian company Russell-Smith have been sacked by the company's administrator, the Communications, Electrical and Plumbing Union (CEPU) says. The electrical and communications company declared insolvency last week, two years after being bailed out of receivership... Read more

Specialist healthcare company Admedus Ltd, continues to advance the restructure of its global operations. Admedus has also achieved on target sales growth, with first quarter revenue being the strongest in the history of the company... Read more

Shares in SAI Global soared by almost a third on Monday after its board accepted a $1.1 billion takeover offer of the quality standards and information services company. SAI on Monday said its directors had unanimously decided to recommend the $4.75 a share all-cash bid from Baring Asia Private Equity, valuing the company at $1.08 billion. ... Read more

Pacific Magazines has a new chief executive, with the Seven West Media-owned publishing business announcing Gereurd Roberts has been elevated to the role. Mr Roberts was previously general manager of food, family and home publications at Pacific Magazines and prior to joining the publisher worked at ACP Magazines (now Bauer Media) and Guardian News and Media... Read more

Ford Australia has built its last ever engines in Geelong today ahead of the closure of the Broadmeadows car assembly line on October 7... Read more

A seven-hour outage to Vodafone's 4G network last night sparked the re-emergence of the nightmare 'Vodafail' movement the telco has been working aggressively to distance itself from in recent years... Read more

There are more women around Australia's boardroom tables but it's actually more women in management that boosts a company's performance, according to a report. Credit Suisse's Gender 3000: The Reward for Change Report, released on Monday, shows that global companies with more women in decision-making roles generate higher returns and better profits... Read more

The Insurance Council of Australia has declared major flooding around Forbes in central NSW a catastrophe with damage expected to cost insurers tens of millions of dollars. ICA chief executive Rob Whelan said the industry body's preliminary assessment indicated the bill will be high... Read more

Three federal politicians are calling on Australians to leak secret information relating to the poker machine industry. The "Pokie-Leaks" campaign will see independent MP Andrew Wilkie, Greens Senator Larissa Waters and the NXT's Nick Xenophon using parliamentary privilege to protect whistleblowers who come to them with secret information about industry tactics, poker machine design and payments to politicians... Read more

The incorrect labelling of a highly invasive aquatic weed has exposed a plant wholesaler to nearly $120,000 in fines and escalated the risk of infestation. Bunnings in Darwin and Palmerston have been selling what was labelled melon sword to unsuspecting customers between August 12 and September 9. Customers were in fact buying sagittaria, a weed of national significance... Read more

The lobbying business of former New South Wales Liberal Party minister Michael Photios was in voluntary administration six years ago and owed the Australian Taxation Office $350,000, a 7.30 investigation has revealed. The ATO was the biggest creditor of his business MP Consulting Pty Ltd and was paid just seven cents in the dollar on the debt... Read more

Analysis - Ian Verrander: US Federal Reserve chief Janet Yellen shreds credibility as economic leaders falter... Read more

International Headlines

U.S. Maket Report: Losses on Wall Street deepened in volatile trading on Monday, as Pfizer led a decline in healthcare stocks and Deutsche Bank pulled financials down, with investors awaiting the first U.S. presidential debate between Hillary Clinton and Donald Trump... Read more

North/South Americas Market Report: Markets closed lower across the region as at the most recent closing prices... Read more

European Market Report: European markets finished sharply lower today with shares in Germany leading the region. The DAX is down 2.19% while France's CAC 40 is off 1.80% and London's FTSE 100 is lower by 1.32%... Read more

Asian Market Report: Asian markets finished sharply lower today with shares in China leading the region. The Shanghai Composite is down 1.76% while Hong Kong's Hang Seng is off 1.56% and Japan's Nikkei 225 is lower by 1.25%... Read more

Oil producers in the Opec group of countries will make another attempt this week to reverse a slump in crude prices, according to Algeria's energy minister. Noureddine Bouterfa said there would be an informal gathering of Opec members on the sidelines of an energy conference in Algiers on Wednesday... Read more

4 reasons OPEC will struggle to boost oil prices. Can OPEC do the impossible? The world's major oil producers are meeting in Algeria this week, trying again to find a way of pushing prices higher. Despite signs of a growing willingness to cut a deal to restrain supply, they have a mountain to climb. Here are four reasons why they'll struggle... Read more

