ASB Securities Morning Brief for Wednesday, 10 February 2016
Wednesday, 10 February 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell after the long weekend, catching up on a global selloff amid concerns global growth may be faltering. Xero and Orion Health Group were among decliners, while Coats Group rose. The S&P/NZX 50 Index fell 82.5 points, or 1.3 percent, to 6071.31. Within the index, 41 stocks fell, five were unchanged and four rose. Turnover was $178 million... Read more

The New Zealand dollar fell as investors grew increasingly wary of corporate credit risk, sapping their appetite for risk-sensitive assets such as the kiwi. The local currency fell to 65.89 US cents at 5pm in Wellington from 66.35 cents at 8am and 66.33 cents yesterday. The trade-weighted index declined to 71.90 from 72.33... Read more

The International Monetary Fund is encouraging New Zealand to take still more action against the rampant housing market, including potentially more macro-prudential tools and further tax measures. One tax measure suggested directly by the IMF is the 'ring-fencing' of tax losses on housing investments - so that such losses can only be applied against housing income and not all income... Read more

Auckland house prices dip... Read more

House prices in central Wellington have surged by 4.8 per cent in the past three months, and 6.6 per cent over the past year, as potential buyers fight for what little property is up for grabs. Demand continues to outweigh supply, with the lack of property listings putting pressure on prices... Read more

A cooling Auckland housing market helped slow the pace of property value growth across New Zealand as regulatory curbs imposed last year continue to dent investor demand in the country's biggest city... Read more

Yields on Colliers' recent commercial property sales in 7.5% to 8% range, prices from under $1m to $2.75m... Read more

Banks cut cash PIEs to half OCR. Low interest rates on offer from the four main banks’ cash PIE funds are likely just an indication of the tough times for people surviving on money in the bank, one commentator says... Read more

Prospects for work in the construction and infrastructure industry are strong, with seven of eight occupations in the industry reporting good prospects for workers... Read more

Finance Minister Bill English says the Government sees no reason to rewrite its agreement with the Reserve Bank, despite its failure to lift inflation back to its target range under current settings... Read more

Win or lose: Results season kicks off. In a fully priced market, companies whose results reveal negative surprises can expect to get hammered, writes Christopher Adams... Read more

Most directors (56.1%) believe risk is increasing in today’s business environment, with 74.5% of directors saying their boards are spending more time discussing risk management than they were two years ago. The second biennial Directors’ Risk Survey by Marsh and the Institute of Directors (IoD), designed to gauge directors’ views on a wide range of risk issues, says technological disruption, reputational risk, and the time spent on risk oversight remain a key focus for directors... Read more

Federated Farmers’ 2015/16 Mid-Season Farm Confidence Survey reveals farmer confidence remains in the doldrums.... Read more

An independent adviser’s report gives the thumbs up to a proposed backdoor listing of a company owned by Wellington property developers and brothel owners John and Michael Chow despite existing shareholders of the shell company RIS Group being heavily diluted and debt increasing substantially... Read more

International banking group Investec Australia has taken a 20% stake in Equitise, the only transtasman equity crowd funder, as it looks to participate in growth in the sector. The stake was sold for an undisclosed sum but Equitise's co-founder and New Zealand manager, Will Mahon-Heap, said the firm made a significant cornerstone investment, and is now the largest shareholder after Equitise's founders... Read more

Apple Sales New Zealand, the local unit of the iPhone and iPad maker, has increased annual profit by 17% while deferring $8.3 million of tax to offset against future profits and potentially lower its 2016 tax bill.... Read more

Sovereign holds on to market top spot. Most insurers grew their books in the December 2015 quarter, new data shows. Financial Services Council statistics for the period show there was $25.9 million of annual premiums added to term risk business in the quarter, taking the total amount in force at the end of the three months to $1.12 billion... Read more

ASB Becomes First New Zealand Bank to Launch Weibo Account... Read more

Some air fares to the United States have dipped below $400 and one travel agent says they will continue to stay low. House of Travel says the $399 one-way Air New Zealand fares to Los Angeles and San Francisco are the lowest it has offered... Read more

Experienced director and business leader Judy Kirk ONZM has joined the Board of Airways New Zealand, the air navigation service provider, effective 1 January 2016... Read more

Mint Asset Management has appointed Dave Fyfe to its investment team as an Analyst. Fyfe is a returning New Zealander who has been in the United Kingdom since May 2012... Read more

Hundreds of potential job cuts as popular Hamilton business considers shutting up shop... Read more

Auckland Council and James Hardie New Zealand have argued in the Court of Appeal today against a High Court ruling that apartment owners could join a leaky building lawsuit after the expiry of the 10-year limit on claims by piggybacking on claimants within the same complex who had met the deadline... Read more

