ASB Securities Morning Brief for Wednesday, 28 September 2016
Wednesday, 28 September 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell in school holiday trading, with Orion Health Group and Xero dropping while Air New Zealand bounced after recent losses. The S&P/NZX 50 Index dropped 11.95 points, or 0.2 percent, to 7,252.92. Within the index, 33 stocks fell, 12 rose and five were unchanged. Turnover was $120.9 million... Read more

The New Zealand dollar gained as a strong performance by Democratic candidate Hillary Clinton in the first US presidential debate stoked investors' appetite for risk-sensitive assets. The kiwi rose to 72.90 US cents at 5pm in Wellington from 72.68 cents at 8am and 72.39 cents yesterday. The trade-weighted index increased to 77.26 from 76.93 yesterday... Read more

Former acting governor Rod Carr has stepped down as chair of the Reserve Bank board of directors. He will be replaced by Professor Neil Quigley ,vice-chancellor of the University of Waikato. Kerrin Vautier has been appointed deputy chair.... Read more

New consumer credit laws don’t appear to be preventing finance companies from using questionable techniques to peddle debt. The Commerce Commission received 40% more credit-related complaints related to finance companies in 2015 than it did the previous calendar year. The Credit Contracts and Consumer Finance Amendment Act 2014 (CCCFA) took effect in June 2015... Read more

Significant disclosure 'still lacking'. Investors and advisers are still being kept in the dark about significant components of fund managers’ fees, it has been claimed. Managers are transitioning to the new Financial Markets Conduct and the FMA released a guidance note in May on how they should manage their fee disclosure requirements... Read more

The Companies Office has botched the deregistration of a company from the Companies Register that appears to have been involved in the questionable pooling of funds from investors overseas that were then deposited in an ANZ New Zealand bank account. The company, Fennas Finance Limited, featured in this article in June. Fennas Finance appears to be, or have been, involved with a secretive organisation named Icon Sachs... Read more

Rocket Lab's private launch site, the first of its kind in the world, is "good to go". On Tuesday the company said it had completed the world's first private orbital launch site on Mahia Peninsula, which is on the East Coast south of Gisborne. The launch range, which was licensed to launch every 72 hours for the next 30 years, would mean the country would soon become the nation with the highest frequency of space launches anywhere in the world... Read more

ASX-listed autoparts firm Bapcor has mounted a $322.5 million takeover bid for NZX-listed Hellaby Holdings as it looks to extend its reach into New Zealand's local auto market. The Preston, Victoria-based company is offering $3.30 a share to take full control of Hellaby, an 8.9 percent premium to yesterday's closing price of $3.03, and has secured acceptances totalling almost 30 percent, according to a notice to the stock exchange... Read more

Hellaby Holdings shares closed up 8.91 per cent at the $3.30 price offered by Australian-listed autoparts firm Bapcor for its $322.5 million takeover bid. The NZX-listed company's board said it "strongly recommends" shareholders put off selling until it provides further guidance, and will meet to consider the takeover notice and appoint an independent adviser... Read more

Intueri shares slump on Australian audit that could threaten viability... Read more

Intueri Education Group chairman Chris Kelly says the market has had "a bit of an overreaction" to today's news that an Australian government audit of its subsidiaries across the Tasman could threaten the viability of the company, and the company is confident in its future. Audits by the Australian Skills Quality Authority (ASQA) found that Online Courses Australia (OCA) and Conwal & Associates weren't compliant with its standards... Read more

Trilogy International independent director Mandy Sigaloff is sitting on a paper profit of $664,000 after she exercised share options granted before her appointment in 2013. Ms Sigaloff was granted the right to buy 200,000 ordinary shares at a price of 80c as part of her agreement to join the company's board. The options were authorised by the directors on November 22, 2013, when shares traded at 60c. The options expired at the end of the month... Read more

Tauranga's Enterprise Angels network of investors in early stage companies has launched a new crowdfunding platform to make it easier for sophisticated investors to access those opportunities. The country's newest crowdfunding platform, AngelEquity, will seek to broaden investments previously limited to angel networks to include people who qualify as wholesale investors, says Enterprise Angel executive director Bill Murphy. Enterprise Angels funded the construction of the site, which Murphy sees as providing a national investment service for offers that have previously been restricted by geography... Read more

