ASB Securities Morning Brief for Wednesday, 02 September 2015
Wednesday, 02 September 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares were mixed as shrinking manufacturing activity in China raised fears about the world's second-biggest economy, and spurred a selloff in equity markets across Asia-Pacific. Australia New Zealand Banking Group, Chorus and Westpac Banking Corp declined. The S&P/NZX 50 Index slipped 1.26 points, or 0.02 percent, to 5654.98. Within the index, 19 stocks fell, 19 rose and 12 were unchanged. Turnover was $200 million... Read more

The New Zealand dollar recovered some of yesterday's decline ahead of the latest dairy products auction, which will likely show a lift in milk prices, while weak Chinese manufacturing data continued to keep traders nervous. The local currency rose to 63.77 US cents at 5pm in Wellington from 63.33 cents at 8am, still down from 64.23 cents yesterday. The trade-weighted index fell to 68.93 from 69.50 yesterday... Read more

Muted finale to NZ's reporting season. The 2014/15 reporting season has finished on an unspectacular note, but it may prove to be a high water mark for corporate earnings as New Zealand enters a period of slower economic growth, dwindling business confidence and sharply lower dairy prices, say analysts. Economists are paring back their GDP forecasts for this year, and many expect growth to come in at around 2 per cent or just under.... Read more

The NZX and the Commission for Financial Capability have launched a series of short videos to help people who are interested in investing but not sure where to begin. The series, featured on the website, is designed as a starting point for New Zealanders to learn about the different investment options, and to increase discussion about saving and investing choices... Read more

Southland needs to diversify to survive - Steven Joyce. Southland cannot rely on its biggest employers to remain strong in the future and needs to continue diversifying its industries, Minister for Economic Development Steven Joyce says. Joyce was at a public meeting with Winton business owners at the Winton Salvation Army Corps on Tuesday to discuss the economic position of New Zealand and the regions... Read more

Overseas-based sellers will have to pay a residential land withholding tax if they sell a property within two years, according to a newly-released Government paper.... Read more

BNZ economists say the risk of NZ falling into recession is increasing by the day. BNZ economists have come out questioning whether we’re “borrowing our way to recession”, saying the likelihood of New Zealand falling into recession is increasing every day. The statement follows ANZ’s Business Opinion Survey, revealing business confidence hit a six-year low in August, and the latest Reserve Bank sector credit figures. They show New Zealand households borrowing at their fastest rate in seven and a half years... Read more

An Auckland mortgage expert warns that speculators are driving up house prices, making it harder for first home buyers who are getting regularly outbid. "The speculators are buying and selling quickly without adding any value in a lot of cases, so that falsely drives the prices up," Loan Market mortgage adviser Bruce Patten said... Read more

Auckland values up 20%+ on last year. Residential property values just keep raising in Auckland – with new QV data showing increases of 20.4% over the past year, 5.6% over the past three months and 60.1% since the 2007 market peak.... Read more

Kiwis overwhelmingly call for compulsory financial literacy in schools. New Zealanders stressed out by money problems are overwhelmingly calling for financial literacy to be taught as a compulsory subject in schools. Monday marks the start of Money Week, aimed at getting the nation thinking and talking about their finances... Read more

More than half of pre-retirees say they are not getting enough information from their KiwiSaver provider to help them make decisions about retirement, a survey has found. The research questioned people over the age of 50 about their expectations and plans for retirement and was undertaken on behalf of the Commission for Financial Capability and the Financial Markets Authority... Read more

New research shows many New Zealanders nearing retirement age are interested in an annuity-type product that will give them a guaranteed income. The Commission for Financial Capability and the Financial Markets Authority have today released the second part of their research into how well New Zealanders are preparing for retirement... Read more

A quarter of people approaching retirement haven't worked out what they will do with their KiwiSaver nest eggs. Of those who do know, nearly six in 10 intend to leave some or all of the savings in their Kiwisaver accounts and withdraw money as and when they need it... Read more

The Sheep, Deer and Cattle Report: Good demand for chilled lamb, quota issues for beef, and both deer products on track for a good season... Read more

