ASB Securities Morning Brief for Monday, 23 November 2015
Monday, 23 November 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose after Kathmandu Holdings reported first-quarter margin growth and affirmed its full-year target, while Tower fell after warning that increased costs would dent profit. The S&P/NZX 50 Index rose 13.27 points, or 0.22 percent, to 6008.52. Within the index, 18 stocks rose, 22 fell and 10 were unchanged. Turnover was $96 million... Read more

The New Zealand dollar is heading for a 0.6 percent gain this week as the prospect of US interest rates grinding higher at a slower pace than expected took the sheen off a greenback that reached an eight-month high. The kiwi was at 65.85 US cents at 5pm in Wellington from 65.44 cents on Friday in New York last week. It was at 65.92 US cents at 8am and up from 65.31 cents yesterday. The trade-weighted index increased to 71.36 from 71.15 yesterday, and is heading for a 0.1 percent increase this week... Read more

It's easy to pay company tax in NZ: PwC. New Zealand has ranked 22nd out of 189 countries when it comes to how easy it is to pay company tax according to the 10th annual Paying Taxes 2016 report by Pricewaterhouse Cooper and World Bank Group... Read more

The Government has downplayed a report from the Parliamentary Commissioner for the Environment on rising sea levels as "speculative" and has shrugged off its recommendations about the need for a fiscal analysis of the costs and a National Policy Statement for Councils. Finance Minister Bill English told reporters in Parliament after the release of the report that the Government had no current plans to assess the fiscal risks of rising sea levels... Read more

Tens of thousands of homes in Auckland's leafy residential suburbs are being rezoned for multiple townhouses and apartments and Auckland Council says homeowners will not be notified about the changes. The central isthmus suburbs of Pt Chevalier, Epsom, Mt Eden, Mt Albert, Glendowie and St Heliers; the North Shore suburbs of Birkenhead, Glenfield and Takapuna; Whangaparaoa Peninsula, rural towns such as Kumeu and the southern suburbs of Howick and Mangere Bridge are among areas affected by the changes taking place behind closed doors... Read more

The median price per hectare for dairy land has tumbled by almost $12,000 since a year ago. Latest data released by the Real Estate Institute of NZ (REINZ) shows that the value of arable land fell even further between October 2014 and October 2015, from $68,514 per ha to $36,110. In October 2014 the median price per ha for the previous three months for dairy land was $43,299 but a year later it was down to $31,552 for the same period. Finishing farms fell from $31,878 to $25,333, and horticulture from $179,894 to $171,482... Read more

The Melville Jessup Weaver report, Review of Retail Life Insurance, has been released this morning by the Financial Services Council. The report says life insurance in New Zealand is 10% to 15% more expensive than it should be because of advisers’ commissions. It claims conflicts of interest cause poor outcomes for consumers... Read more

The Financial Markets Authority expects banks and other financial institutions to reward staff for conduct that addresses customers' best interests to the same extent as rewarding them for achieving sales and bonus targets, the FMA's director of regulation Liam Mason says. Mason told this was one issue the regulator was trying to emphasize in its first monitoring report on practices in sales and advice in the financial services sector, released this week... Read more

Report tore apart FSC. A disclaimer on a report issued today by the Financial Services Council shows how divisive it is... Read more

Life insurance commissions revealed... Read more

Asteron quits FSC. Asteron Life has resigned as a member of the Financial Services Council (FSC) in response to the Melville Jessup Weaver report due to be released on Monday... Read more

Advisers: MJW report not fair. Advisers and their remuneration structures have been unfairly singled out for criticism, the Professional Advisers Association says... Read more

Insurers who use independent financial advisers to distribute their products have reacted angrily to a highly critical report.... Read more

NZ Super Fund's responsible investor strategy pays off - Matt Whineray... Read more

Environment Canterbury (ECan) is investigating demand for another possible irrigation scheme in South Canterbury. An ECan spokesperson confirmed on Thursday the regional authority was jointly funding a project with the Irrigation Acceleration Fund to support "an integrated water infrastructure solution" after requests from a local zone committee... Read more

International dairy prices are at a "particularly bad" part of the cycle, but are expected to improve substantially in the first half of next year, rural lending specialist Rabobank says. New York-based Tim Hunt, who leads Rabobank's global dairy research team, said the market remained "fundamentally bearish"... Read more