The appeal against the decision to extradite Kim Dotcom and his fellow Megaupload co-accused Mathias Ortmann, Bram van der Kolk and Finn Batato will be heard in August. In December, Judge Nevin Dawson ruled there was a case to answer in the copyright violation, money laundering and racketeering charges brought by the US government against the Megaupload founders... Read more

The Auckland barrister who was struck off for his involvement with the Mr Asia drugs syndicate has died. Edward Poulter Leary, known as Eb, died of cancer on Sunday... Read more

Opinion - Roger J Kerr: Roger J Kerr has no problem with the RBNZ reminding everyone that the markets’ interpretation of monetary policy intentions or settings is sometimes off beam and not helpful to what the RBNZ is trying to do... Read more

Australian Headlines

Australian Market Report: Local market endures $41bn wipeout, with bank stocks leading the falls amid a global rout. At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was down 143.3 points, or 2.88 per cent, at 4832.1 while the broader All Ordinaries index lost 139.5 points, or 2.78 per cent, to 4882.6.... Read more

Local unit more than half a cent lower in late trade, punished by resurgent yen. The Australian dollar is being punished by a resurgent Japanese yen and haemorrhaging global equity markets. At 1700 AEDT on Tuesday, the local unit was trading at 70.37 US cents, down from 70.96 cents on Monday.... Read more

Aussie Gold soars over A$1670 an ounce... Read more

Business conditions hit one-year low. Global woes are weighing on the spirits of Australian firms, while business conditions have tumbled to the lowest level in a year. The National Australia Bank's index of business conditions eased slightly by one point to plus five, with broad-based weakness across most states and sectors... Read more

Business confidence holds up despite financial volatility: NAB... Read more

Credit Union survey shows increasing number of Australians are shopping around. Australians are shopping around for mortgage deals more than they were six months ago - before the big banks raised their interest rates... Read more

The Future Fund hasn't been voted world's best sovereign investor for nothing. The fund poured just over a fifth of its $118.4 billion portfolio into cash last year as it took a cautious view of the global investment outlook, predicting greater volatility and lower prospective returns... Read more

Much of Australia's mining services sector and other businesses that rode the resources boom might be getting by on "life support", but this year is shaping as a tipping point that will see company collapses increase, insolvency and industry experts say... Read more

Renaissance Minerals has raised a tidy $3.4 million at $0.03 each for development of its Cambodian gold project from sophisticated and institutional investors.... Read more

Adelaide-based WA gold producer Ramelius Resources has tipped a much improved underlying interim profit, a year after returning to the black. Its shares were up 2.5 cents, or 7.35 per cent, to 36.5 cents at the close and have nearly doubled since the start of the year.... Read more

Pantoro Limited's managing director, Paul Cmrlec, has increased his stake in the company through an on-market trade. Pantoro is currently in the full ramp-up process at the Nicolsons mine, located in the Kimberly Region of Western Australia... Read more

Battered contractor NRW Holdings has been given a boost by securing a $40 million contract at a Queensland coal mine that is set to reopen this year... Read more

Argent Minerals will now have until 30 June 2017 to increase its interest from 51% to 70% in the West Wyalong Farmin with Golden Cross Resources after the partners agreed to the extension. This is an extension of 18 months beyond the previous earn-in date of 9 January 2016... Read more

Analysts expect record 1H profit from CBA. Commonwealth Bank is expected to unveil another record first-half profit when it reports its first half results on Wednesday. CBA will become the first of Australia's big four banks to report since they hiked their mortgage rates last year.... Read more

Investors have punished the Bank of Queensland after the regional lender flagged a significant restructure and warned of lower profit margins due to rising funding costs. Around 50 jobs are expected to go across the country from the bank's workforce of approximately 2,220 staff, a spokesman for the bank has told the ABC... Read more

Rupert Murdoch's 21st Century Fox has reported a decrease in quarterly revenue as disappointing earnings from its film arm, despite the box-office success of Matt Damon's The Martian, offset advertising revenue from its television and cable assets. The entertainment business, which formed after a demerger out of News Corp in 2013, reported revenue of $10.4 billion ($US7.38 billion) for the December quarter, a decrease of $69.3 million ($US49 million) on that reported in the prior year... Read more

Finbar says it is planning a $109 million apartment complex on the Golden Eggs warehouse site in Palmyra.... Read more

WAFarmers stands alongside the National Farmers’ Federation (NFF), state farming organisations (SFO’s) and other industry bodies in launching and supporting a national campaign against the Federal Government’s proposed ‘backpacker tax’ which would have detrimental effects on the nation’s agricultural sector... Read more

