ASB Securities Morning Brief for Thursday, 28 May 2015
Thursday, 28 May 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell, led by Metro Performance Glass after it missed prospectus sales forecasts. Spark NZ and Fletcher Building declined as offshore investors repatriated funds back home. The NZX 50 Index fell 37.917 points, or 0.7%, to 5757.938. Within the index, 28 stocks fell, 14 rose and four were unchanged. Turnover was $135 million... Read more

The New Zealand dollar bounced from a two-month low in local trading as investors await the outcome of today's Fonterra Cooperative Group's board meeting, which is expected to have settled the first forecast payout for next season, for release tomorrow. The kiwi rose to 72.50 US cents at 5pm in Wellington from 72.18 cents at 8am, still down from 73.13 cents yesterday. The trade-weighted index declined to 75.88 from 76.15 yesterday.... Read more

Economy to grow at 3pc, driving jobs growth: NZIER... Read more

The Reserve Bank has no alternative but to hold rates steady until mid-2017, according to the NZ Institute of Economic Research. An interest rate cut would throw more fuel on to the fire of the Auckland housing market - which has left the RBNZ in a bind, the NZIER said in its June Quarterly Predictions report... Read more

A slump in dairy exports weighed on the trade balance last month. Exports at $4.2 billion were $240 million or 5.5 per cent lower than in April last year, a drop that could entirely be explained by a $237 million or 66 per cent drop in exports of whole milk powder to China... Read more

SuperCity yields on steep decline. New data reveals that average rental yields in Auckland have fallen dramatically over the past two years.... Read more

Housing Minister Nick Smith has defended his plans to free up crown land in Auckland to build new homes despite claims people could end up living on top of cemeteries, school playing fields and on pylons... Read more

Over 5000 Auckland house sales a year could be affected by the Reserve Bank’s new 70% LVR restriction, according to a new report.... Read more

Accusations fly over Government's Saudi farm deal. Opposition MPs are labelling a $4 million payment to a Saudi businessman a "bribe" after the Government confirmed the payment followed fears of a $30 million lawsuit... Read more

Fonterra said Sir Ralph Norris would step down from its board following the co-operative's annual meeting on November 25... Read more

Westland Milk affirms 2015 payout, sees increase to $5.60-$6 for 2016... Read more

NZ heading for lowest wool clip in 6 years as farmers favour meat breeds, sheep flock declines... Read more

The National Institute of Water and Atmospheric Research has developed new tools that can help farmers decide when to irrigate or fertilise. But it needs farmers to test out the tools to ensure they are as practical and easy to use as possible... Read more

FAA review issues paper welcomed. There’s praise for the Financial Advisers Act review issues paper, which is being described as wide-ranging and asking the right questions about the regulation of the industry... Read more

Mainfreight cracks $2 billion. Mainfreight's multinational competitors, including European giants DHL and Kuehne + Nagel, are increasingly giving up market share to the New Zealand firm as its global clout increases, says managing director Don Braid... Read more

Energy Mad, the unprofitable lightbulb maker which counts NZX's SuperLife as its biggest shareholder, narrowed its annual loss in the 2015 financial year after stripping out costs. However, the accounts were still tagged by the company's auditor over its ability to generate cash. The shares last traded at 6.5 cents, and have dropped 33 percent this year. The stock was sold at $1 a share in its 2011 initial public offering... Read more

Metro Performance Glass, which has more than half of New Zealand's glass processing market, reported profit ahead of its prospectus forecast, but lower than expected revenue. Profit was $9.6 million in the 8 months ended March 31, ahead of $9.4 million projected in its July 2014 prospectus. Metro Glass shares fell 2.2 per cent to $1.80, still above the $1.70 offer price in July last year, when it raised $244.2 million.... Read more

Turners, formerly known as Dorchester Pacific, more than doubled annual profit, beating guidance, reflecting its car auction house acquisition and its financing businesses performing ahead of forecast. Profit rose to $18.1 million in the year ended March 31, up from $8.2 million a year earlier, the Auckland based company said in a statement. Turners' shares last traded at 31 cents, and have fallen 3.1 percent since the start of the year. ... Read more

A new report into the International Convention Centre deal says the government has come out on top over SkyCity in the protracted wrangling over the project. The office of Economic Development Minister Steven Joyce sent the Herald a fresh KordaMentha evaluation of the new deal which was announced this week... Read more

SkyCity Entertainment Group, the listed casino company, says group revenue is up 17.9 per cent to $415.6 million for the second half of the 2015 year-to-date, accelerating from the pace of sales growth posted in the first half... Read more

Opponents to the Wellington International Airport's mooted $350 million runway extension are just a "small minority," says chief executive Steve Sanderson.... Read more

