ASB Securities Morning Brief for Thursday, 16 April 2015
Thursday, 16 April 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell, led by Kathmandu Group Holdings and paced by Australian banks Westpac Banking Corp and Australia & New Zealand Banking Group amid weakness in the stock market across the Tasman. Fonterra Shareholders' Fund fell ahead of tonight's Global Dairy Trade auction. The NZX 50 Index fell 26.030 points, 0.4 percent, to 5856.079. Within the index, 27 stocks fell, 18 rose and nine were unchanged. Turnover was $131 million... Read more

The New Zealand dollar held above 99 Australian cents, putting it back within reach of parity, after a decline in Australian consumer confidence and the weakest Chinese growth in six years weighed on the Aussie dollar. The kiwi traded at 99.04 Australian cents at 5pm in Wellington, from 98.51 cents immediately before China released economic activity indicators for March, and from 98.24 cents late yesterday. The local dollar rose to 75.20 US cents from 74.61 cents yesterday... Read more

Business confidence softened slightly in the New Zealand Institute of Economic Research's quarterly survey of business opinion, but remains sturdy. Firms both report and expect a slight weakening of activity but only to levels indicative of annual economic growth slight above 3 per cent, NZIER economist Christina Leung said... Read more

NZ food prices rise at fastest pace since 2011, led by rising fruit and veggie prices... Read more

Tighter rules on lending to speculators could moderate overheated market, says Reserve Bank deputy.... Read more

Reserve Bank calls for action aimed at investors. Governmental tax measures and macro-prudential tools aimed at investors are necessary to address growing housing market imbalances, says the Reserve Bank’s Deputy Governor... Read more

National house prices last month rose more than 20 per cent since the same time last year while the median house price, driven by the Auckland market, nears half a million dollars. Real Estate Institute of New Zealand (REINZ) reported 8,803 dwelling sales in March 2015, which was up 20.3 per cent on March 2014, the highest March sales volume since 2007, and up 27.6 per cent compared to February this year... Read more

No signs of a breather for Auckland. With a 13.5% year-on-year increase in average asking prices on Trade Me Property, the Auckland market continues full steam ahead – and the same data also shows growth in the regions.... Read more

BNZ will officially return to the mortgage adviser market after controversially leaving it 12 years ago.... Read more

Our comprehensive review of Conservative & Default KiwiSaver fund performance to March 2015, identifying who has the best long-term returns... Read more

Time running out for DIMS decision. With less than two months left to make a decision, a number of advisers are still unsure whether they will offer discretionary investment management services (DIMS) as of the second half of this year... Read more

Disclosure requirements benefit advisers: Manager. New financial product disclosure requirements are good news for advisers, it has been claimed. ... Read more

America's appetite for hamburgers has helped to drive beef returns to record highs in the first six months of the export season, says Beef and Lamb New Zealand. Beef and veal export returns reached a record high of $1.6 billion in the six months to March - up 43 per cent or $480 million on the corresponding period last season... Read more

Global Dairy Auction: Dairy prices continue decline. International dairy prices continued to decline at the overnight GlobalDairyTrade auction with the GDT price index falling by 3.6 per cent since the last sale a fortnight ago, driven mostly by weakness in skim milk powder... Read more

Drought bites deepest in Hurunui District... Read more

The Shareholders Association has issued a sharp rebuke to the Commerce Commission over its delays in determining the final wholesale broadband prices that will apply to Chorus... Read more

Tech security firm Network Box is expanding its global presence by opening a new branch in Christchurch. General manager Howard Nicholls said the company was "taking advantage of Christchurch becoming an innovation and technology hub in New Zealand", and had chosen the city to support Network Box's New Zealand and Australian markets... Read more

Fast-food giant McDonald's has proposed a return to mediation to resolve the last big obstacle to what now looks likely to be a successful union campaign to end "zero-hours" contracts in the fast food industry. The campaign climaxed with protests by several hundred fast-food workers around the country yesterday, marking an international day of action by low-wage workers demanding higher pay and secure hours... Read more

Up to 18,000 properties may be affected by Auckland Council’s “taniwha tax,” according to the Taxpayers’ Union. It is holding a forum on level 9 of the Crombie Lockwood tower at 191 Queen St at 10.30am today to publicise a report about the "tax." (See report attached below)... Read more

The Christchurch City Council has recently released its draft Long Term Plan (LTP) and has called for consultation from the wider Christchurch community. The LTP has been closely reviewed by the New Brighton Business and Landowners Association (NBBLA) as it is imperative to the recovery of New Brighton commercial district and the wider community... Read more

Philanthropists urged to create youth jobs - Swiss style. New Zealand's wealthiest philanthropists and community trusts are being urged to link up with local employers to create jobs for unemployed young people.... Read more

