ASB Securities Morning Brief for Monday, 23 May 2016
Monday, 23 May 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose as Sky Network Television gained on perceptions it may be closer to fair value after shedding a quarter of its value while New Zealand Refining dropped. The S&P/NZX 50 Index gained 6.24 points, or 0.09 percent, to 6,909.86. Within the index, 24 stocks rose, 20 fell and six were unchanged. Turnover was $143.8 million... Read more

The New Zealand dollar rose after figures showed the nation continues to welcome migrants at a record pace, ensuring a key plank of economic growth and demand remains in place. The kiwi rose to 67.61 US cents from 67.31 cents late yesterday and is heading into the weekend little changed on the week. The trade-weighted index rose to 72.79 from 72.55... Read more

International tourism spend surpasses $10 billion for the first time. Value and volume in the tourism sector continues to rise with new data sets showing yet more international visitors came this April than last and each of those visitors is spending more while here. Tourism New Zealand Chief Executive Kevin Bowler says the results are evidence that the organisation is making a real difference for the industry, as it focuses its efforts on increasing value.... Read more

Housing is grabbing all the headlines lately, so the heat is on the Government to deliver on Thursday. The sale of state houses, homelessness, the Government/Auckland Council divide over Auckland's city boundary, foreign buyers, the prospect of land tax, mortgage lending limits and rising unaffordability are all huge issues... Read more

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts. Mr English said last week that although government debt levels aren't high by international standards, "we could be stretched if another economic shock or natural disaster hit."... Read more

Can the Budget pull a rabbit out of a hat? Soaring house prices spurred by Auckland's rampant real estate market is one of the most pressing problems facing John Key ahead of Thursday's Budget... Read more

Political change in the US may slow efforts to free up agricultural trade, impacting New Zealand which had hoped to gain better access to the world's largest economy through the Trans-Pacific Partnership agreement, according to a US academic with links to New Zealand. US lawmakers are expected to ratify the Trans-Pacific Partnership during the so-called "lame-duck" session of Congress between the US presidential election in November and the swearing-in of a new US president early next year... Read more

The Financial Markets Authority has issued a direction order to foreign exchange education firm Cambrian Corp to change the way its markets itself, which the market watchdog said was either misleading or deceptive and made unsubstantiated claims about its services. The market supervisor's notice orders Auckland-based firm to ensure all marketing materials make clear that FX trading "cannot be relied upon to provide substantial profits quickly and consistently", is high risk, and that those risk disclaimers are prominent enough to be seen... Read more

Big-fight showdown: Sky versus streamers. Fight fans are squaring up for a showdown with Sky TV and boxing promoters Duco over illegal streaming of Joseph Parker's big weekend win.... Read more

Augusta Capital lifted annual earnings 17 percent as the listed property investor and fund manager eked out bigger returns from its two segments, with a higher occupancy rate and more syndication deals completed. Distributable profit after tax, the preferred measure of many property investors which strips out unrealised movements in the value of their portfolios, rose to $5.7 million, or 6.5 cents per share, in the 12 months ended March 31, from $4.9 million, or 5.8 cents, a year earlier, the Auckland-based company said in a statement. The shares rose 0.9 percent to $1.13 and have gained 12 percent this year.... Read more

ANZ Bank New Zealand's UDC Finance unit reported a 4 percent decline in first-half profit, saying the result reflected tighter lending and deposit margins as a result of increased competition and an increase in its charge for bad debts. Profit fell to $27.3 million in the six months ended March 31, from $28.4 million a year earlier. Operating income fell 1.9 percent to $59.5 million while operating expenses fell 2.5 percent to $15.8 million... Read more

Kiwi Property's $280 million plan to extend Sylvia Park still appears to be well and truly alive, although most of it has yet to be confirmed. The country's biggest listed property company, Kiwi has plans to build 20,000 square metres of new retail space at a cost of $180 million, and a 11,200sqm, nine-level office building above the existing dining lane with 700sqm of ground floor retail... Read more

Chevron New Zealand, which is selling its local service station chain to Z Energy, injected $14.3 million into its Caltex pension scheme which was wound up earlier this year. The Auckland-based subsidiary of the global oil company is quitting its New Zealand downstream businesses, selling the Caltex and Challenge! service station brands to Z for $785 million and exiting its 11 percent stake in New Zealand Refining... Read more