Kiwi dairy farmers face world’s lowest payout. New Zealand dairy farmers bracing for the lowest payout in a decade probably won’t welcome the latest analysis of global trends in the industry – their counterparts in every other dairy-producing country are being paid more... Read more

Dairy prices, after suffering a steep slide since March, rose for the second time in a row at this morning's GlobalDairyTrade auction, the GDT price index gaining 10.9 per cent. Whole milk powder prices, which are key to determining Fonterra's farm gate milk price, rose by 12.1 per cent to an average US$2,078 a tonne. Further out along the price curve, whole milk powder traded at US$1,975/tonne for the November contract period, US$2,105/tonne for December and US$2,110 for March 2016... Read more

Most dairy farmers will probably take advantage of a Fonterra interest-free loan to help them through this season, Federated Farmers dairy chairman Andrew Hoggard says. "I've got half the debt of the average dairy farmer and this payout is hurting us, so we'll be taking this - it makes sense because this spring will be horrid cashflow-wise," Hoggard said... Read more

Rural Equities, the farming group majority-owned by the Cushing family, posted a 27 percent decline in annual earnings as milk prices plummeted. The Hastings-based company said operating earnings before interest and tax fell to $4.67 million in the year ended June 30, from $6.43 million a year earlier... Read more

Job Done for winning pitch in Fonterra innovation competition. It is indeed “job done” for the digital innovation start up of the same name which has secured a business relationship with dairy giant Fonterra Cooperative Group after delivering the winning pitch at an Auckland innovation event the cooperative organised... Read more

Sanford, New Zealand’s largest listed fishing group, will quit its underperforming Pacific tuna business and put the unit’s fleet up for sale. The shares were unchanged at $5.10, and have gained 6.3 percent this year. The Auckland-based company sold its San Nanumea vessel and is in talks with a potential buyer of San Nikunau, its other Pacific tuna ship, after reviewing the viability of the business, Sanford said in a statement... Read more

Just Water International, the water cooler and supplies business 79 percent owned by founder Tony Falkenstein, reported a 17 percent drop in annual profit, as restructuring costs weighed on the bottom line... Read more

Sea Dragon bosses to take up to $300,000 in rights offer... Read more

OceanaGold Corp expects 2015 production to increase while costs fall after the gold miner takes control of Waihi Gold Mine later this year. The acquisition of the Waihi mine from Newmont Mining Corp is awaiting approval from the Overseas Investment Office. OceanaGold shares, which trade in New Zealand, Canada and Australia, increased 1.1% to $2.86 on the NZX.... Read more

Snakk founder Derek Handley to leave board, shares fall... Read more

Travellers are the likely winners as a new strategic alliance between Air New Zealand and Air China gets the official sign-off.... Read more

Airways Corp of New Zealand, the state-owned enterprise in charge of the nation’s air traffic control, has met a government request for a higher dividend payment in its latest financial year and promised to increase it further this year... Read more

Online translations company Straker Translations has raised $6 million to help fund its international expansion, including $4 million from David Kirk’s Bailador Investments... Read more

Vertical fund businesses – a broken model? Vertical fund managers control the entire investment “ecosystem” - from manufacturing fund product through to advising the end investor. This means the fund manager can be a “one stop shop” providing the (supposedly) perfect client solution, isolated from any alternatives. It makes great business sense – but does it make sense for investors?... Read more

Bidding opens for $210m in extra UFB funds... Read more

The Government has set a deadline of the end of 2022 for extending ultrafast broadband to at least 80 per cent of the population. Crown-owned company Crown Fibre Holdings has invited companies to bid for the construction work by October 28 and expects to award contracts by July next year... Read more

AMP Capital has no plans to replace Nick Dobson, who is stepping down after 17 years.... Read more

Warren Stephens is stepping down as New Zealand’s Million Dollar Round Table (MDRT) chair. Mat Page, currently the Northern Area Chair, will take over from today... Read more

Pressing need for basic infrastructure overtakes Christchurch ‘smart city’ plan. A plan to transform Christchurch into “the world’s smartest city”, taking advantage of the earthquake rebuild to incorporate ‘intelligent infrastructure’ that could monitor and optimise use of services like energy and water, has missed its initial targets because stakeholders were more concerned to restore basic services.... Read more