AMP Capital New Zealand has named its head of fixed income, Grant Hassell, as managing director, replacing Graham Law, who departs after six years.... Read more

Mark Flay, chief financial officer of Cullen Investments, the investment vehicle for millionaire Eric Watson, is no longer a director of the company. ... Read more

Name suppression for restaurant managers charged with worker exploitation... Read more

Opinion - David Hargreaves: Reserve Bank's cry for help. The Reserve Bank's decision to press the Government for action on the overheating Auckland house market is an admission of its own powerlessness... Read more

Opinion - Pattrick Smellie: Houses prices just supply and demand. Another day, another report on the over-heated Auckland property market.... Read more

New Zealand Herald Editorial: Guarantee minimum work hours... Read more

Australian Headlines

Australian Market Report: Australia’s sharemarket closed weaker for a third straight session as the big banks lost ground, despite a rally in resources stocks on firming commodities. The benchmark S&P/ASX200 index fell 0.6% to 5,908.4... Read more

The Australian dollar came under renewed pressure in Asia today on news of weak economic growth in China and a slump in consumer sentiment in April. The Australian dollar was trading at around US75.85c at 5.45pm (AEST) having earlier traded at close to US76.30c. It was trading at US75.80c late yesterday.... Read more

The federal budget has suffered a $30 billion revenue write-down over the next four years because of the collapsing iron ore price, according to Prime Minister Tony Abbott. Mr Abbott has revealed the growing revenue black hole at a business lunch in Sydney on Wednesday... Read more

The International Monetary Fund (IMF) has highlighted the damaging effect the iron ore slump is having on Australia, as the Treasurer seeks a discussion with the Chinese finance minister on the matter. In its latest world outlook, the IMF forecasts Australia's economy will grow by 2.8 per cent this year, which is slightly down on its previous prediction in October of 2.9 per cent... Read more

ANZ boss Mike Smith is urging business leaders to get on with accepting slower economic growth, and give up an obsession with iron ore. The steel making commodity's value has dived in the past year and recently hit its lowest level in a decade, slashing government revenue and forcing miners to cut jobs and costs... Read more

Economists are divided on whether official figures due out today will show Australia's unemployment rate has risen. Most were surprised when the jobless rate fell to 6.3 per cent last month, having previously stood at a 12-year high of 6.4 per cent... Read more

Consumer confidence 'looking vulnerable' ahead of federal budget. Westpac's widely-watched report shows that consumer sentiment fell in April, in a worrying sign ahead of the Federal Government's May budget.... Read more

Two of the world's largest banks say Australia will be the biggest loser from iron ore price falls, with dire fiscal consequences. BNP Paribas and JP Morgan have joined the growing list of experts forecasting long spells of low prices for Australia's largest export commodity. The former warns of a $20 billion hit to Australia's $200 billion-plus export earnings in calendar 2015, as the iron ore price remains around half of what it was a year ago... Read more

Affordable housing shortage drags Australia down social rankings. Australia is the world's 10th most socially advanced nation but a lack of affordable housing is holding it back, a survey shows... Read more

Woodside Petroleum's sales revenue has plunged on weaker oil prices and a shutdown caused by Cyclone Olwyn. Australia's largest oil and gas producer achieved $US1.4 billion in sales in the three months to March, down 20 per cent from the preceding quarter... Read more

Axiom Mining completes share consolidation... Read more

The first of more than 4000 jobs and $7 billion in investment will begin flowing to Queensland within months when Indian Company Adani starts construction on the Carmichael megamine in Central Queensland. Adani Australian boss Jeyakumar Janakaraj said the company was ready to get the first boots on the ground as soon as federal ap... Read more

Shares in Western Areas were higher after the company announced it had generated free cashflow of $15.4 million during the March quarter and reiterated full-year production guidance reaching the upper end of a range between 24,500-25,500 tonnes of nickel. Western Areas shares were up 10.5 cents, or 3.44 per cent, to $3.155 at 10.20am after touching an earlier peak of $3.24.... Read more

Exterra Resources has been granted a trading halt pending an update from the Linden Project... Read more

Gold and copper miner PanAust has rejected a state owned Chinese company's $1.1 billion takeover bid, describing the offer as inadequate.... Read more

It's been a short-lived public journey for shareholders of Fifth Element Resources, the mysterious explorer which boasted a $329 million market capitalisation on, well, nothing. In line with expectations, Fifth Element said today it had agreed with the Australian Securities Exchange to de-list from the board.... Read more

Media baron Kerry Stokes is understood to have expanded his stake in the Cooper Basin oil and gas firm, DrillSearch, buying 37.8 million shares in a deal executed by Deutsche Bank. The additional slice of stock was bought at $1.15 per share and has sparked expectations Seven Group (SVW) intends to mount a takeover for the energy minnow... Read more

