ASB Securities Morning Brief for Wednesday, 27 July 2016
Wednesday, 27 July 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell from a record high, led by Trade Me Group and Orion Health Group, as investors await earnings season for evidence that high valuations are being driven by anything more than the absence of attractive alternatives to dividend yields. The S&P/NZX 50 Index fell 6.92 points, or 0.1 percent, to 7,310.390, having gained about 16 percent this year. Within the index 27 stocks fell, 18 rose and six were unchanged. Turnover was $137 million... Read more

The New Zealand dollar gained late in the day, although there were no obvious drivers other than demand for yield as traders await the outcome of policy reviews by the Federal Reserve and the Bank of Japan. The kiwi jumped to 70.49 US cents as at 5pm in Wellington, from 69.89 US cents at the start of the day and from 69.79 cents yesterday. The trade-weighted index gained to 75.51 from 74.98 yesterday... Read more

New Zealand fruit exports have been the shining star of commodities over the past year, countering a weak period for exports of dairy products. The country's merchandise exports advanced 2 percent to $49.34 billion in the 12 months ended June 30, Statistics New Zealand said. Fruit, the country's fourth-largest export commodity, jumped 31 percent to $2.63 billion, while dairy exports, the largest group, declined 7.3 percent to $11.16 billion, the agency said... Read more

The surprising drop in credit card debt, and the reasons behind it... Read more

The Reserve Bank’s latest changes to loan-to-value restrictions (LVRs) will make little difference to the Auckland market, and will unnecessarily punish investors and first-home buyers in the rest of country, says Geoff Barnett, National Manager of Century 21 New Zealand. Under the proposed new restrictions, which many of the retail banks have already adopted, residential property investors across New Zealand will now require a deposit of at least 40%, while owner-occupier first-home buyers across the country will require a deposit of at least 20%. Loans to construct new dwellings will continue to be exempt from the 20% deposit requirements for first-home buyers... Read more

Building activity is at record levels nationwide and is forecast to continue to boom in the latest National Construction Pipeline Report, Building Minister Nick Smith says. The report shows annual construction activity across New Zealand has topped $31 billion, an all-time high, and is projected to reach $37 billion in 2017... Read more

The pipeline of new Auckland housing will underpin a longer construction boom for the country, making up for an overestimation in the amount of commercial work in the pipeline, says the 2016 National Construction Pipeline Report. Prepared by the Building Research Association of New Zealand and Pacifecon, a construction industry consultancy, the report shows building work is now expected to peak in 2017 at $37 billion, a year later than previously thought... Read more

No property price crash looming. That is the message from economists, who say the heat is slowly coming out of the property market but supply pressure will limit any fall in values. Yesterday, Infometrics forecast that building consents would hit record levels by 2018, which would result in house prices falling 11% over two years, from next September... Read more

Mortgage lending has ballooned to record levels as rising national house prices fuel a new wave of borrowing. KPMG's quarterly survey of financial institutions showed mortgage lending reached a new high of $227.7 billion, up $8.4b since December. The lending boon helped the main banks to increase their combined profits to $1.2b after tax in the three months to March, up 8 per cent from $1.11b on the December quarter... Read more

The six largest KiwiSaver scheme providers now control $86 in every $100 invested in KiwiSaver. In its latest quarterly KiwiSaver report, Morningstar says the KiwiSaver market is becoming increasingly concentrated. There is more than $33 billion invested in KiwiSaver schemes, but ANZ, ASB, AMP, Westpac, Fisher Funds, and KiwiWealth dominate... Read more

The amount of Kiwi dollars being pumped into responsible investments has grown 28 per cent in the last year to a record $78.7 billion, according to an annual report on the sector. The New Zealand Responsible Investment Benchmark report has found there is a growing appetite from investors to take account of environmental, social, governance and ethical issues when it comes to choosing where to put their money... Read more

The Inland Revenue Department has scored an 'A' in the first tranche of the Treasury's investor confidence rating (IRC) for state agencies that manage significant Crown investments and assets, gaining greater autonomy as a result, while the Corrections and Education ministries gained a 'C' rating. Finance Minister Bill English said the rating scale isn't about giving an organisation a pass or fail mark as much as being a tool that they can use to improve their investment management... Read more

Unitary Plan finally on view. The future look and feel of Auckland will become clearer today when a new rulebook telling people what can be built and where is released. The rulebook, formally known as the Unitary Plan, is expected to allow for intensification on a scale the city has never seen and open up more rural land for houses. It will decide where and how Aucklanders will live, work and play for the next 30 years... Read more

