ASB Securities Morning Brief for Friday, 27 March 2015
Friday, 27 March 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell, paced by Fletcher Building and Air New Zealand, as a global sell off weighed on local stocks. Fonterra Shareholders' Fund extended yesterday's decline after the dairy giant lowered its dividend forecast. The NZX 50 Index fell 24.614 points, or 0.4 percent, to 5833.168. Within the index, 21 stocks fell, 14 rose and 15 were unchanged. Turnover was $111 million... Read more

The New Zealand dollar extended its slide against the euro after a stronger-than-expected survey of German business confidence left traders short of the European common currency. The kiwi fell to 69 euro cents at 5pm in Wellington, from 69.87 cents at 5pm yesterday. The local currency slipped to 75.75 US cents from 76.40 cents yesterday... Read more

The Government has yet to decide whether to join a multilateral bank to finance infrastructure in Asia, an initiative led by China but opposed by the US. "Negotiations are still in the early stages, and any decision on whether New Zealand becomes a founding member of the Asian Infrastructure Investment Bank is still some months away," said a spokesman for Finance Minister Bill English... Read more

Leaked text from a draft Trans Pacific Partnership chapter shows New Zealand has been seeking to exempt actions under the Overseas Investment Act 2005 from coverage of the investment chapter, which would allow it to turn down investments without being sued... Read more

Budget 2015: GST rethink needed for digital evolution... Read more

Reserve Bank says commercial property carries $30b of debt and is riskier for banks than residential lending... Read more

Housing remains affordable for first home buyers in all parts of the country except Auckland, according to the latest AMP360 Home Loan Affordability Report. The report measures the ability of a working couple aged 25-29 (based on the median income for that age group) to service a mortgage for a home at the lower quartile selling price in each region of the country... Read more

More million dollar homes go under the hammer. One in five Auckland properties have sold under the hammer for more than $1 million and only two of 55 properties were sold for less than $500,000 last week.... Read more

Report calls for overhaul of red meat industry... Read more

Waikato dairying productivity and the economy of rural communities are at risk from reckless conversions, says a respected farming leader. Martin Bennett, chairman of the Dairy Environment Leaders Forum of the country's top 60 farmers, wants a halt to big conversions he says threaten to tip an already pressured catchment into a groundwater disaster, until a proper nutrient limit policy is developed... Read more

Shake-up to consumer credit laws includes introduction of minimum repayment warnings on credit card statements... Read more

NZX plans to launch equity options trading on April 24. NZX, which operates New Zealand's stock market, plans to start offering equity options trading in three stocks as it seeks to develop the nation's capital markets... Read more

MetService expects FY earnings to drop on delay in inking new MoT contract... Read more

SeaDragon today reports sales for the year to 31 March 2015 will be around $6.5 million, more than twice the $3.1 million sales achieved in the prior year as the company benefits from strong raw material supply and forward sales agreements struck last year... Read more

Kiwi company Milmeq wins innovation award after doubling export revenue in two years... Read more

The owners of the country's biggest childcare company, Kidicorp, are ditching the corporate name and giving the whole operation to charity. Wayne and Chloe Wright, whose family trust has owned Kidicorp since privatising it in 2007, have transferred the company to the Wright Family Foundation, a new registered charity... Read more

The Commerce Commission is likely to allow Cavalier Wool Holdings and New Zealand Wool Services International to merge their two wool scouring operations, which would ultimately make a monopoly of wool scouring services in New Zealand... Read more

Continuing professional development does not offer much benefit for financial advisers, it has been claimed.... Read more

New Zealand’s tourism industry is in a strong position to take advantage of growth opportunities, according to the State of the Tourism Industry 2014, released today by the Tourism Industry Association New Zealand (TIA) and Lincoln University... Read more

New Zealand's premier tourism event, Trenz 2015, will see a larger contingent of buyers out of the United Kingdom as well as emerging markets such as Indonesia, Argentina and Brazil.... Read more

Christchurch Airport international passenger numbers grew 15 per cent in February from the prior corresponding month in 2014 new statistics show. The international arrivals into Christchurch grew at twice last month's New Zealand growth of 7.6 per cent... Read more

Online retail is a growing trend but a new survey shows younger consumers still want the experience of shopping in a store.... Read more