An 80-year-old accountant who owes Inland Revenue around $500 million wants the High Court to approve his proposal to pay $1000 a week off the debt. If John George Russell's bid fails, it places him one step closer to bankruptcy, which the tax department appears intent on pursuing... Read more

Investors in the Hubbard Management Fund have had all their capital returned. ... Read more

The Commerce Commission has filed charges against a mobile trader, or truck shop operator, claiming he obtained money from customers by deception and never intended to supply them with the goods they paid for... Read more

A multimillion-dollar divorce wrangle between a sawmill magnate and his former wife has made its way to the Supreme Court. Mark Clayton has significant sawmilling interests in the central North Island and his business and other assets are owned by a series of companies and trusts... Read more

Opinion - Alex Malley: New Zealand must seize opportunities offered by TPPA... Read more

Opinion - Rick Shera: TPP could block copyright fair use. The recent leak of the intellectual property chapter of the Trans Pacific Partnership Agreement, currently entering its seventh year of negotiation, shows that New Zealand's negotiators are doing a good job holding the line against more restrictive copyright laws... Read more

Opinion - Gareth Vaughan: Branching into P2P lending could help Kiwibank challenge the Aussie banks. Gareth Vaughan argues the time's ripe for Kiwibank to be set free from its ailing parent if it's to really challenge the big four banks.... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket closed more than 2 per cent lower today, amid a broadbased sell-off across Asian bourses and after the Reserve Bank board held the cash rate steady at 2 per cent. At the official 4.15pm (AEST) close, the benchmark S&P/ASX200 had fallen 110.6 points, or 2.12 per cent, to 5096.4, while the broader All Ordinaries had lost 105.1 points, or 2.01 per cent, to 5117.... Read more

The Australian dollar is slipping south as China’s stock market debacle continues to drive gloom on global equity markets. At 7am (AEST), the currency was trading at US71.11 cents, down from US71.42 cents yesterday... Read more

RBA rates call fails to calm market jitters as ASX 200 tumbles 2.12%... Read more

What you should do with your mortgage now the Reserve Bank of Australia has kept the cash rate on hold at two per cent... Read more

The Reserve Bank appears unmoved by the recent routs on global share markets and is likely to keep the cash rate unchanged for some time. The cash rate was left at a record low of two per cent for a fourth straight month after the RBA's September board meeting... Read more

Online retail sales have sagged as a spending frenzy fades in the aftermath of the government's budget-related small businesses tax cuts. The latest NAB Online Retail Sales Index shows a 1.4 per cent dip in July, a significant deterioration on the revised 2.3 per cent growth recorded in June... Read more

Australia's current account deficit blows out by 41 per cent while net debt approaches $1 trillion... Read more

Housing construction is expected to gradually ease from its recent highs in the months ahead as home price growth softens. Approvals for the construction of new homes rose by a higher-than-expected 4.2 per cent in July, reversing a 5.2 per cent drop in June. The rise was driven by a double-digit rise in the volatile multi-unit dwellings category, offsetting a dip in approvals for detached homes... Read more

Perth house values continue slide... Read more

China free trade agreement expected to tip billions into Australian farms, dairy industry to be popular with investors. From vast Central Australian cattle stations to the smallest southern Victorian dairy farms, the Australian agriculture sector is expecting a transformation later this year, with food-hungry Chinese companies in negotiations worth billions... Read more

The Federal Government has abandoned plans for a bank deposit tax which would have imposed a 0.05 per cent levy on deposits up to $250,000 from the start of next year. The tax was proposed, but not legislated, by the former Labor government ahead of the 2013 election and would have raised about $1.5 billion over the next four years... Read more

Pilot Energy to make material acquisition... Read more

Aurizon chief warns FTA opposition will cost jobs if China walks away. Union scare mongering over the China-Australia Free Trade Agreement risks damaging ties with our most important trading partner, Aurizon chief executive Lance Hockridge has warned. Mr Hockridge, head of the country’s biggest rail company, said claims that Australian jobs would be lost because the FTA allowed the Chinese to import labour for major projects were incorrect... Read more