Pacific Business Trust appoints Kim Tuaine as new Chief Executive Officer... Read more

Newmarket Business Association announces new board at AGM... Read more

Telcos Spark and Vodafone have topped the list of the most complained about companies in 2015, according to a new report from the Commerce Commission.... Read more

Top law firm Russell McVeagh has criticised the Commerce Commission for "naming and shaming" companies in its Consumer Issues Report. The commission's report details trends in consumer complaints last year, including naming some of the companies which attracted most complaints from the public... Read more

An Australian expert in market manipulation will give evidence that none of the trades identified by the Financial Markets Authority in its case against Milford Asset Management portfolio manager Mark Warminger created a false or misleading appearance in the market. Mr Warminger's lawyer Marc Corlett QC, in his opening defence at the High Court in Auckland today, said Professor Michael Aitkin, a professor of ICT strategy at Sydney's Macquarie University and one of the world's leading experts in market manipulation, will give evidence on behalf of Mr Warminger... Read more

Trading by Milford Asset Management portfolio manager Mark Warminger in Xero shares in June 2014 sparked an inquiry by the NZX’s market surveillance team and, ultimately, the current market manipulation case against him underway in the High Court at Auckland... Read more

Auckland roading contracts were awarded under a culture of bribery and corruption for eight years, the High Court in Auckland has heard. Stephen James Borlase and Murray John Noone are standing trial facing bribery and corruption charges over Auckland roading contracts worth more than $1 million. They pleaded not guilty last year to charges brought against them by the Serious Fraud Office (SFO)... Read more

Corruption at council widespread, says Crown. A rare prosecution of alleged corruption in the New Zealand public sector has heard of a claimed cascading culture of bribery that saw a senior Auckland Council manager collect $1.1 million and his subordinates taken for a $3000 lunch... Read more

Reckitt Benckiser is probably not the only pharmaceuticals company that’s tricking consumers with identical products, Consumer NZ says. Yesterday, the consumer goods giant signalled it would plead guilty to 10 charges brought by the Commerce Commission over the way it promoted a range of Nurofen products, the Commerce Commission said... Read more

Language defence fails in $7.3m property deal fight. An Auckland company argued it shouldn't have to pay a ten per cent deposit on a cancelled $7.3 million property purchase because its director didn't understand English. But a High Court judge was satisfied that the director, Helen Liang, is "much better at English than she has let on" and found in the seller's favour over the $730,000 deposit... Read more

Vintage Farm Trust, which operates two dairy farms in Taranaki, has been ordered to pay at least $87,000 for employment law breaches including paying workers below the minimum wage and failing to keep records. The determination from the Employment Relations Authority follows a routine audit by a labour inspector from the Ministry of Business. A statement from MBIE says its investigation was "marred by allegations of bullying when two of the employees were pressured into signing an agreement to settle their claims for $8500... Read more

Australian Headlines

Australian Market Report: ASX losses halved on hopes for Hillary. The S&P/ASX 200 index fell 1.1 per cent at the open after German giant Deutsche Bank hit a record low last night on capital adequacy fears. However, the index climbed to finish down 25.5 points, or 0.47 per cent, at 5405.9 as markets wagered Mrs Clinton had done enough to swing voters’ polls back in her favour, reducing the risk from Mr Trump’s isolationist global stance and anti-US Federal Reserve policies... Read more

The Australian dollar has gained against the US dollar as investors await the US presidential debate with Republican candidate Donald Trump and Democrats Hilary Clinton. At 0700 AEST on Tuesday, the local unit was trading at 76.35 US cents, up from 76.18 cents on Monday.... Read more

The Australian dollar could fall up to 10 per cent if US Republican candidate Donald Trump wins the US presidency in November, according to Commonwealth Bank's currency strategists. Mr Trump's main economic policies, including major income and company tax cuts, government spending and tariffs, are "very inflationary", CBA currency strategists Richard Grace, Elias Haddad, Joseph Capurso and Wei Li say in a research note... Read more