The Financial Markets Authority has dropped its website list of authorised financial advisers because it did not always provide the most up-to-date information, a spokeswoman says... Read more

Kiwi retailers shocked at cat fish-food slavery claims. Popular pet food brands sold in New Zealand have been caught up in disturbing claims of slavery on the high seas. The Associated Press this week published the results of a year-long investigation into the fishing industry in Indonesia and Thailand, which found slaves - mostly from Burma - were being forced to fish for little or no pay and even imprisoned in cages while on land... Read more

Deloitte reveals incidents of bribery and corruption on the rise - Bill going through Parliament to help crack down on offenders. A Deloitte report released today suggests New Zealand isn’t as squeaky clean as many would think when it comes to bribery and corruption.... Read more

Smith and Davies' Northland trucking business is being sold to a rival company. Sources said up to 20 workers were being laid off as a result, but the head of Smith and Davies said he hoped all 100 staff in Northland would be employed... Read more

Port expansion: Legal action over Auckland port fight. Urban Auckland, a society set up to protect the city's built environment and waterfront, has taken the first legal steps to stop Ports of Auckland beginning construction on two massive wharf extensions next month... Read more

Mark Hotchin, principal of failed finance company Hanover, has abandoned his appeal against Perpetual Trust to include them in the Financial Markets Authority’s civil case against the former lender’s directors and promoters... Read more

Quake-hit Canterbury homeowners will soon start receiving a bill for excess payments on their Earthquake Commission (EQC) repairs.... Read more

Opinion - Mike Hosking: You can hate the port, but not success. Aucklanders ought to celebrate the city’s economic growth as much as the harbour’s natural beauty... Read more





Australian Headlines

Australian Market Report: The Australian sharemarket has abandoned its quest to break through the key 6,000 threshold, closing 1.6 per cent weaker as financial and mining stocks tumbled. At the close, the local market was a sea of red aside from a buoyant energy sector, with oil stocks soaring on Saudi Arabian supply fears. At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was 94.2 points, or 1.58 per cent, lower at 5,879.1, while the broader All Ordinaries index fell 87.4 points, or 1.47 per cent, to 5,849.7.... Read more

The Australian dollar has followed the share market lower after disappointing economic data out of the US. At 4pm (AEDT), the local currency was trading at US78.17 cents, down from US78.78 cents yesterday. The Australian dollar peaked at US79.05 cents overnight but began its descent following the release of disappointing durable goods orders figures in the US... Read more

Trans-Pacific Partnership leaked chapter raises health, environment concerns. Fair trade and consumer groups say a leaked draft chapter of the secretive Trans-Pacific Partnership shows that the Australian Government may be willing to trade off health and environmental protections. The Trans-Pacific Partnership (TPP) is under negotiation between 12 countries and Wikileaks has released what it says is the draft chapter on investments as it stood in January... Read more

Soaring property prices are prompting struggling mortgage holders to sell up rather than face financial strife, ratings agency Moody's says. As house prices rose 7.6 per cent nationally in 2014, mortgage delinquency rates fell to their lowest level in eight years, a Moody's report shows... Read more

A proposed overhaul of commissions worth $3.5 billion a year to financial planners for selling life insurance has sparked a bitter divide in the industry. A report authored by former Australian Prudential Regulation Authority (APRA) member John Trowbridge and released on Thursday found that substantial change was need to restore consumer trust in financial planners... Read more

More needs to be done to address costs for Australian businesses, especially in the area of compliance, red tape and penalty rates, says investment group Washington H Soul Pattinson (WHSP). WHSP has investments in a wide range of sectors, including building products, coal mining, telecommunications, pharmacies and agribusiness... Read more

Australian companies are taxed too highly, and politicians need to realise it's harming the economy, according to Rio Tinto chief executive Sam Walsh. Australia's corporate tax rate had been stuck at 30 per cent for a decade while New Zealand, South Africa, the UK and Canada had cut their rates to below 30 per cent. The average tax rate across Asia was 21 per cent, Mr Walsh said... Read more

The Australian parliament has voted to cement the Government's proposed two-year data retention scheme into law.... Read more

Antipa Minerals has been granted a trading halt by the ASX pending details of a proposed capital raising... Read more