Mineral Commodities is on the up after posting solid half-year earnings, which included a profit after tax of US$3.9 million (A$5.4 million)... Read more

Dempsey Minerals has been granted an ASX trading halt in relation to a pending asset acquisition... Read more

Base and precious metals developer Boss Resources has propelled itself into the forefront of Australia’s small but prospective uranium space with the acquisition of a substantial Russia-owned project in South Australia... Read more

Wollongong Coal will axe 80 jobs and shutter its Russell Vale mining operations after widening its annual loss to $200 million. The company said mining would be suspended at its Russell Vale Colliery in southern NSW because of difficult operating and financial conditions... Read more

Uscom targets revenue growth with acquisition of Thor Laboratories... Read more

EnviroMission has moved into a trading halt to divulge the terms of a US$110 million funding Heads of Agreement package. Earlier it revealed a major Japanese fund would to invest US$110 million (A$154.6 million) into EnviroMission's La Paz Solar Tower development in the US state of Arizona... Read more

Myer pours $100m into omni-channel overhaul. Outlines $600m company-wide transformation... Read more

Myer is looking to a Topshop-led overhaul to end years of weak sales growth in its department stores, and is asking investors for the cash to pay for it. The retailer has unveiled a $221 million share issue to help pay down debt and put toward a $600 million, five-year investment focused on female shoppers and high-profile brands including the UK fashion powerhouse, which will appear in stores from November... Read more

Quickflix has suspended trading on the ASX for the third time in recent months. The streaming video on-demand (SVOD) and transactional video on demand (TVOD) company — which operates across Australia and NZ — says it requested the trading halt ahead of a restructure announcement... Read more

For innovation hub, access to Big Blue's product catalogue. ANZ Bank has extended its long-running partnership with IBM under a new $450 million, five-year deal that will help deliver technology for the bank's regional Asian strategy. ... Read more

International Goldfields has revealed it is finalising share sale agreements and other regulatory filings related to the acquisition of an 85% interest in Uruguay cannabis biosciences company Winter Garden Biosciences. Due diligence was completed for the acquisition... Read more

Brisbane-based drug developer Invion Limited has secured A$1 million from a U.S. investor for the commercialisation of a number of trial treatments. Shares in the company emerged from a trading halt today only to fall 22% on the news to $0.014... Read more

Shares in Austal were higher after the company announced it had delivered the last of eight Cape Class patrol boats to Australian Border Force. The eight-vessel order was part of a $330 million design, build and in service support contract... Read more

Visa faces $20m fine in landmark ACCC case... Read more

Opinion - Malcolm Maiden: Myer's $600m revival plan may be best chance to get it right... Read more

Opinion - Chris Tedder: RBA hold fire amidst deteriorating investor sentiment... Read more

Opinion - Paul Secunda: Tapping super not the answer to home ownership decline... Read more

International Headlines

U.S. Market Report: Here we go again. Stocks took another nosedive Tuesday following more fears about a slowdown in China's economy. The Dow Jones Industrial Average dropped more than 400 points, or 2.6%, and is 12% below the all-time high it set in May. The S&P 500 fell 2.7% and is once again in a so-called correction. It's down more than 10% from the record that it hit in May... Read more

North/South Americas Market Report: North and South American markets are sharply lower today with shares in U.S. off the most. The S&P 500 is down 2.55% while Brazil's Bovespa is off 1.80% and Mexico's IPC is lower by 1.22%... Read more

European Market Report: European markets finished sharply lower today with shares in London leading the region. The FTSE 100 is down 3.03% while France's CAC 40 is off 2.40% and Germany's DAX is lower by 2.38%... Read more

Asian Market Report: Asian markets finished sharply lower today with shares in Japan leading the region. The Nikkei 225 is down 3.84% while Hong Kong's Hang Seng is off 2.22% and China's Shanghai Composite is lower by 1.23%... Read more