Carrickmore drops out of infant formula business... Read more

Zespri to start kiwifruit growing trials in China... Read more

NZ export log prices jump to 7-month high on pick up in Chinese demand... Read more

The sale of an iconic Queenstown hotel constitutes the largest single hotel transaction in New Zealand in nearly a decade. The 273-room Novotel Queenstown Lakeside sold this week for more than $90 million, says Colliers International’s National Director of Hotels, Dean Humphries, who acted as a co-adviser in the transaction... Read more

Warehouse Group, the country’s largest listed retailer, has changed its dividend policy to allow eventual profits from its new financial services group to be ploughed back into building up its lending book... Read more

Kathmandu affirms 2016 profit growth guidance, acknowledges 'sales fatigue'... Read more

Spark joins firms tapping debt market, to sell up to $150 mln of seven-year bonds... Read more

Icebreaker is keeping mum on the implications of Pencarrow Private Equity's arrival on its share register and board, which has seen the family of Jeremy Moon cede control of the merino wool clothing company he founded... Read more

More than 133,000 homes and businesses have now connected to ultra fast broadband. The September quarterly report for the first phase of the UFB rollout shows almost 56% of the build is complete and more than 815,000 homes, schools and workplaces can now connect to the network. Uptake currently sits at 16.4%, a slight improvement on June’s report (14.6%)... Read more

A consortium of contractors and designers has been awarded a contract to build the biggest roading project to be undertaken in the Waikato, the NZ Transport Agency says. The 21 kilometre long Hamilton section of the Waikato Expressway will be constructed by a group made up of Fletcher, Beca, Higgins and Coffey (FBHC), in an alliance with the Transport Agency.... Read more

The value of building consents in Marlborough is up last month compared with October 2014, and the number of consents with it. A summary of consents released by the Marlborough District Council revealed there were 98 consents, worth $13.2 million, issued in October 2015, compared with 91 consents, worth $10.6m, issued in October 2014... Read more

Cavalier Corp, the unprofitable carpet maker, has promoted finance chief Paul Alston to the top job, a role he's had on an acting basis since Colin McKenzie stepped down in May... Read more

Phil Goff announces Auckland mayoralty bid... Read more

Four Kiwi companies are being investigated by New Zealand's Serious Fraud Office (SFO) in an anti-corruption purge. The move comes in the wake of the introduction of strict new anti-corruption laws, which will slap tougher penalties on New Zealand businesses if they are caught paying bribes overseas... Read more

Bankrupt developer Dave Henderson's bid to revive a Christchurch building has helped scupper an insurance payout on the property. The Court of Appeal this week upheld a claim by insurer AAI that it should not have to pay a $6.5 million settlement for earthquake damage to the building, citing Henderson's efforts to "re-establish" the property among the reasons for its decision... Read more

Opinion - Brian Fallow: When house prices go up, Aucklanders go shopping... Read more

Opinion - Siah Hwee Ang: Ease of doing business does not always equate to more business. The World Bank's Doing Business Index was released recently. Governments of all countries eagerly awaited its release to see how well they fared in comparison to last year... Read more

Opinion - Bernard Hickey: Just imagine if someone told you that the ratepayers of Auckland and the taxpayers of New Zealand in general were providing billions of dollars of subsidies to the wealthiest property owners in the land. How do you think the public would react? The assumption would be not very well. Yet that is exactly what they've been told and I haven't heard the chorus of talkback abuse or any outraged front pages or indignant questions in Parliament or reports of stormy council meetings. Yet... Read more

Australian Headlines

Australian Market Report: The Australian market looks set to open flat following a lacklustre performance on Wall Street as investors digest the Federal Reserve’s minutes of its last meeting. At 0645 AEDT on Friday, the December share price index futures contract was down four points at 5,252... Read more

The Australian dollar has extended its gains against the greenback, which softened after the US central bank stressed rate rises would come gradually. At 0700 AEDT on Friday, the currency was trading at 71.96 US cents, up from 71.69 cents on Thursday... Read more