Central West Gold has been granted a trading halt by the ASX pending the results of a general meeting... Read more

Hazelwood Resources may be closer to its shares to trading once again on the Australian Securities Exchange after Siderian Resources Capital agreed to further extend the repayment date of its debt facility to 23 April 2015... Read more

Broad Investments has completed two separate acquisitions that could provide $15 million in additional turnover and be EPS accretive.... Read more

Murray Goulburn calls farmer vote on $500m listing. Murray Goulburn boss Gary Helou said investor appetite for a dairy business on Asia's doorstep will trump any concerns about taking up units with no voting rights in Murray Goulburn's $500 million listing. The nation's biggest dairy exporter on Wednesday issued a notice of meeting for May 8, at which the Victorian co-operative's farmers will vote on a capital restructure proposal that includes listing a unit trust on the Australian Securities Exchange... Read more

Anzac campaign an epic fail for Woolies. Woolworths is grappling with a marketing disaster of monumental proportions after being accused of exploiting the Anzac Day centenary. The grocery giant has apologised and deleted its Anzac commemoration website, which invited users to share war tributes alongside the Woolies logo and under the slogan "fresh in our memories"... Read more

The disease threatening Queensland’s banana industry is yet to push prices up, supermarket giant Coles says. As two international experts make their way to Australia to help efforts to contain the disease Panama TR4 fungus, Coles said in some markets alternative supplies had been arranged... Read more

Coles eyes farm investments for fresher fruit... Read more

A Perth architecture company has been hand-picked by the Sultan of Oman to design the country's $500 million new museum, an international arts destination intended to rival New York's Guggenheim and St Petersburg's State Hermitage... Read more

Victoria will pay $339 million not to build the controversial East West Link road tunnel project. The money is net costs already drawn down and paid to the East West Connect consortium for the bid process, design and pre-construction. The Victorian government will pay the symbolic fee of $1 to buy the companies in the consortium... Read more

East West Link: Contractors call for long-term planning after settlement... Read more

The Victorian government is running blind when it comes to IT, and its agencies are reluctant to share details of their technology operations with the accountability watchdog, according to the state's auditor-general... Read more

Australia's telco ombudsman cuts workforce by 10 percent... Read more

Opinion - Michael Janda: Auction frenzy as Sydney keeps leading Australian property prices higher. Australian real estate is vulnerable to any economic hiccup.... Read more

International Headlines

U.S. Market Report: U.S. stocks rose higher on Wednesday as earnings from major companies beat lowered expectations and investors' worries about a poor quarterly season receded. All 10 major S&P 500 indexes posted gains... Read more

North/South Americas Market Report: North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 1.41% while Mexico's IPC is up 0.79% and U.S.'s S&P 500 is up 0.72%... Read more

European Market Report: European markets finished higher today with shares in France leading the region. The CAC 40 is up 0.70% while London's FTSE 100 is up 0.30% and Germany's DAX is up 0.03%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.21%, while the Shanghai Composite led the Nikkei 225 lower. They fell 1.24% and 0.20% respectively... Read more

Oil prices jumped more than a dollar on Wednesday after a lower than expected build of crude oil stocks in the United States. Crude stocks there rose 1.29 million barrels to 483.69 million barrels in the week to April 10, the U.S. Energy Information Administration said on Wednesday, against a forecast of a 4.1 million barrel rise from a Reuters survey of analysts... Read more

Oil prices climbed in Asia for a fifth-straight trading day Wednesday following forecasts that US shale production would likely decline and help ease a global supply glut, analysts said. US benchmark West Texas Intermediate for May delivery gained 35 cents to $53.64 and Brent crude for May rose 57 cents to $59.00 in afternoon trade... Read more

U.S. could be energy independent within four years... Read more

Fed's Bullard repeats call to hike now, cites asset bubble risk. Falling unemployment and an improving U.S. economy are evidence that the Federal Reserve should start raising interest rates, a top Fed official said on Wednesday, citing risks of asset bubbles if the central bank keeps rates too low for too long. St. Louis Fed Bank President James Bullard... Read more

U.S. industrial output posted its biggest drop in more than 2-1/2 years in March in part as oil and gas well drilling plummeted, highlighting the negative impact of lower crude prices and a strong dollar on the economy... Read more

Home builder sentiment rises to 2015 peak: NAHB... Read more

The rental market in Houston is one of the hottest in the country — but the plunge in oil prices and drilling is expected to be felt beginning later this year... Read more

Industrial production recorded its biggest drop in more than 2-1/2 years in March, weighed down by a decline in mining and utilities output, fresh evidence that economic growth slowed sharply in the first quarter... Read more

Ernst & Young settles with N.Y. for $10 million over Lehman auditing... Read more

Smith & Wesson's stock rallies on better-than-expected profit and sales outlook... Read more