Oil prices continued on their wild roller coaster ride Tuesday, as weak Chinese manufacturing data sent prices tumbling lower. A 7% dive to $45 a barrel comes after prices soared higher to close Monday above $49 a barrel -- a nearly 30% rise in three days.... Read more

Here's more good news for gas prices: Iran is planning a big return to world oil markets. Iran has been shut out of Western oil markets for years due to sanctions, but those restrictions will be lifted if Congress backs a nuclear deal struck in July... Read more

Oil price wars: Russia hints at squeeze in production... Read more

Below-target inflation is a reason to keep interest rates "fairly low," Boston Fed President Eric Rosengren said on Tuesday, adding that U.S. prices could come under more pressure if the economies of China, Japan, and the euro zone slow down... Read more

There's no doubt about it: China's slowdown is going to have an impact beyond its borders. Christine Lagarde, managing director of the International Monetary Fund, is telling developing countries to prepare now, and warning global growth will be weaker than the IMF forecast just two months ago... Read more

Lagarde Says Global Growth Outlook Weaker Than IMF July Forecast... Read more

U.S. factory activity braked to a more than two-year low in August, but sturdy gains in automobile sales and construction spending suggested the economy remained on solid footing... Read more

The U.S. auto industry powered ahead in August, topping sales estimates and shrugging off gyrating stock markets as consumers continued to show their penchant for pickup trucks and SUVs. The six largest automakers in the U.S. market all beat the sales forecasts of industry analysts, with Toyota, Honda, Nissan and GM reporting declines that were not as severe as expected... Read more

Goldman Sachs Thinks This Volatility Index Should Be Much Lower. The VIX is trading like the U.S. is in a recession... Read more

General Electric Co. said Tuesday it has won more than $1 billion in orders from customers in the Asia Pacific region, as generators look for ways to improve efficiency and reduce costs and environmental damage... Read more

U.S. law firm and class action specialist Hausfeld launched a platform on Tuesday to help pursue claims against Google, posing a potential headache for the world's No. 1 Internet search engine amid its regulatory troubles in Europe. Hausfeld has coordinated various high-profile class action cases, including for companies affected by an air cargo pricing cartel, investors impacted by currency-rigging by banks and firms fighting fees levied by MasterCard and Visa Europe... Read more

Google Revamps Logo to Reflect Increasing Shift to Mobile... Read more

Netflix shares were down 5% on Tuesday, following reports that Apple is considering launching its own streaming media service. The company has been reaching out to high-level people in the entertainment industry for confidential talks, an executive familiar with Apple's plans told CNNMoney's Brian Stelter... Read more

Morgan Stanley cuts S&P 500 price target... Read more

Hackers have stolen more than 225,000 Apple accounts from iPhone customers. Security company Palo Alto Networks is calling the attack "the largest known Apple account theft caused by malware." Palo Alto Networks (PANW) discovered the hack along with Chinese tech group WeipTech... Read more

BlackRock Inc., the world’s largest money manager, said Quintin Price, who oversees the firm’s $944 billion fundamental active stock and bond investments as head of its alpha strategies business, plans to retire. Price, who is 54, will return to London where he will be a senior adviser for BlackRock through next summer, according to a memo provided by the firm. Price headed the alpha strategies unit since it was started in 2012, and has expanded the portfolio-management teams of the firm’s fundamental stock-picking business, mostly in the U.S. and Asia... Read more

Oh Canada! The country has fallen victim to cheap oil and slid into recession for the first time in six years. The G-7 economy is a big energy exporter and the slump in crude prices -- currently below $50 a barrel -- has spread pain across the country and hit growth... Read more

Mexico withheld millions in tax refunds from P&G, Unilever, Colgate... Read more

Chile Policy Makers See Bleaker Outlook for Growth and Inflation... Read more

Brazil's Epic Era of Splurging Is Over. Higher taxes, loss of jobs and lower wages have cut into consumer spending... Read more

The strongest correlation between oil prices and European bond yields in six months may turn out to be a challenge for investors assessing the outlook for prices. The yield on German 10-year bunds, Europe’s benchmark sovereign securities, has jumped almost 30 basis points, or 0.3 percentage point, from a more than two-month low of 0.51 percent reached last week... Read more