Southern Response kept some costs information from earthquake claimants to avoid "confusion" over the amounts of their insurance settlements. Documents show the Crown-owned company, which handles AMI's quake claims, does not initially disclose to claimants some of the costs associated with the repair or rebuild of their property. The costs are at the centre of a legal dispute, to be heard at the Supreme Court in June... Read more

Puhoi – Warkworth PPP – welcome news for Northland economy... Read more

NZ government seeks $1 bln saving by making Puhoi-Warkworth Highway a PPP... Read more

Aged-care operator Summerset Group Holdings will consider retirement villages for Christchurch satellite towns and regional South Island centres in coming years. Chief executive Julian Cook says Summerset wants to build 300 retirement units nationally this year and more than 300 units in 2016. He did not give targets for 2017 and beyond... Read more

A 2500 seat convention centre on one of the few remaining blocks in the Airport Oaks industrial area that is not owned by Auckland International Airport Limited is for sale, along with an adjacent car parking business on a freehold 1.55 ha site... Read more

Kiwi-owned Fyran Boats, a home-grown East Tamaki-based marine industry company which won a design award for one of its boats at the recent Auckland Boat Show, has been placed on the market... Read more

Corks are popping as Elephant Hill celebrates its 2013 Merlot Malbec winning one of the highest accolades in international wine competitions - the Trophy for Best New Zealand Red Wine at the 2015 International Wine Challenge in London... Read more

SCF shareholders 'fool's gold' claim. South Canterbury Finance preference share holders were "robbed" of their "rights to accurate and timely information about the company" and some who bought them were "playing with fool's gold", claims broker Chris Lee... Read more

The biggest investor in one of Allan Hubbard's shambolic business vehicles has won about $372,000 in court costs from it, further diluting the amount available to 300 others. This follows a High Court judge siding with Geraldine businessman Graham Carr over how much he is entitled to from Hubbard Management Funds (HMF)... Read more

Opinion - Keith Woodford: Managing the dairy downturn... Read more

Opinion - Mike Yardley: Restrict foreign house buyers. As the dust settles on Budget 2015's big bangs, notably the looming hardship hand-outs, the big housing bogey will continue to dog the Government's agenda... Read more

Opinion - Craig Richardson: More than you bargained for: Corporate acquisitions carry a new cyber-threat... Read more

Opinion - Pattrick Smellie: Greece is again standing the edge of the financial abyss. Imagine if New Zealand were Greece. The Greek economy, at around US$250 billion (NZ$345b) of annual activity, is a bit bigger than New Zealand's, but in global economic terms, the two countries together amount to a rounding error, at around 0.7 per cent of world gross domestic product... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has reversed momentum from two days of strong gains to close substantially softer, as weak construction data weighs on sentiment. At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index was down 48.1 points, or 0.83 per cent, at 5725.3, while the broader All Ordinaries index declined 46.2 points, or 0.8 per cent, to 5724.2.... Read more

The Australian dollar hit successive one-month lows against the surging US dollar in morning trading today. The local unit dipped as low as US77.26c just before noon after a slow, tentative rally topped out at US77.50c when the US dollar headed higher again. The Australian dollar was worth US77.37c at noon (AEST), down from US77.96c yesterday... Read more

The Reserve Bank has welcomed indications the US Federal Reserve will hike interest rates later this year, saying such a move will probably weaken the Australian dollar.... Read more

ANZ has announced a $600 million ‘green bond’ issue, the first from the bank and the largest of its kind to date from an Australian issuer... Read more

The Federal Government has brought forward the start date for new farm tax breaks, effective immediately.... Read more

Three million landlords face tougher scrutiny from the Australian Tax Office, thanks in part to a property owner who had their daughter's wedding and an overseas trip paid for by taxpayers. The tax office has revealed it will use the tax reporting season to focus on rental property deductions and "unusually large" expense claims.... Read more

Asia to lock in Australian prosperity: Hockey. The emergence of Asia's middle class will be the most transformative event in Australia's history, Treasurer Joe Hockey says. If properly exploited, it could lock in our prosperity forever, he said.... Read more

Home building binge worries RBA... Read more

The Reserve Bank warns lending controls on banks to reduce the heat in Australia's property market could just drive buyers elsewhere for their loans. Risky lending into an inflated market has been a consistent worry for the Reserve Bank's rates strategy, though not enough to deter this month's rate cut to a record low of 2 per cent... Read more

The amount of construction work completed in Australia had its largest fall in almost 14 years, dragged down by a record slump in the mining sector. In the first three months of 2015, completed construction work fell 2.4 per cent - a result twice as bad as the market was expecting... Read more

Former assistant treasurer Arthur Sinodinos says the GST base should be broadened. Treasurer Joe Hockey has asked his department to cost a move to exempt feminine hygiene products from the GST, which he will take to a meeting with his state counterparts in July... Read more