Bank of America Corp, the No. 2 U.S. bank by assets, reported a better-than-expected first-quarter profit, reversing from a year-earlier loss, as legal costs fell steeply and the bank earned more from mortgage lending. Still, BofA's cost-cutting efforts fell short of what some in the market had expected, and the bank's shares fell about 1.2 percent to $15.63 in morning trading on Wednesday... Read more

Target nears $20 million settlement with MasterCard over data breach. Target Corp. TGT, is close to reaching a settlement with MasterCard Inc. MA, to reimburse financial institutions roughly $20 million for costs they incurred from the retailer’s massive data breach in 2013, according to people familiar with the negotiations... Read more

Delta Air Lines Inc on Wednesday reported first-quarter profit that topped analysts' expectations and pleased investors with plans to reduce international capacity in the fourth quarter where a strong U.S. dollar has weakened demand. The Atlanta-based airline earned $746 million in the three-month period, more than triple its net income a year earlier... Read more

US fast food wage protests expand to other industries... Read more

CEO raising workers' minimum pay to $70K: 'It's about making a difference'. The CEO of a Seattle-based company who is raising the minimum pay for his employees to $70,000 a year over concerns about inequality is receiving praise, as well as questions, for his bold step. (video only)... Read more

IMF lifts eurozone forecast but warns outlook fragile... Read more

The head of the European Central Bank pledged on Wednesday to roll out its money-printing program 'firmly' and granted continued backing for Greece, saying there was no need yet to limit emergency funding for its banks. Describing speculation that the fledgling 60 billion euro a month scheme would be scaled back as "surprising", Mario Draghi underlined his determination to see through quantitative easing until September 2016, or until inflation was back up to target... Read more

Ratings agency S&P has downgraded Greece's credit rating again, saying it expects its debt and other financial commitments will be "unsustainable". It has dropped long and short-term sovereign credit ratings to CCC+/C from B-/B and says its outlook is negative... Read more

The German government said on Wednesday that it was unrealistic to expect euro zone countries to be able to pay out a new tranche of aid to Greece this month... Read more

Google under siege: Europe wants blood. After walking away without so much as a slap on the wrist from a U.S. antitrust investigation, Google is about to get into a major fist fight with the European Union.... Read more

Currency trading platform EBS has been approached by major banks to provide a computerized system removing much of the human element behind a scandal over the manipulation of currency benchmarks by lenders, a senior EBS manager said... Read more

All or nothing gives way to new deal for fund 'star' wantaways. After watching billions of dollars of investor cash follow "star" managers exiting rivals, some Britain-based fund firms have taken a novel step to help cushion the blow: let the manager take their fund's assets with them... Read more

Barclays Plc shareholders should reject the British bank's remuneration policy, as pay for Chief Executive Antony Jenkins is "excessive", a shareholder advisory group said on Wednesday. Pirc, an independent group that says it offers advice to institutional investors with assets of more than 1.5 trillion pounds ($2.2 trillion), said shareholders should oppose Barclays' remuneration report at the annual meeting on April 23... Read more

Activist investor Knight Vinke said UBS needs to "radically" shrink and should look at spinning off or merging its investment bank, reviving its two-year criticism of the Swiss bank. Knight Vinke says UBS's investment bank is unviable and should be spun off so the bank can focus on its wealth and asset management businesses... Read more

Another European arm of printing and publishing group PaperlinX has been placed in administration, and more could follow. The company's subsidiary in the Netherlands and Belgium has been handed over to administrators, amid falling revenues and profit margins due to weak demand for paper products... Read more

Nokia says it has agreed to buy smaller French rival Alcatel-Lucent in a €15.6bn (£11.2bn) takeover deal. Under the all-share deal, Alcatel-Lucent shareholders will own 33.5% of the new combined firm, and Nokia shareholders 66.5%... Read more

Norway among 57 members for new China-led bank... Read more

Abu Dhabi's Etihad Airways CEO warns Europeans against protectionism. The boss of Abu Dhabi's Etihad Airways has warned Europe that it will suffer if it restricts the access of foreign carriers to its market, in a fresh effort by fast-growing Gulf airlines to head off what they see as Western protectionism... Read more

China's economic growth slowed further in the three months to March this year, expanding 7% compared to a year earlier, its slowest pace since the global financial crisis in 2009. The rate was lower than the 7.3% posted for the three months to December. Last year, China's economy, which is the world's second largest, grew at its slowest pace since 1990... Read more

Toyota ends expansion freeze with new plants in Mexico, China.... Read more

Indians sent more money home last year than any other group of migrants. A World Bank report estimated this week that India received $70.39 billion in remittances last year. That’s ahead of China, which got $64.14 billion, and more than all the remittances received by the Philippines, Mexico and Pakistan combined... Read more

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