TasFoods dairy products show their wares in revenue growth... Read more

The boomtime for the Asia Pacific hotel sector is tipped to attract a proportion of the forecast $US8.5 billion ($12.1 billion) in hotel investment in 2016. Scott Hetherington, CEO of JLL Hotels & Hospitality Asia, said that in 2015 the headlines featured blockbuster acquisitions of high-profile, gateway market hotels by Chinese investors... Read more

Booming property markets in Sydney and Melbourne have helped push furniture retailer Nick Scali's half year profit to a record high. Nick Scali's profits soared by more than 40 per cent to $14.1 million in the six months to December 31 as home buyers rushed out to buy furniture for their new pads... Read more

Payday lender and pawnbroker Cash Converters has locked in a new funder to replace Westpac, which pulled its support from the sector last year for reputational reasons. Cash Converters said today it had agreed a $100 million, five-year loan from Fortress Investment Group, the US-listed global investment manager... Read more

Nathan Tinkler facing bankruptcy over $2.8 million debt... Read more

'Embarrassing' human error behind national Telstra outage... Read more

Telstra says it has restored the service of the "vast majority" of its customers after an "embarrassing human error" caused a nationwide outage which left millions with no service. The outage hit about 9.45am this morning, which the telco attributed to a fault at one of its "major mobile nodes... Read more

Analysis - Malcolm Maiden: Share market plunge is in danger of becoming self-fulfilling. Feedback loops played a central part in Nobel-prize winning economist Robert Shiller's book Irrational Exuberance, which predicted the end of the '90s sharemarket internet boom and set out a template for the booms and busts that followed... Read more

Opinion - Chris Berg: Is the Government chasing growth, or just revenue? Right now the Government is casting around for new approaches to tax after a GST rise was all but ditched. But they first need to answer a simple question: why are they interested in tax reform at all?... Read more

Opinion - Paul Wallbank: Xero’s evolution on cloud nine... Read more

Opinion - Matthew Lynn: Why we can't afford to bail out shaky banks... Read more

International Headlines

U.S. Market Report: Volatility is still rocking U.S. stocks. The Dow quickly dropped another 145 points on Tuesday morning, while the S&P 500 and Nasdaq each lost 1% out of the gate.... Read more

North/South Americas Market Report: Markets closed lower across the region as at the most recent closing prices... Read more

European Market Report: European markets finished sharply lower today with shares in France leading the region. The CAC 40 is down 1.69% while Germany's DAX is off 1.11% and London's FTSE 100 is lower by 1.00%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.55%, while the Nikkei 225 led the Shanghai Composite lower. They fell 5.40% and 0.63% respectively... Read more

Brent crude price lifts to $US33.20 per barrel, as US dollar dip gives some support.... Read more

Hold that sigh of relief. Oil prices are no longer falling by the day, but the slide may have stopped for all the wrong reasons, the International Energy Agency warned Tuesday.... Read more

Spot gold builds on previous session's rally, lifts 0.1% in London trade. Gold prices were slightly higher on the London spot market on Tuesday, as volatility on financial markets spurred demand for safe-haven assets. Spot gold was up 0.1 per cent at $US1,190.10 a troy ounce, having hit its highest level in eight months in the previous session, trading around $US1,200 an ounce... Read more

Inventories at U.S. wholesalers fell in December for the third straight month, another sign companies cut back on restocking toward the end of 2015 amid softer sales. Inventories dropped 0.1% to a seasonally adjusted $582 billion, the Commerce Department said Tuesday. Annualized growth in restocking slowed to 1.9% from a 6% pace early last year... Read more

U.S. equities bounce back from early drop... Read more

Obama proposes $4.1 trillion spending plan in final White House budget... Read more

Sears warns on sales, to speed up store closures... Read more

Why aren’t stores selling more clothes? Maybe we are just bored of the skinny jean. You’ve no doubt seen the news that it’s been something of a rough patch for some of the biggest names of mid-priced women’s fashion. Mall stalwarts such as Gap, J. Crew and Urban Outfitters lately have posted disappointing sales, and so have department stores Nordstrom and Macy’s.... Read more

Yelp shares took a roller coaster ride on Monday after quarterly earnings that beat expectations were accidentally released before the close of market. Late day trades on the New York Stock Exchange sent Yelp shares soaring and plunging after earnings were disclosed prematurely. Yelp shares were down more than 12.5 percent to $15.81 about 19h30 GMT.... Read more

How bad is the tech wreck on Wall Street? Only seven stocks in the Nasdaq 100, an index that includes the largest non financial stocks on the exchange, were up this year as of late morning trading Tuesday.... Read more