U.S. new home sales fall in August but trend still positive... Read more

Disney Working With Adviser on Potential Twitter Bid (developing story)... Read more

Christmas comes early for Hasbro and Mattel. The two toymakers are both already big hits on Wall Street this year. Shares of each company are up nearly 20%.... Read more

Democratic Senator Mark Warner on Monday asked the U.S. Securities and Exchange Commission to investigate whether Yahoo and its senior executives fulfilled obligations to inform investors and the public about a hacking attack affecting 500 million user accounts. "Disclosure is the foundation of federal securities laws, and public companies are required to disclose material events that shareholders should know about," Warner said in a letter to SEC Chairwoman Mary Jo White... Read more

Wells Fargo's fake accounts have been around a long time. Almost a dozen Wells Fargo workers told CNNMoney that the shocking tactic -- where employees opened unauthorized accounts to meet unrealistic sales goals -- has been around much longer than the bank has acknowledged... Read more

The trial has started of six people accused of fraud and corruption involving a department of the Halifax Bank of Scotland (HBOS). David Mills, Michael Bancroft, Mark Dobson, Alison Mills, Jonathan Cohen and Tony Cartwright, have pleaded not guilty. Southwark Crown Court was told that the six were involved in a racket led by another man, Lynden Scourfield... Read more

Monarch Airlines in talks about cash injection amid financial health rumours. Budget carrier issues statement calming speculation about its financial position after concerns were raised on social media... Read more

The former chief economist of the International Monetary Fund has told the BBC a slowdown in China is the greatest threat to the global economy. Ken Rogoff said a calamitous "hard landing" for one of the main engines of global growth could not be ruled out... Read more

British business leaders may put on a brave face in public, but they're seriously worried about Brexit. A new survey shows 76% of U.K. CEOs have considered moving their company headquarters or parts of their business out of the country in the wake of the Brexit vote in June.... Read more

German business confidence has rebounded to a two-year high in September, according to the closely-watched Ifo survey. The index, which measures the morale of some 7,000 firms, rose to 109.5, from an upwardly-revised 106.3 in August. "The German economy is expecting a golden autumn," said Ifo head Clemens Fuest.... Read more

Deutsche Bank shares plunge to lowest level in over 20 years. Shares in Germany's biggest bank haven't been this cheap for more than 20 years. Deutsche Bank stock slumped as much as 6.5% on Monday. The trigger appeared to be reports over the weekend that the German government has ruled out state assistance for the troubled bank... Read more

Deutsche Bank said on Monday it had no need for German government help with a $14 billion U.S. demand to settle claims it missold mortgage-backed securities, as its shares hit a record low. German magazine Focus reported at the weekend that Chancellor Angela Merkel had met Deutsche Bank Chief Executive John Cryan over the summer and had indicated he could expect no help from Berlin in resolving the bank's dispute with the U.S. Department of Justice... Read more

Aldi UK and Ireland chief pledges to win price war after profits fall. Matthew Barnes is adamant German budget chain will respond to rivals’ reductions after 2015 profits were down 1.8%... Read more

Sainsbury's one-hour delivery service takes on Amazon. Staff on bikes will peddle up to 20 items in south-west London via Chop Chop app, competing with Amazon’s Prime Now... Read more

Spain Bankia fraud trial for ex-IMF boss Rodrigo Rato... Read more

Samsung has said it will delay restarting the sale of its Galaxy Note 7 phone in South Korea, as the firm needs more time for the global recall of the device. The South Korean tech giant was forced to recall some 2.5 million devices globally due to overheating batteries... Read more

South Korean prosecutors are seeking a warrant to arrest chairman Shin Dong-bin of Lotte Group in a corruption probe. The request follows a questioning of Mr Shin last week. The move is the latest twist in a continuing probe into the country's fifth largest conglomerate.... Read more

Opinion - Matthew Lynn: The Deutsche Bank crisis could take Angela Merkel down – and the Euro. There are some words that make such an unlikely pairing that we find it hard to put them together. Italy and efficiency, for example. Or Bake Off and Channel 4. And ‘Germany’ and ‘banking crisis’ is another one... Read more

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