New Zealand brewers' gold sweep at Australian International Beer awards... Read more

Listed film software and analytics firm Vista Group won the PwC Hi-Tech company of the year in the annual Hi-Tech Awards (#htanz) with judges saying it truly had “worldwide potential”. Vista may argue that potential has already been met given it now provides software to over 4000 cinemas in more than 60 countries and has 400-plus staff in eight offices globally... Read more

Wellington-based online electricity retailer Flick said it's scoping overseas markets for expansion in a bid to build the scale it needs to reach profitability after winning the Vocus Communications Innovative Services award at the annual Hi-Tech awards in Auckland last night. The two-year-old start-up has attracted 10,600 customers, offering electricity at spot-market electricity prices while consistently being below the major electricity retailers' tariffs in recent times... Read more

Primary Growth Partnership participant Precision Seafood Harvesting has notched up another accolade, winning the inaugural Maori innovation award at the annual Hi-Tech Awards for its sustainable fishing technology that allows wild fish to be selected and handled with better care to lift their value. Sponsored by government-funded Callaghan Innovation, the Maori innovation award attracted a record number of entries for a new category... Read more

Mark Jennings, the former Head of News and Current Affairs at MediaWorks, is to join the Complaints Committee of the Online Media Standards Authority (“OMSA”). OMSA’s Complaints Committee is an independent body chaired by former Court of Appeal Judge, Sir Bruce Robertson... Read more

Kiwi businesswomen are calling for a stand against the use of the term, "mumpreneur". The word, which first appeared in the Collins English Dictionary in 2011, describes a woman who runs a business while also looking after her children. A variant is the word mumtrepreneur. It makes businesswomen worldwide cringe, including Wellington publicist Lou Draper, who says it is time to quit using the word... Read more

Campaign launched to warn gullible investors about the risks of property investment seminars that are big on hype and pressure, short on facts. Consumer Protection WA is leading the Australian campaign, amid concerns people are attending free seminars only to be pressured in to paying thousands of dollars for dodgy deals. (video only)... Read more

NZX looked at a tougher earnout hurdle for the sellers of the Clear Grain Exchange which would have got the platform beyond the breakeven target eventually agreed on, the High Court in Wellington heard today. The third week of an 11-week hearing came to a close early today with former NZX head of strategy Heather Kirkham saying Clear had been trading slowly during the due diligence process, but sellers Dominic Pym and Grant Thomas were enthusiastic about the 1.5 million tonne target and discussed whether the earnout target should be increased to 2 million tonnes "to ensure it provided a true performance objective" as Clear was only at about break even if it achieved 1.5 million tonnes... Read more

Admission of guilt in Commerce Commission price-fixing case results in $1.25 million penalty for Manawatu real estate agency. Unique Realty Limited was the first of the agencies involved in a long-running Commerce Commission case to appear in court – and it was ordered to pay a penalty of $1.25 million following its hearing. Last December, the Commission filed charges, in the Auckland High Court, against 13 real estate agencies around the country... Read more

Opinion - Bernard Hickey: Connect borrowers with savers. New Zealand's risk-averse savers would dearly love to invest in infrastructure bonds to fund Auckland's growth. The Auckland Council and the Government should help make that happen... Read more

Opinion - Bernard Hickey: Let them build, using bonds. The flurry of news this week about Labour calling for the abolishment of Auckland's rural-urban boundary buried a potentially more important idea that could eventually do more to solve the housing crisis than rubbing out any lines on a map... Read more

New Zealand Herald Editorial: Labour's bond proposal makes sense... Read more

Opinion - Geoff Simmons: Sprawl, NIMBYs, and the environment. Geoff Simmons wants answers to three questions before abolishing Auckland’s city limit... Read more

Opinion - Chris Keall: Sky slams Parker fight pirates. It should chill. Sky TV has slammed people who watched the Parker fight on via Facebook. It should relax. The pay TV broadcaster has 99 problems, but this ain't one... Read more

Opinion/Analysis - Rod Oram: Electricity charging is changing. Consumers may have to pay more to get a better power deal longer-term... Read more