Excelsior Gold has been granted an ASX trading halt in relation to a capital raising... Read more

Mining billionaire Gina Rinehart has stepped up her criticism of governments for imposing too many costs on the mining sector amid a commodity price downturn. A protracted slump in iron ore prices has put many miners under financial pressure, and Ms Rinehart says government costs need to be reviewed to keep Australian miners competitive... Read more

Andrew Forrest iron ore cartel idea “absolute nonsense” – Rio Tinto CEO... Read more

Triton Minerals non-executive chairman Alan Jenks and executive technical director Alfred Gillman have exercised a total of 2,565,000 unlisted options worth a total of $256,500. Gillman exercised 2 million unlisted options exercisable at $0.10 expiring 18th June 2015... Read more

The resources industry says hundreds of foreigners may be working illegally on offshore rigs and vessels after the Federal Court struck out an Abbott Government visa regime. A Full Bench of the Federal Court has backed an appeal by the Maritime Union of Australia and ruled a determination by Assistant Immigration Minister Michaelia Cash was "invalid"... Read more

Former Leighton boss Hamish Tyrwhitt has again teamed with Wal King after accepting the chief executive role at the UK-listed Asia Resource Minerals. Mr King, the longstanding chief executive of Leighton until 2011, was appointed chairman of Asia Resource in February with the swift change in leadership a signal of his faith in Mr Tyrwhitt... Read more

Oilex says it expects to begin production on its joint venture Cambay-73 project in India in May. The company said today oil and gas production facilities at Cambay were now 77 per cent complete... Read more

Latin Resources has completed its placement priced at $0.01 each to raise $285,000 to progress its projects in South America and for working capital purposes. The company received applications from sophisticated and professional investors for a total of 28,500,000 shares under the placement... Read more

Photos of black smoke billowing from the McArthur River Mine in the Northern Territory's Gulf region have sparked an investigation by the Environment Protection Authority (EPA). The pictures were snapped by a person driving past the mine in mid-March, and an official complaint was lodged with the EPA... Read more

Waratah Resources has appointed Mandeep Bhandari as a non-executive director of the company with immediate effect.... Read more

Industry relieved as West Australian Government puts mining royalty rates on hold... Read more

One-man shareholder class action litigator Mark Elliott has aimed his legal guns at department store Myer, claiming unspecified losses relating to the retailer’s recent profit downgrade, which sent shares in the company plummeting. Myer told the Australian Securities Exchange this morning it had been served with legal proceedings yesterday by a shareholder seeking to bring action for itself and on behalf of a defined but unnamed group of Myer shareholders... Read more

Surfwear group Billabong is facing a multimillion-dollar shareholder class action over the timing of earnings downgrades that sparked massive share price falls. A Melbourne retail investor whose A$30 million ($30.9 million) investment in Billabong halved in value in just over a month is leading the class action.... Read more

UBS has sold a $25m stake held by Quadrant Private Equity in Burson Auto Parts in an after market block trade, sources have said. The bank sold 8m shares at $3.25 each. The stock will be sold into the market Friday. Shares in the company have closed at $3.22... Read more

Media heavyweight Nick Falloon was yesterday named as Fairfax Media’s new chairman, replacing Roger Corbett who steps down in August. In a statement to the stock market, Fairfax said the former Ten chairman “has had a lifetime of experience in the media industry” and will “assume the chairmanship” of the company after Mr Corbett signs off on the full year accounts... Read more

In the first major move of its type and a hope of things to come, a large online booking agent has axed its credit-card surcharge. News Corp Australia can reveal Wotif has dumped its $5.50 “booking fee” — a move that could save consumers as much as $20 million a year. It is also dropping the $16.95 charge for flights with full-service airlines. On flights with low-cost carriers, the fee is now $9.95... Read more

Suda Limited to reveal equity raising... Read more

Packaging group PaperlinX is in talks with its European financiers amid fears it may have breached the terms of a loan.... Read more

More land and bricklayers are urgently needed to meet the surging housing demand, says building products group Brickworks. Brickworks managing director Lindsay Partridge says there's a wait of up to a year for new housing in some markets because of a lack of land releases and tradespeople to build new homes. And that is helping to push up prices. Shares in Brickworks closed 25 cents higher at $13.81.... Read more