The federal government is being urged to allow age pensioners to boost retirement incomes by borrowing against their homes. As thousands of retirees are set to be cut off from the payment, key Senate crossbenchers want to extend the pension loans scheme to full pensioners... Read more

Fortescue Metals Group has set up an international marketing company in Singapore, but insists it is not trying to avoid paying tax. After lambasting its bigger rivals Rio Tinto and BHP Billiton for using marketing hubs as tax shelters in Singapore, Fortescue has defended the establishment of an investment company in the city state... Read more

Oro Verde is preparing to reveal details of a capital raising, with the ASX granting the company a trading halt to prepare.... Read more

Atlas Iron has announced it will book a $130 to $160 million non-cash impairment charge at June 30, which it says reflects the carrying value of its assets following a further reduction in the iron ore price. “This is clearly bad news,” Michael McCarthy, Chief Strategist at CMC Markets, said... Read more

Marathon Resources granted trading halt for shareholder vote... Read more

Norway-focused iron ore miner Northern Iron is receiving support from its financiers to cover foreign exchange losses following a plunge in iron ore prices. Shares in the company closed 0.1 of a cent higher at one cent.... Read more

Harvest Minerals has raised $600,000 through a placement priced at $0.01 to sophisticated investors.... Read more

Prairie Mining receives $500,000 as part payment for Newman Base Metal Project... Read more

Programmed Maintenance Services chief executive Chris Sutherland says a proposed takeover of rival Skilled Group would give it the scale to compete for bigger contracts. Speaking after Programmed announced an almost 16 per cent slide in its full year profit to March to $25.7 million, Mr Sutherland talked up the virtues of the proposed tie-up. Programmed shares climbed nine cents, or 3.5 per cent, to close at $2.64 while Skilled added one cent to $1.385.... Read more

Casinos operator Crown has entered into a $1 billion agreement with developer Lend Lease to build its casino and resort at Sydney's Barangaroo South. Lend Lease said late Wednesday it had finalised commercial documentation with Crown Resorts Limited for the proposed development of a world-class integrated resort at the site... Read more

Mirvac has sold three office buildings and a shopping centre to separate parties, reaping $293 million.... Read more

Home-builder Simonds Group has laid out its ambitions to crack into the top echelon of NSW builders and capitalise on the state’s strong housing market.... Read more

The owner of Radio Rentals, Thorn Group, expects the federal government's small business tax breaks will deliver a boost to its bottom line.... Read more

Woolworths and Coles need to target Aldi's weaknesses – its limited range, lack of service and absence of value-added meals – rather than try to compete with the fast-growing discounter on price or private-label products, says a British retail expert. Kantar Worldpanel director Edward Garner has warned that Australia's major grocery retailers are facing a "new normal" of lower sales and weaker margins as the sector becomes more price-competitive and Aldi gains market share.... Read more

Telstra blocks Vodafone "Ready Business" trademark... Read more

Suncorp is spending $75 million to improve its operating systems in a move it says will allow it to process insurance claims more efficiently... Read more

Former Qantas chief executive Geoff Dixon has lambasted a controversial proposal to allow foreign airlines to fly domestic routes at the Top End "as a step too far even for northern Australia" and a form of dumping that could "seriously undermine" local airlines... Read more

ACCC to include Mazda in its investigations over allegations it misled some customers... Read more

BBY clients left with no clue as to when their money will be returned. People owed money by collapsed broking firm BBY say a creditors meeting today has given them no information on what has happened to their funds. BBY called in administrators KPMG last week after it declared it was trading insolvent... Read more

The Commonwealth Bank is being sued in the US for allegedly wrongfully withholding millions of dollars in funds that NSW Police claims were used in an IT bribery scandal last year. The lawsuit was filed by Ace Foundation, a not-for-profit born in mid-2014 thanks a multi-million dollar injection by ServiceMesh founder and former CSC executive Eric Pulier, the man at the centre of the Commonwealth Bank IT bribery scandal... Read more

Opinion - Elizabeth Knight: Woolworths board readies axe but own necks also on block. Woolworths may require fresh blood in management and an overhaul of its board... Read more

International Headlines

North/South Americas Market Report: North and South American markets are broadly higher today with shares in U.S. leading the region. The S&P 500 is up 25.96% while Brazil's Bovespa is up 0.93% and Mexico's IPC is up 0.42%... Read more

European Market Report: European markets closed sharply higher today with shares in France leading the region. The CAC 40 is up 1.95% while Germany's DAX is up 1.26% and London's FTSE 100 is up 1.21%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.63% and the Nikkei 225 rose 0.17%. The Hang Seng lost 0.60%... Read more

Oil prices rose in Asia Wednesday on bargain-hunting following sharp falls in the previous session triggered by a strong US dollar and continued concern over the global supply glut, analysts said. US benchmark West Texas Intermediate (WTI) for July delivery gained 44 cents to $58.47 while Brent crude for July gained 30 cents to $64.02 in afternoon trade.... Read more