Australian Headlines

Australian Market Report: The Australian share market is expected to start the week in positive territory after gains on Wall Street and in Europe. After some volatility, US shares finished on a positive note on Friday, boosted by technology stocks which rose on the back of a better-than-expected forecast from chip maker Applied Materials... Read more

The Australian dollar is higher despite pressure from the rising greenback. At 1200 AEST on Friday, the currency was trading at 72.34 US cents, up from 72.21 cents on Thursday.... Read more

Low pay growth, price rises and the new normal. Are we waiting with ever-growing impatience for the economy to get back to normal, or has the economy shifted to a "new normal"? I think that's the central question in macro-economics today – not just in Oz but throughout the developed world... Read more

How Bill Shorten won week two of the Federal Election campaign... Read more

NSW is on track to become Australia's first trillion-dollar economy in just over a decade, and will reach $1.3 trillion by the middle of the century. The projection, set to be revealed in the NSW Intergenerational report this week, means the state's economy will soon rival whole countries already on the trillion dollar economy mark such as the Philippines and South Africa... Read more

The Australian Greens would require Australia's sovereign wealth fund to invest up to $15 billion in local innovation over four years. In the latest in a string of policy announcements, the minor party will mandate three per cent of Future Fund investment be in Australian innovation. The Greens would also reinstate $389 million to the Entrepreneur's Infrastructure Program and pour $679 million over four years into getting kids to study science, technology, engineering and maths subjects.... Read more

Surcharge Free campaign aims to save us the $1.6 billion a year we’re slugged on credit cards. There's nothing more frustrating than popping out for a bite to eat, or a spot of retail therapy, only to be stung with a credit card surcharge. And while tough new laws due to come into effect this year will stop the worst offenders — namely, the hotels and airlines that slugs Australians with hundreds of millions of dollars each year — consumer advocates fear that a surcharging free-for-all is around the corner... Read more

Debt investors are taking rising bad loans at Australia’s major banks in their stride, with the cost to insure their bonds falling to an almost four-month low. Credit default swaps for the country’s four biggest lenders fell to 97 basis points on average on Thursday, a level unseen since Jan. 25, according to data compiled by Bloomberg. The premium over similar U.S. bank instruments also shrank to just 20 basis points from as much as 50 in February... Read more

Papua New Guinea-based oil and gas producer Oil Search has announced it will takeover rival InterOil for $US2.2 billion. Oil Search said in a separate agreement it would also sell part of InterOil's exploration assets and interests acquired from a petroleum retention licence to French oil and gas giant Total... Read more

Argosy Minerals Ltd is heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare... Read more

The mining industry has conceded defeat over exploration drilling in paddocks. The coal mining industry has waved the white flag over a landmark court ruling which prevents them from conducting exploration drilling in paddocks. Hume Coal, the company against which the ruling was made earlier this month, has broken its silence and confirmed it will not challenge Justice Preston's Ruling in the NSW Land and Environment court.... Read more

Unity Mining Ltd has been granted a trading halt by the ASX, pending the results of both the company's Special General Meeting and the Scheme Meeting... Read more

Broken Hill Prospecting Ltd has appointed Anthony ‘Trangie’ Johnston as its chief executive officer, a geologist with 20 years’ experience in exploration, project development and mining activities. He was most recently the CEO of KBL Mining (ASX:KBL), a precious metal producer and development company. Johnston oversaw the restructure of the company to achieve operational profitability... Read more

A Singaporean businessman has enlisted the help of some of the biggest names in the wagyu world as he pursues a dream to transform the Pilbara cattle industry. The team behind Bruce Cheung includes an 89-year-old legend of Japanese wagyu breeding, an America’s Cup hero-turned-farmer, one of Australia’s most revered cattlemen and a WA meat processor with unprecedented access to the Chinese market... Read more

TV2U International Ltd has been granted a trading halt by the ASX pending details of a joint venture agreement with a B2B service provider... Read more

Communications Minister Mitch Fifield knew NBN Co had asked the Australian Federal Police to investigate the leaking of sensitive internal documents, but says he didn't inform the Prime Minister or any of his cabinet colleagues. Fifield today revealed he had been advised by NBN senior management late last year that the government-owned enterprise had referred the matter to the AFP after an internal investigation failed to identify the source of the leaks... Read more