Unions and business groups have begun this year's fight over wages for the nation's lowest paid workers. The Australian Council of Trade Unions (ACTU) will lodge its submission with the Fair Work Commission as part of the regulator's annual wage review. More than 1.8 million people are on the minimum wage... Read more

A debt agreement broker which claims to offer a “real alternative to bankruptcy” has been referred to the financial regulator over allegedly misleading ATM advertising. The Consumer Action Law Centre (CALC) in Melbourne has written to the Australian Financial Security Authority (AFSA) regarding ads which appeared on CashCard ATM screens and receipts promoting a company called Debt Help Australia... Read more

Police have arrested a senior Coca-Cola Amatil employee over allegations of receiving corrupt commissions and money laundering. Coca-Cola Amatil alerted police last year, alleging that a 61-year-old employee was receiving commissions from a vehicle supplier for leasing its cars... Read more

Opinion - Callum Pickering: Australia's strength becomes an economic soft spot... Read more

Opinion - Ian Verrander: Twiggy Forrest's 'cartel' pitch a sign of desperation... Read more





International Headlines

U.S. Market Report: U.S. stocks were poised for a lower open on Thursday to put the S&P 500 on track for a fourth straight decline, after Saudi Arabia and its allies launched air strikes on Yemen. Oil prices spiked, with Brent crude up 2.8 percent to $58.04 and U.S. crude up 2.4 percent to $50.38 after warplanes from Saudi Arabia and its allies struck Shi'ite Muslim rebels fighting to oust Yemen's president. Halliburton shares gained 1.5 percent to $44.12 in premarket trade... Read more

North/South Americas Market Report: North and South American markets are mixed. The S&P 500 is higher by 0.19%, while the Bovespa is leading the IPC lower. They are down 2.25% and 0.73% respectively... Read more

European Market Report: European markets finished broadly lower today with shares in London leading the region. The FTSE 100 is down 1.37% while France's CAC 40 is off 0.29% and Germany's DAX is lower by 0.18%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.58%, while the Nikkei 225 led the Hang Seng lower. They fell 1.39% and 0.15% respectively... Read more

Brent crude surged by as more than 5 percent on Thursday after Saudi Arabia and its Gulf Arab allies began air strikes in Yemen, before paring gains by almost half to trade back near $58 a barrel... Read more

Gold, silver surge as investors grow risk averse... Read more

U.S. jobs, services sector data point to growth rebound... Read more

The U.S. services sector expanded in March at its fastest pace since September, an industry report showed on Thursday. Financial data firm Markit said its preliminary, or "flash," reading of its Purchasing Managers Index for the service sector rose to 58.6 in March from a final reading of 57.1 in February... Read more

Do consumers and investors need to be worried about another housing bubble? Hopefully, the answer is no. But the question can't be ignored... Read more

Fast-growing 'smart' funds in regulators' sights. Funds that mimic strategies used by active managers for a fraction of the cost could be forced to carry a health warning by regulators who are concerned they may pose greater risks than are being disclosed. The so-called "smart-beta" funds use formulas to decide when to buy and sell stocks and bonds on a semi-regular basis as opposed to blindly tracking an underlying index or being more actively run on a daily basis... Read more

U.S. consumer watchdog unveils plans to regulate payday loans... Read more

The “doc fix” deal won’t be a fix for the deficit, according to Congress’s budget scorekeeper. Early Thursday afternoon, the House of Representatives passed a measure to permanently replace a nearly 20-year-old formula for reimbursing doctors who treat Medicare patients... Read more

Fed's Lockhart says economy is in solid shape for rate tightening cycle... Read more

Fed's Bullard: now may be good time to normalize U.S. monetary policy... Read more

Nearly six months after Bill Gross’s exit, Pacific Investment Management Co.’s flagship Total Return fund is beating most of its rivals. The world’s biggest bond mutual fund has returned 3.730% from the start of October through Tuesday, ahead of 92% of its peers and its benchmark, according to fund-research firm Morningstar Inc... Read more

Cash-strapped American Apparel spent $10.4 million on the internal investigation it conducted before firing its CEO Dov Charney last year, according to a company filing. That's a lot of money for a company that reported a $27.6 million loss and ended 2014 with only $8.3 million in cash... Read more