Australia's interest rates are likely to stay low for years, perhaps even decades, a top global economist warns. US futures trader and exchange operator CME Group's executive director and senior economist Erik Norland, who is visiting Australia this week, says any rate rise forcing Australia's debt-laden companies and households to pay more interest could be crippling and unbalance the entire economy... Read more

Business cashes government debt in low rate environment. Interest rates around the world are at the lowest levels they’ve been for over 150 years — in some cases, actually lower than they’ve ever been. Yet the only borrowers taking advantage of this seem to be those buying or building properties and governments, indeed almost every government around the world, running huge multibillion-dollar budget deficits... Read more

First home buyers are facing the biggest barrier in recent history to entering the housing market, with deposits at record high levels relative to incomes in the Sydney market. Research by Deutsche Bank's chief Australian economist Adam Boyton shows it would take a 25 per cent drop in Sydney home prices to bring the size of deposit required back to average levels over the past 20 years... Read more

Travellers foot bill for backpacker tax backflip. Every person flying out of Australian will help pay for an overhaul of the Federal Government’s backpacker tax that has won support from the nation’s farmers. A month after the Government accused Labor of “choking the golden goose” of tourism by increasing the departure tax in 2012, Treasurer Scott Morrison will increase it again by $5 a person to $60.... Read more

Australians are expected to spend an extra 22 days surfing, chatting, shopping and working online this year compared to two years ago. Residents across metropolitan areas spend more time online than their regional counterparts, and those connected to the national broadband network are the biggest users, according to new research commissioned by the company rolling out the NBN... Read more

Shares in Western Areas and other WA nickel miners surged this afternoon after the Philippines government flagged fresh mine closures in the wake of environmental audits. Western Areas shares began to run shortly after midday, as the official Twitter account of the Philippines Department of Environment and Natural Resources began live coverage of a press conference held by Environment Secretary Gina Lopez on the results of the audit... Read more

Gold producer Resolute Mining Ltd has been granted a trading halt by the ASX this morning, pending details of a capital raising - which will be in the form of a bookbuild. Resolute's shares have increased seven-fold over the past 12 months to $2.19... Read more

Vimy Resources has received special permission to begin preliminary work on its Mulga Rock uranium project in the Goldfields, despite Environment Minister Albert Jacob not yet giving final approval for the project... Read more

Rio Tinto is poised to beef up its cyber security capabilities worldwide in what appears to be a response to the growing influence of IT-OT convergence at mine sites. The miner has opened a sizable recruitment drive for cyber security experts across a range of disciplines in four countries – the US, Australia, South Africa and Canada. The Australian roles are located in Perth and Brisbane... Read more

Mining giant Rio Tinto has launched an offer to buy back up to $US3 billion ($A3.9 billion) of its US dollar-denominated bonds as part of its ongoing capital management program.... Read more

Aruma Resources Ltd in an ASX trading halt... Read more

Breaker Resources has taken advantage of its recent share price run to raise an extra $10 million. It is understood the company has raised the cash in a heavily oversubscribed placement, priced at a discounted 50 cents, through Patersons Securities... Read more

Breaker Resources NL's shares have tripled since the start of the month, last trading at around $0.65.... Read more

Credit ratings agency Moody’s says mining equipment supplier Emeco Holdings remains at risk of default despite a merger deal which includes a debt-for-equity swap. Moody’s today joined S&P Global Ratings in describing the deal which would fold private contractors Orionstone and Andy’s Earthmoving into Emeco as a distressed debt exchange, or de facto default. The contractor’s shares closed down 0.5¢ to 6.8¢.... Read more

Aguia Resources has appointed Guilherme Jacome as head of engineering to lead the upcoming bankable feasibility study of the Tres Estradas phosphate project in Southern Brazil... Read more

CZL moves to 80% ownership of Plomosas... Read more

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

Austpac Resources NL’s has completed a $250,000 private placement to professional investors, at an issue price of $0.01 per share. The new funds will be used for working capital and to progress the Newcastle Zinc Iron Recovery Plant... Read more

Pharmaxis drug Bronchitol has been approved for marketing in Russia for the treatment of both paediatric and adult cystic fibrosis (CF) patients... Read more