Telstra's $3 billion NBN black hole puts dividends under pressure. The renationalisation of the last mile of broadband infrastructure and establishment of the NBN was always going to come at a heavy cost to Telstra. But, just how heavy wasn't known until the telco's boss Andy Penn fronted up to investors earlier this month... Read more

Telstra customers were reporting another outage Sunday on the telco's mobile and broadband networks, with services in Sydney, Melbourne, Brisbane and Perth all affected. The outage comes just days after its most recent system meltdown on Friday last week... Read more

Consumer regulators across Australia are launching a national campaign against spruikers, who run get-rich-quick seminars. Consumer Protection WA is leading the national campaign, amid concerns people are attending free seminars only to be pressured in to paying thousands of dollars for dodgy deals. Consumer Protection WA's Director of Property Industries Stephen Meahger said spruikers must comply with Australian consumer law... Read more

Burger giant McDonald's is avoiding the public spotlight in the row over its underpayment of fast-food workers, instead relying on its "partners" - the shop assistants' union and employer lobby the Australian Industry Group - to represent it. The multinational has written to its network of franchisees following Fairfax Media revelations about it underpaying employees by tens of millions of dollars under an agreement with the Shop, Distributive and Allied Employees Association... Read more

Quickflix creditors may not know for another five months if and when they will be paid back, with administrators behind the collapsed business extending the next creditors meeting. In a release to the ASX this morning, administrator Richard Hughes from Deloitte said the WA Supreme Court had approved its extension until October 21 to “seek proposals from parties interested in the purchase of the company’s business and/or recapitalisation of the company”... Read more

Opinion/Analysis - Michael Evans: Taking the government's advice cost me my credit rating. Beware the secret cost of trying to get the best deal... 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 0.60% and the IPC rose 0.23%. The Bovespa lost 0.82%... Read more

European Market Report: European markets closed sharply higher on Friday with shares in London leading the region. The FTSE 100 is up 1.70% while France's CAC 40 is up 1.67% and Germany's DAX is up 1.23%... Read more

Asian Market Report: Asian markets finished higher on Friday with shares in Hong Kong leading the region. The Hang Seng is up 0.80% while China's Shanghai Composite is up 0.66% and Japan's Nikkei 225 is up 0.54%... Read more

U.S., Japan clash over yen policy at G-7 meeting... Read more

The United States issued a fresh warning to Japan against intervening in currency markets on Saturday as the two countries' differences over foreign exchange overshadowed a Group of 7 finance leaders' gathering in the Asian nation. Japan and the United States are at logger-heads over currency policy with Washington saying Tokyo has no justification to intervene in the market to stem yen gains, given the currency's moves remain "orderly"... Read more

The U.S. economy should be solid enough to merit an interest-rate increase this year, and the central bank won’t cave to political pressure to refrain from tightening during a presidential election year, said John Williams, president of the Federal Reserve Bank of San Francisco.... Read more

Economic data will garner most of the attention next week, with investors placing a heavy weight on a host of reports as they try and determine the likelihood of a rate hike by the U.S. Federal Reserve at its June meeting. Multiple gauges of the manufacturing sector will be released along with durable goods orders, a reading on consumer sentiment and the revised gross domestic product report for the first quarter... Read more

General Motors Co. will spend about $100 million to reimburse customers who bought 2016 Chevrolet Traverse, GMC Acadia and Buick Enclave sport utility vehicles with overstated fuel economy figures, said a person familiar with the matter. Fuel economy was overstated by 1 to 2 miles per gallon because the company failed to reflect new emissions-related hardware in calculations of efficiency for window stickers, according to a statement... Read more

Dean Foods Co's former chairman Thomas Davis said he threw his cellphone into a Dallas creek to hide his role in an insider-trading scheme after FBI agents visited his home, according to a transcript of his guilty plea. In a secret hearing in Manhattan on Monday, Davis told a federal judge about his efforts to hinder the investigation into the scheme as FBI agents and regulators closed in on him... Read more