ASEAN leaders agree to economic 'Community' at summit shadowed by terrorism worries. The leaders of the 10 member states of the Association of South-East Asian Nations (ASEAN) have signed a declaration formally establishing an EU-style regional economic bloc. The move to set up the ASEAN Community at the group's summit in Malaysia's capital Kuala Lumpur takes ASEAN a step closer to being a free trade area.... Read more

Cash-strapped shoppers are being warned not to get sucked in by enticing zero per cent credit card offers flooding onto the credit card market ahead of Christmas. The number of no-interest honeymoon-rate offers has doubled in the past two years with deals spanning as long as 15 months... Read more

The chief executive officer of Australia's largest horticultural company, Costa Group, says Australian agriculture is underinvested, and foreign capital is critical to help it grow. Speaking after Costa Groups' first annual general meeting since the company floated on the ASX earlier this year, CEO Harry Debney called for a more even approach to regulation of foreign capital investments... Read more

The federal government is under attack over the decision to lease Darwin's port to a Chinese company and its failure to properly notify the US of the deal. Senior Labor frontbencher Anthony Albanese has called it a lack of judgment by Prime Minister Malcolm Turnbull while Clive Palmer has labelled it "very disturbing" that a foreign power could acquire such a strategic asset... Read more

Superannuation savings proposal could actually cost taxpayers, budget office says... Read more

Crater Gold Mining is focussed on the development of the Crater Mountain gold project and the Fergusson Island gold project in PNG, and also has interests in Australia... Read more

Pilbara Minerals recently outlined a new discovery of lithium-tantalite mineralisation at its Pilgangoora Spodumene-Tantalite Project, which is located near Port Hedland in Western Australia... Read more

Azure Minerals has shown the market how it is done, raising a fast $5.2 million from key investors to fast track work at its recently announced large, high grade silver discovery in northern Mexico. The placement was done at $0.036 a share. This will allow Azure to up the ante at its Mesa de Plata silver discovery at the Alacrán Project where the first two diamond core holes at the project hit very wide zones of silver with grades of up to 1,044 g/t silver from just two metres depth... Read more

A US District Court has dismissed a lawsuit by Rio Tinto alleging that Vale SA conspired with an Israeli billionaire to take Rio Tinto's mining concessions in West Africa, with the court finding the events were outside the statute of limitations. Rio's lawsuit pitted two of the world's largest mining companies against each other in a fight over a vein of iron ore in the Simandou range of Guinea, one of the richest veins ever discovered... Read more

Livestock exporter Wellard's stock will be priced at $1.39 for its initial public offering ahead of a listing on the Australian Securities Exchange... Read more

Bunnings is about to face a new challenger and it will probably slay it easily. But we should keep barracking for any little guys brave enough to take on the big green giant. Mitre 10 and Home Hardware could be going to merge to take on Bunnings, according to some recent news reports. This is good. We need this. Masters tried to take on Bunnings and it has been, what the kids might call, an epic fail... Read more

Medical centres operator Primary Health Care has downgraded its profit forecasts for fiscal 2016 as margins are squeezed and revenue weakens. Primary expects underlying net profit in full year 2016 to be five per cent lower than last year's results. Primary's shares closed 27 cents, or 7.5 per cent, lower at $3.33.... Read more

Spring clearance sales helped drive a 3.4 per cent lift in Myer’s same store sales during the first quarter. The retailer reaffirmed an underlying net profit forecast in the range of $64 million to $72 million for fiscal 2016 at its annual general meeting on Friday... Read more

Struggling department store chain Myer has narrowly avoided a strike over its remuneration report and been forced to justify the generous payout made to former chief Bernie Brookes. Just under 22 per cent of shareholders voted against the adoption of the remuneration report at the company's annual general meeting in Melbourne on Friday, not far off the 25 per cent protest vote required to record a first "strike"... Read more

Hotel and casino giant Wynn said the opening of its new $4.1 billion hotel in Macau will be delayed by three months as gaming revenue in the gambling enclave suffers a drawn-out decline. Revenues dropped for the 17th consecutive month in October, by 28.4 percent from a year ago, as China suffers a painful growth slowdown and Beijing embarks on a corruption crackdown that has hammered Macau's key VIP sector... Read more