Goldman CEO eyes more cost cuts amid global growth concerns... Read more

Wendy's Co. reported preliminary fourth-quarter profit that beat expectations as it continues to see benefits from operating fewer of its restaurants itself. The company also said Tuesday it anticipates same-store sales growth above what analysts were expecting, while its earnings forecast was in-line with analyst projections. The company expects adjusted per-share earnings in a range of 35 cents to 37 cents and same-store sales growth of about 3% in North America... Read more

It pays to be the CEO of Google. Sundar Pichai has vaulted into the ranks of the world's highest-paid executives after being awarded stock worth $199 million.... Read more

Viacom Inc CEO Philippe Dauman railed at critics of his leadership after a fifth straight quarter missing Wall Street's sales estimates on Tuesday, unnerving investors and sending the media company's shares down more than 15 percent to a four-year low. They were Dauman's first public remarks since replacing the ailing 92-year old Sumner Redstone as executive chairman last week, an appointment that was opposed by Redstone's daughter and greeted by skepticism by some investors... Read more

Cost cuts, cheaper commodities help Coca-Cola top profit estimates... Read more

Central banks are pulling out all the stops to turn around the global economy. They're pumping money into their economies, creating negative interest rates and buying billions of dollars in bonds. Yet experts are worried some of these strategies will not be enough to turn around the slump in the world... Read more

Charity Age UK and energy provider E.On have suspended a branded tariff following criticism of the deal. On Thursday, the Sun newspaper claimed the charity was earning £6m a year from recommending energy deals that were not the cheapest available... Read more

UK's rising trade deficit sparks fears of drag on economic growth. Economists warn that reducing the trade deficit will be an 'extremely slow' process... Read more

Bank of England poised to act if household debt spirals. Bank deputy Sir Jon Cunliffe warns consumer debt remains 'large by historic standards', leaving the economy 'vulnerable to shocks'... Read more

Tui Group has reported a 40% slump in summer holiday bookings to Turkey following the continued fighting and migrant crisis in neighbouring Syria. The owner of the Thomson and First Choice brands said it was "evident that there has been a significant shift in demand away from Turkey"... Read more

Swiss bank UBS is imposing a pay freeze across its investment banking arm as banks across Europe take an increasingly hard line on costs to improve profitability, two sources familiar with the matter told Reuters. UBS has reshaped its strategy in the wake of the global financial crisis, slimming down its investment bank and focusing more on its wealth management business, which now accounts for more than half of its operating profit... Read more

Twice in 24 hours Deutsche Bank has been forced to go public about the health of its finances in a bid to reassure panicked investors. Co-CEO John Cryan wrote a letter to employees on Tuesday describing the bank as "absolutely rock solid." The letter was subsequently published by the bank... Read more

EasyJet founder Sir Stelios protests airline's 'scattergun' dividends. Sir Stelios Haji-Ioannou has ramped up pressure on the budget airline ahead of its AGM this Thursday... Read more

First Sino-Russian ecommerce platform launched... Read more

Gazprom cuts spending on Power of Siberia pipeline, delays Vladivostok LNG. For the second year in a row the Russian gas monopoly is reducing its budget for the construction of the Power of Siberia pipeline, through which it intends to supply gas to China, and is postponing the construction of the LNG plant that would have supplied Japan and South Korea... Read more

McDonald's Japan Forecasts First Full-Year Profit in 3 Years... Read more

Japan 10-year bond yield goes negative for first time... Read more

Innovation Network Corp. of Japan is making the case to Sharp Corp. that its rescue proposal for the electronics maker is worth more than an offer from Foxconn Technology Group, a sign the government fund is determined to keep fighting for victory in the takeover battle... Read more

Global Bond Rally Near `Panic' Level With Japan Yield Below Zero. Worldwide gains in sovereign bonds sent Japan’s benchmark 10-year yield below zero for the first time and have guided U.S. Treasuries to the best start to a year since 1988 as investors seeking the safest assets gorge on government debt... Read more

Nomura CEO Sees Buyback Chance After Shares Drop to 3-Year Low... Read more

India's decision to effectively ban Facebook's pared-back free Internet service is a major blow to the social network's plans, and may prompt other regulators to demand equal online access for their users. Facebook will have to reconsider its approach in the light of India's new rules preventing Internet service providers from having different pricing policies for accessing different parts of the Web, analysts said... Read more

What Facebook’s Mark Zuckerberg Said About India’s Ban on Free Basics... Read more

Rupee Volatility Rises Most in a Week on India Stock Selloff... Read more

Opinion - Mike Callaghan: A rocky road awaits the yuan... Read more

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