TFS Corporation says it has received its first payment ($US2.25 million) from the sale of processed sandalwood to China. The payment has been received ahead of the first shipment of Indian sandalwood, which is scheduled to depart Fremantle on September 30. Shares in the company were up 4.5 cents, or 3.14 per cent, to $1.48 at 12.35pm.... Read more

Flight Centre has acquired the corporate business of European online travel agency eDreams ODIGEO for an undisclosed sum.... Read more

How Stephen Elop plans to help Telstra transform. Stephen Elop, the man who helmed many high-profile tech companies through the stormy waters of disruption, is now leading Telstra's charge to transition from a telco to a technology company, and his message is simple: it’s time to sink or swim... Read more

The telcos who buy space on the National Broadband Network say the most pressing issue for them is the wholesale pricing of access to the Federal Government-owned broadband provider. Most internet service providers charge their customers a fixed price, while the National Broadband Network's prices are variable, creating a profit-destroying mismatch... Read more

Capilano gag order over activist’s ‘toxic honey’ claim. An Australian beekeeper is in a sticky situation after Capilano won a gag order against him. Simon Mulvany accused the honey maker of selling “toxic” imported honey in order to make more money, a claim the company vehemently denies... Read more

The Indonesian Government has reportedly "abolished" its quota system for importing cattle, allowing companies to ship in livestock provided they commit to the country's new breeding program. The Jakarta Globe is reporting Indonesia has introduced a new trade rule, which stipulates that one of every six imported cattle from Australia must be for breeding purposes... Read more

They came to public attention last year at the height of the baby formula shortage that wreaked havoc in our supermarkets. But the network of Chinese personal shoppers known as daigou have been quietly working away behind the scenes Australia’s retail economy for years. And the Tax Office may soon have them in its sights, with reports that up to $1 billion in taxes are slipping through the net.... Read more

The courtroom stoush between Woolworths and its US-based joint venture partner in the collapsed Masters hardware chain has been sent to arbitration. Woolworths has secured a stay of Federal Court proceedings brought by Lowe's seeking a wind-up by liquidator of the Masters business... Read more

International Headlines

U.S. Market Report: Wall Street rose for the first time in three days on Tuesday, helped by technology and discretionary stocks. The S&P 500 technology sector rose 0.8 percent and gave the biggest boost to the benchmark index, powered by Microsoft and Google parent Alphabet... Read more

North/South Americas Market Report: North and South American markets are mixed. The S&P 500 is higher by 0.63%, while the Bovespa is leading the IPC lower. They are down 1.32% and 0.71% respectively... Read more

European Market Report: European markets finished sharply lower today with shares in Germany leading the region. The DAX is down 2.93% while France's CAC 40 is off 2.46% and London's FTSE 100 is lower by 1.47%... Read more

Asian Market Report: Asian markets finished broadly lower today with shares in China leading the region. The Shanghai Composite is down 1.18% while Hong Kong's Hang Seng is off 0.48% and Japan's Nikkei 225 is lower by 0.42%... Read more

Deal or no deal? For the world's major oil producers, it looks like the answer will once again be "no deal." Oil prices dropped 3.5% on Tuesday as OPEC struggled to agree how to restrain output at a meeting in Algeria... Read more

U.S. Bond Market’s Biggest Buyers Are Selling Like Never Before... Read more

U.S. single-family home prices rose slightly less than expected on an annual basis in July, and the year-over-year gain was smaller than in the prior month, a survey showed on Tuesday. The S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas rose 5 percent in July on a year-over-year basis, retreating from the 5.1 percent climb in June and short of the estimate calling for a 5.1 percent increase from a Reuters poll of economists... Read more

WTO cuts 2016 world trade growth forecast to 1.7 percent, cites wake-up call... Read more

Chesapeake Energy Corp said on Tuesday that two directors, including a representative of activist investor Carl Icahn, resigned on Monday, a week after Icahn more than halved his stake in the natural gas producer. Chesapeake said the resignations of Icahn representative Vincent Intrieri, along with John Lipinski, board members since June 2012 and June 2014 respectively, were not due to any disagreements... Read more