Viacom Inc said on Saturday its board members have been unable to meet with controlling shareholder Sumner Redstone because his daughter Shari is blocking access to the media mogul. Viacom's criticism of Shari Redstone comes a day after Sumner Redstone, 92, removed Viacom Chief Executive Officer Philippe Dauman and Viacom board member George Abrams from the seven-person trust that will determine the fate of Redstone's $40 billion media empire that includes Viacom and CBS Corp in the event of his incapacitation or death... Read more

Quarrels have broken out behind the scenes of Anthem Inc's proposed acquisition of Cigna Corp, as the health insurers seek regulatory approval for their landmark deal, the Wall Street Journal reported on Sunday. The newspaper said the squabbles could delay or derail antitrust approvals, though the deal does not appear to be in danger of imminent collapse... Read more

Hedge funds who own debt at Puerto Rico's Government Development Bank are accusing the bank and the island's governor of giving preferential treatment to local creditors under a law designed to restructure GDB's debt, signaling a breakdown in a tentative restructuring deal the sides reached earlier this month. A bondholder group that includes hedge funds Brigade, Claren Road and Fir Tree updated an existing lawsuit against the bank and Governor Alejandro Garcia Padilla late Friday, saying new amendments to a fiscal emergency law passed in April would protect local creditors over non-resident bondholders... Read more

Venezuela is running out of sugar. Amid a political and humanitarian crisis, Venezuela's state-run sugar producers announced earlier this week that they have temporarily ceased production due to a lack of raw sugar.... Read more

Venezuela: how the socialist paradise turned into debt and hyperinflation hell... Read more

Haruhiko Kuroda, governor of the Bank of Japan, says the most serious risk facing the global economy was the possibility of the UK voting to leave the European Union. In an interview ahead of the Group of Seven Leaders meeting in Japan this week, Mr Kuroda made the remarks when I asked him whether China, Brexit, or the US Federal Reserve raising interest rates was the biggest threat to global economic stability... Read more

EU referendum: Brexit 'could damage NHS', health boss warns... Read more

Now that Bayer AG’s bid for seed giant Monsanto Co. is out of the bag, attention has turned to how much the German company will need to pay. The value of the transaction could top $63 billion, according to some analysts tracking the situation. So far, neither side has disclosed the terms or structure of the deal. That’s triggered speculation over how Bayer will finance what would be the largest ever takeover by a German company... Read more

Two of the bidders for Tata's Port Talbot and other UK steel plants are willing to work together, the BBC understands. Liberty House and a management buyout team will submit separate bids for Tata UK when the deadline closes on Monday. However, they plan to state in the bid documents that they are willing to work in partnership on a takeover... Read more

Sir Philip Green could help draft law to protect pensioners, says MP. Frank Field, co-chair of inquiry into controversial sale of BHS, says tycoon could advise on new legislation... Read more

The Co-operative has unveiled plans to bring back an annual payout for its millions of members. The group suspended the dividend in 2014 when it posted huge losses. As part of a major refresh, which also involves reviving its 1960s blue clover logo, the Co-op now plans to reintroduce the members' dividend by 2018... Read more

Sky has emerged as potential kingmaker in a looming £9bn bid battle between private equity giants for mobile operator O2. The pay-TV company is being courted by at least five buyout specialists seeking its heavyweight backing for their bids, City sources revealed... Read more

Pakistan’s central bank unexpectedly lowered its benchmark interest rate for the first time since September to boost economic growth before the government presents its budget for the new financial year. The State Bank of Pakistan cut the target policy rate to 5.75 percent from 6 percent, it said Saturday in an e-mailed statement in Karachi. All 22 economists surveyed by Bloomberg had predicted no change... Read more

Abu Dhabi stocks posted their longest losing streak since October amid a slump in trading across Gulf Arab equity markets as investors held out for more than a $1 billion worth of rights issues. The ADX General Index fell 1.1 percent, declining for the sixth straight day. Emirates Telecommunications Group Co., or Etisalat, the largest phone company in the Middle East, led the retreat with a 2.6 percent drop... Read more

Subaru to Maintain Japan Production Focus Despite Stronger Yen... Read more

Apple’s Tim Cook Maps His Vision for India in Meeting With Modi... Read more

Opinion - Larry Elliott: George Osborne, the really unfortunate chancellor. Like some of his predecessors, Osborne has to cope with a trade deficit and budget deficit at the same time... Read more

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