Anheuser-Busch InBev, the world's largest brewer, is close to proposing JAB Holding Chief Executive Olivier Goudet as its next chairman, according to four sources familiar with the matter... Read more

Bond-buying by the European Central Bank will reinforce the euro zone's economic recovery, its president, Mario Draghi, said on Thursday, adding that there was already evidence that the scheme was taking effect.... Read more

The European Union will continue to diverge from global banking regulations where necessary to avoid overburdening smaller lenders, the bloc's financial services chief said on Thursday. European commissioner Jonathan Hill, in the job since November, said he would extend his predecessor's policy of tailoring global banking rules where justified... Read more

French public deficit cut to 4% of GDP... Read more

France has cut its budget deficit target for 2015 and signalled that the economic recovery is gathering pace. After the release of better-than-expected deficit data for 2014, Finance Minister Michel Sapin said there were reasons to be confident about growth. Official data showed the 2014 deficit was 4% instead of the 4.4% forecast, and will fall to about 3.8% this year, Mr Sapin predicted... Read more

Royal Dutch Shell is planning further job cuts in its UK North Sea oil and gas business in 2015, the company said on Thursday, just a week after a package of tax cuts from the Treasury aimed at encouraging growth in the industry. "Shell UK plans to reduce the number of staff and agency contractors who support the company's UK North Sea operations by at least 250 in 2015," Shell said in an emailed statement... Read more

Norwegian green energy to power UK homes... Read more

Low interest rates causing 'huge problems' in Germany: Schaeuble... Read more

German sportswear firm Adidas has outlined a turnaround plan that includes making some of its goods in Europe rather than Asia. The company's chief executive, Herbert Hainer, said: "We will bring production back to where the main markets are."... Read more

London’s black cabs are now Chinese-owned—and their new owner is betting £250 million ($372 million) that other places will want them too. China’s Zhejiang Geely Holding Group Co. said Thursday it will build a new car plant in Coventry, England, that will enable it to ramp up production of the famously boxy rides. The plant will be able to produce up to 36,000 vehicles a year, a tenfold increase from its current facility also in Coventry, the company said... Read more

Hainan Airlines Co Ltd, China's fourth-largest carrier, said on Wednesday it plans to order 30 Boeing Co B787-9 jets as it seeks to expand international routes to tap into growing demand for overseas travel from China. The order would be the biggest this year for the jet, worth $7.7 billion according to list prices. It would also boost the aircraft maker's 787 program backlog to 855 planes... Read more

China offers Sri Lanka olive branch and warnings. Chinese President Xi Jinping worked to mend relations with Sri Lanka on Thursday as state-run media warned the island nation's new government against shutting off billions in investments from Beijing.... Read more

Toyota Motor Corp. broke a two-year silence on a revamped manufacturing process—built on sharing components among vehicles—that the world’s best-selling auto maker says will produce half its vehicles by 2020 and slash costs.... Read more

Indonesia wants to play a major role in a new Chinese-led Asian infrastructure bank, with at least the vice-president's position reserved for the Southeast Asian country, the finance minister said. The $50 billion Asian Infrastructure Investment Bank (AIIB), expected to start operations by the end of the year, is attracting a growing list of countries from Britain to India to New Zealand... Read more

Indian Finance Minister Arun Jaitley Preaches Patience on Economic Reforms. Modi’s government is focused on expanding manufacturing, lightening the regulatory burden on companies... Read more

India’s affluent-household club is growing quickly. Over the next five years, the number of such households–meaning those with financial assets of $100,000 to $2 million –is expected to jump 10-fold, to 4.9 million, according to an Economist Intelligence Unit study. In percentage terms, India ranked first among the 32 nations covered in the report... Read more

Ford Motor Co plans to triple exports from India with a $1 billion plant that will be one of its most heavily automated in Asia, offsetting slower sales inside the country with a push to sell more local production abroad... Read more

This Chart Explains Why India Is Swimming With Loan Sharks... Read more

Opinion - Oliver Marc Hartwich: Germany's bubble economy is on borrowed time... Read more

Opinion - Mark D Cook: Make these stock portfolio moves before the next bear market... Read more

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