‘Like an ocean liner without lifeboats’: HSBC’s dire warning for global economy... Read more

Maybe the U.S. economy isn't tanking after all. Don't believe all of the economic gloom and doom. Yes, the American economy ran into some rough seas during the first quarter, with growth grinding to a halt. On Friday, the government is set to release revised data that could even show the economy contracted in the first three months of the year.... Read more

Americans are feeling better about their household finances but many remain on shaky ground when it comes to saving for emergency expenses and retirement, according to a Federal Reserve survey... Read more

New Jersey’s pension system plans to boost its investment with Och-Ziff Capital Management Group LLC by as much as $900 million to more than $2 billion... Read more

McDonald's Corp. said it will no longer report monthly sales results, effective July 1... Read more

Charter's $56 billion Time Warner Cable deal to face U.S. scrutiny... Read more

US stocks rose in morning trade but shares in handbag maker Michael Kors sank more than 20% after it reported slowing revenue growth. Fourth-quarter revenues rose 17.8%, its slowest revenue growth since December 2011, and same-store sales in North America dropped 6.7%... Read more

Broadcom Corp. shares rose as much as 17.4 percent after Dow Jones reported that the wireless chipmaker was in talks to be bought by Avago Technologies Ltd. The discussions are at an advanced stage, the newswire reported, citing unidentified sources... Read more

YouTube is worth more than eBay, Yahoo and Starbucks: B. of. A. Merrill Lynch... Read more

Aetna Inc. is paying a record $4.5 million fine in Missouri in part for something that rarely draws the ire of regulators -- paying for procedures it shouldn’t have covered... Read more

Etihad Airways says it will add $6.2 billion to U.S. economy by 2020... Read more

Several Internet giants have inquired about buying Flipboard Inc., maker of a newsreader app that has recently signaled it is open to acquisition discussions, according to people familiar with the matter. In recent weeks, Google Inc. and Yahoo Inc. have both reached out and held early discussions with Flipboard, three of the people said. Those talks have involved ideas around how products could be integrated, but they haven’t evolved to a price, the people said... Read more

Third Madoff Employee Avoids Prison Term After Aiding U.S.... Read more

Apple set to issue yen-denominated bonds... Read more

Hackers gained access to personal information of 104,000 taxpayers this spring, downloading an online service the Internal Revenue Service uses to give Americans access to their past tax returns, the agency said Tuesday... Read more

Tax evasion: EU-Switzerland sign deal 'to end banking secrecy'... Read more

EC Official Denies Greek Government’s Statement That a Deal Is Close. Greece remained far apart from its international creditors on a deal to unlock needed bailout aid, with the two sides unable to even agree on the amount of progress made thus far... Read more

Britain's Queen Elizabeth set in motion on Wednesday the new government's plans for an in-out referendum on staying in the European Union, but left open questions about when it will be and what changes to the EU the government wants beforehand... Read more

The trader at the centre of the Libor rate-rigging trial tried to influence other banks to manipulate the key benchmark rate to suit his own trading positions, a jury at Southwark Crown Court has heard. Tom Hayes allegedly told one trader that he had managed to keep the three-month Libor rate "artificially high"... Read more

The Irish government has given its backing to International Consolidated Airlines Group SA's plan to buy Aer Lingus.... Read more

FIFA Rocked as U.S. Charges 14 in Corruption Investigation. Soccer’s top governing body also hit by criminal probe in Switzerland over World Cup allocation... Read more

The Russian government has given its approval to parallel imports, meaning that it will be possible to import some goods for sale in Russia without rights holder permission. The government hopes that this decision will lead to a drop in prices, but experts say that its major consequence will be an increase in counterfeit goods. Moreover, the measure is contrary to the norms of the Eurasian Economic Union, the key integration union on the territory of the former USSR... Read more

It sounds pretty juicy: Venezuela’s benchmark stock index has surged 73 percent in the past week. Yet the gains come with important caveats. The shares are priced in rapidly depreciating bolivars, annual inflation is estimated at more than 100 percent, and foreign investors have almost no chance of getting their money out of the country... Read more

China has more than 1 million millionaires... Read more

China’s richest man might have been running a massive fraud. The only thing we know for sure is that stock in Hanergy Thin Film Power, a solar panel company equipment owned by what was at the time China's richest man, fell 47 percent last Wednesday. We don't know exactly why it fell, or even how much its Chairman Li Hejun lost when it did, since he apparently upped his bet against his own company in the days before the crash. Just that it did... Read more

What India’s Gold Monetization Program Means for You. India has around 20,000 tons of gold lying in households and temples. That’s the same weight as around 3,300 adult elephants and, at Tuesday’s prices, worth around $767 billion... Read more

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