Unemployment in the eurozone fell to its lowest rate in July for more than three years, figures have shown. European Union statistics agency Eurostat said the jobless rate in the currency union fell to 10.9% in July from 11.1% the month before. The fall was helped by a sharp fall in unemployment in Italy, where the jobless total fell by 143,000.... Read more

France 'stuck in the doldrums' with second worst factory sector in the eurozone. Manufacturers in the euro's second largest economy have another torrid month, weighing down on the ECB's moves later this week... Read more

Asos chief executive Nick Robertson to step down. The founder of the online fashion retailer Asos is planning to step back to a non-executive role 15 years after launching the company... Read more

British companies exposed to fallout from China's market turmoil. Fears over a Chinese economic meltdown have been keenly felt in the UK’s boardrooms... Read more

Pound stumbles as UK manufacturing lurches towards stagnation. The sector is stuck in a 'holding pattern' as job losses are reported for the first time in 26 months... Read more

Novo Banco: Portugal bank sell-off hits snag. Portugal's central bank has missed its deadline to sell Novo Banco, a bank created after the collapse of the country's second-biggest lender. The Bank of Portugal said negotiations had broken down with an unidentified potential buyer... Read more

Foreign investors may get access to major deposits in Russia. If a foreign company in Russia repeats the recent success of Italian energy company in Egypt and discovers a strategic deposit on Russian territory, it will be able to develop that deposit. Experts expect the relevant amendments to the Russian legislation to attract investment in exploration... Read more

Rosatom invites Google and Facebook to store Russians’ data next to a nuclear power plant... Read more

The ruble snapped four days of gains as oil declined and Morgan Stanley forecast the country’s recession will last another year. Russia’s currency weakened 1.5 percent to 65.1950 against the dollar by 1:52 p.m. in Moscow, starting September on a sour note after four consecutive months of declines. An index of manufacturing activity in August fell to 47.9 from 48.3 in July, the ninth straight month of contraction... Read more

The United States is considering sanctions against both Russian and Chinese individuals and companies for cyber attacks against U.S. commercial targets, several U.S. officials said on Monday. The officials, who spoke on condition of anonymity, said no final decision had been made on imposing sanctions, which could strain relations with Russia further and, if they came soon, cast a pall over a state visit by Chinese President Xi Jinping in September... Read more

Gazprom Not Welcome as Denmark Seeks Dong IPO After Goldman. Denmark, which is still dealing with the political fallout of Goldman Sachs’s purchase of a stake in Dong Energy, doesn’t want Russia’s Gazprom or “equivalent” potential buyers to participate in the state-backed utility’s initial public offering.... Read more

China's all-important manufacturing industry is running out of steam. An important gauge of factory activity fell to a three-year low of 49.7 in August, according to China's National Bureau of Statistics. Any number below 50 indicates a deceleration in the manufacturing sector... Read more

China stock probes send shivers through investment community... Read more

Shares in Man Group PLC fell 6.2% early Tuesday after a report that the head of the hedge fund's Chinese unit has been detained by police to help with an investigation into market volatility... Read more

India’s economy, defying weakness in developed countries and elsewhere in emerging Asia, expanded 7% in the April-through-June quarter, making it one of the world’s fastest-growing as China downshifts. Asia’s third-largest economy also continued to distinguish itself from its neighbors by being fueled not by investments or exports but by consumer spending, which grew 7.4% year-on-year, according to official figures released Monday... Read more

5 Indicators That Contradict India’s GDP Figures... Read more

Indian authorities have accused internet giant Google of abusing its dominance in search advertising. The three year inquiry centres on complaints filed by several websites which claimed Google had been unfairly highlighting its own services. The accusations are similar to other allegations Google has faced in the US and Europe.... Read more

Opinion - Greg Robb: September rate hike just the surprise move the Fed hoped to avoid... Read more

Opinion - Larry Elliot: Financial markets are not free – they're one of the last bastions of socialism. From QE to rate rise delays to Beijing’s stock market interventions, the world’s policymakers have done everything possible to boost asset prices... Read more

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