Wells Fargo & Co.’s board is actively considering whether to claw back pay from former retail-banking head Carrie Tolstedt as well as from Chief Executive John Stumpf, according to a person familiar with the matter. The board is deliberating in the wake of the bank’s sales-tactics scandal and could make a decision as soon as Tuesday, the person said. The board wants to take action before Stumpf returns to Capitol Hill; he is scheduled to testify Thursday before the House Financial Services Committee... Read more

A group of Democratic U.S. senators on Tuesday demanded Yahoo Inc explain why hackers' theft of user information for half a billion accounts two years ago only came to light last week and lambasted its handling of the breach as "unacceptable." The lawmakers said they were "disturbed" the 2014 intrusion, disclosed by the company on Thursday, was detected so long after the hack occurred... Read more

Disney is the ’most logical choice’ of buyer for Twitter. Disney would join and Alphabet as companies reportedly interested in Twitter, valued at $16.5 billion.... Read more

U.S. says Wells Fargo to pay $400,000 to settle charges over swaps... Read more

The US has put sanctions on a Chinese firm and four executives over allegedly helping North Korea evade sanctions. Dandong Hongxiang is accused of acting on behalf of a North Korean bank that is on a UN sanctions list to stop the spread of weapons of mass destruction... Read more

SpaceX has successfully tested a new rocket engine it plans to use to take people to Mars within the next 10 years. CEO Elon Musk tweeted about the successful first firing of the Raptor engine, and included two photos of it... Read more

The board of Italian broadcaster Mediaset has given management a mandate to press ahead with legal action against Vivendi over a disputed pay-TV deal, a source close to the matter said on Tuesday... Read more

Italy is poised to cut its economic growth forecasts for this year and next and raise its projections for the budget deficit on Tuesday when the cabinet meets to approve a new forecasting document. The new forecasts, which will provide the framework for the government's 2017 budget to be presented next month, will set up a potential tussle with the European Commission, which has urged Italy not to ease up on previously agreed fiscal targets... Read more

London’s housing market faces severe price declines if the U.K.’s vote to leave the European Union triggers an extended period of economic weakness, according to UBS Group AG... Read more

British retail sales fell unexpectedly this month after a strong showing in August, according to a survey published on Tuesday, contrasting with robust figures since June's vote to leave the European Union... Read more

The first shipment of US shale gas has arrived in Scotland amid a fierce debate about the future of fracking in the UK. A tanker carrying 27,500m3 of ethane from US shale fields has reached Grangemouth, the site of the petrochemicals plant owned by Ineos... Read more

Deutsche Bank shares hit a record low on Tuesday and state-backed lender NordLB scrapped plans for a 500 million euro ($560 million) bond sale, underlining investor concern about the health of the financial industry in Europe's largest economy... Read more

Shares in troubled Deutsche Bank have fallen even further to a new low. They fell another 3% to €10.22 during morning trading on the Frankfurt stock exchange... Read more

What to watch for in Nike earnings. Product launches have fallen flat and competition is tight, but Nike is still the leader... Read more

Fifteen Air France current and ex-employees have gone on trial almost a year after two company executives had their shirts torn off as a meeting on job cuts descended into chaos. A hundred protesters broke down a fence and invaded a boardroom, forcing the executives to flee... Read more

Spain's Telefonica is looking to list about 30 percent of its British mobile unit O2 in what would be one of the biggest initial public offerings (IPOs) on the London market this year, sources told Reuters... Read more

Brexit Real Estate Backlash Fans Rush Into ‘Hot’ Swedish Market. Britain’s vote to leave the EU may have cooled its property market. But elsewhere in Europe, things are heating up fast. In Sweden, where interest rates are negative, politics are stable and economic growth is brisk, a quick look at publicly traded real estate companies shows demand is soaring... Read more

U.S. and Europe scoop up $1.25 billion in Russian bonds. The Russian Finance Ministry has placed $1.25 billion worth of bonds on the open market. Furthermore, it has deliberately targeted foreign investors rather than local companies. Russian analysts say the government is pursuing sound economic policy... Read more

Saudi Arabia slashes pay for top officials by 20%... Read more

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