Spanish building giant ACS said Friday it had signed a 2.9-billion-euro contract for the construction of a new highway in Australia. The group "has signed a contract... for the design and construction of the new M5 highway in Sydney for 4.3 billion Australian dollars (2.9 billion euros/$3.2 billion)," it announced... Read more

Myer signs M&C Saatchi advertising guru David Whittle to board... Read more

Blackham Resources appoints Milan Jerkovic chairman as gold production beckons... Read more

New IT chief with SAP experience wanted. Rail freight giant Aurizon is searching for a new chief information officer after Peow Goh informed the company he would depart after two years in the job... Read more

Liquefied Natural Gas Limited makes key technical appointments... Read more

The Foreign Investment Review Board will look into the proposed sale of one of Tasmania's oldest and largest farm businesses, The Van Diemen's Land Company... Read more

Foreign Minister Julie Bishop says she's not feeling pressured after the visiting Japanese defence minister made a strong public statement linking Japan's bid to build Australia's new submarine fleet to strategic and defence co-operation issues.... Read more

James Hardie slashes asbestos compensation fund payments by 44 per cent... Read more

International Headlines

U.S. Market Report: The S&P 500 index logged its best weekly gain in nearly a year Friday after a series of strong earnings, particularly from retailers, helped boost the stock-market benchmark... Read more

North/South Americas Market Report: North and South American markets finished broadly higher on Friday with shares in Brazil leading the region. The Bovespa is up 1.48% while Mexico's IPC is up 0.62% and U.S.'s S&P 500 is up 0.38%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The DAX gained 0.31% and the FTSE 100 rose 0.07%. The CAC 40 lost 0.08%... Read more

Asian Market Report: Asian markets finished broadly higher on Friday with shares in Hong Kong leading the region. The Hang Seng is up 1.13% while China's Shanghai Composite is up 0.37% and Japan's Nikkei 225 is up 0.10%... Read more

Saudi Arabia working with other oil producers to stabilise the market... Read more

The U.S. Federal Reserve and other global central banks may need to consider new tools in a world of permanently lower interest rates, including keeping big balance sheets or using negative interest rates to combat shocks, a top Fed official said on Saturday. With the so-called natural interest rate in the United States now near zero, and equilibrium rates in other countries around the world also lower than in the past, central banks have "significantly less room to maneuver" in the face of recessions, San Francisco Fed President John Williams said at a conference at University of California Berkeley's Clausen Center... Read more

Pfizer has a big plan to slash its U.S. tax bill... Read more

Electrolux AB is seeking to retract notable testimony by its chief executive in an antitrust trial where it is fighting to save its planned purchase of General Electric Co.’s appliance business, a potential setback for the company’s legal defense... Read more

Square and Match haven’t spurred IPO optimism — yet. Stocks need to maintain gains to unlock more enthusiasm for new offers, experts say... Read more

SpaceX is cleared for lift off. Elon Musk's SpaceX commercial space program got approval Friday from NASA to take a crew to the International Space Station -- SpaceX's first such mission... Read more

United Auto Workers union ratifies contract with Ford... Read more

Volkswagen is cutting back on its investment plans next year as it continues to grapple with the cost of its emissions scandal. The German automaker will cut investments by one billion euros ($1.1 billion), or about 8%, to 12 billion euros.... Read more

Shares in Nike have jumped more than 5% after the US sportswear giant announced a dividend rise, a massive share buyback and a stock split. The $12bn (£7.9bn) buy-back, 14% dividend increase and share split were revealed late on Thursday and sent Nike shares up almost 7 cents to $132.65... Read more

Russia's GDP would have been 1.5 percent higher if sanctions had not been imposed against Moscow, former Russian Finance Minister and Committee of Civil Initiatives Chairman Alexei Kudrin has said, pointing out that no positive effect from the sanctions has been seen in any industry... Read more

Russia-Japan trade falls by 38% in 2015. Bilateral trade in the first 10 months of 2015 stood at $17.7 billion... Read more

Troubled Japanese electronics giant Sharp is trying to persuade its employees to buy its products in a bid to help sales. The firm said it was not mandatory for staff to buy its goods, but confirmed that it wanted workers to choose its products over that of its competitors... Read more

India's central bank employees strike over pensions... Read more

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