The Financial Markets Authority wants more funding – and the Government thinks financial markets participants should pick up the tab. ... Read more

The Institute of Financial Advisers has voted on the formation of Financial Advice New Zealand – but will not reveal what it has decided.... Read more

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). The June 2016 rise was across all our top kiwifruit export destinations, but particularly Japan (up $55 million) and China (up $39 million). The quantities of kiwifruit exported also rose (up 32 percent), with gold kiwifruit up 49 percent, and green kiwifruit up 21 percent... Read more

The government's proposal to update the nation's 2003 biosecurity strategy identifies the reliance of the primary sector on a small number of monocultures and large-scale changes in land use such as dairy conversions among 12 strategic threats. The Biosecurity 2025 strategy aims to future-proof the nation's biosecurity systems, updating the original 2003 strategy to ensure it stays ahead of the "threats and pressures because of our growing international trade, greater mobility of people and increasingly complex global supply chains," according to the discussion paper... Read more

The Forest Owners Association believes the government is aiming in the right direction with its just announced biosecurity ambitions, but wants to see real plans to deliver on this intention. The Chair of the Forest Owners Biosecurity Committee Dave Cormack says the government’s aim to recruit every New Zealander into biosecurity surveillance is ambitious... Read more

Scientists fret about long-term support for pest programme... Read more

EROAD has been named a Corporate Partner of American Trucking Associations (ATA). ATA is the USA’s largest national trade association for the transportation industry. It develops policies promoting highway safety, security, environmental sustainability and profitability, and is considered the voice of the American trucking industry... Read more

Nervous times for Silver Fern Farms. A stand-alone Silver Fern Farms remains just one bad year away from a financial disaster, writes Keith Woodford... Read more

Government signs off on new rules to safeguard bobby calves... Read more

Harmoney Corp, New Zealand's first and biggest peer-to-peer lender, generated $8.6 million of revenue in its first full year of operation, widening its annual loss as it poured more money into building the financial services platform. Auckland-based Harmoney reported a loss of $14.2 million in the 12 months ended March 31, compared to a loss of $6.3 million in seven months through March 31, 2015, its financial statements show... Read more

New Zealand's banks have shrugged off global market turmoil and the depressed dairy sector to make a net profit of $1.1 billion in the first three months of this year. KPMG's Financial Institutions Performance Survey shows the banks' collective earnings were up 8 per cent on the previous quarter, with ANZ's profit up $69 million to $416m, and BNZ's increasing $67m to $259m for the three months ending March 31... Read more

Three New Zealand research organisations have signed up to become members of the Medical Research Commercialisation Fund, Australia’s largest life science venture fund. Otago University, the Malaghan Institute, and Callaghan Innovation are joining the fund’s collaborative structure which includes more than 50 Australian medical research institutes and research hospitals, the Australian federal government and five state governments. The A$200 million fund managed by Australian venture capital firm Brandon Capital includes backing from four of Australia’s largest industry superannuation funds – AustralianSuper, HESTA, Statewide Super, and Hostplus.... Read more

6 Northland region networking business groups to get support from new Director Consultant Bill Raynel... Read more

Leading Australian life science venture firm announces appointment of Duncan Mackintosh to lead New Zealand operations... Read more

Entrepreneur and motorsport backer Tony Lentino, 42, has died after a 15-month battle with a rare form of small cell cancer. He was the owner of Super Black Racing NZ in the Australian Supercars series, and it was team members who announced the passing of their boss on Twitter. He died quietly at his home in Wellsford north of Auckland... Read more

1Above has today re-signed its sponsorship deal with the world’s No. 1 ranked women’s pro golfer – Lydia Ko. 1Above has proudly supported the New Zealand golfing superstar since 2015, signing its first sponsorship with Ko in February last year... Read more

InterContinental Hotels Group will gain its sixth and seventh New Zealand hotels later this year after signing up a local hotelier family as a partner. The global chain will add its first Holiday Inn hotel in Queenstown later this year following the conversion of the former Goldridge Resort; and a new build 120-room Holiday Inn Express hotel in Christchurch city centre, to open in 2018... Read more

Swamp kauri case continues in Auckland High Court. Judges should not be ruling on "matters of opinion" over swamp kauri exports, the High Court at Auckland heard Tuesday. Environmental group Far North Environmental Protection Society has taken the Ministry for Primary Industries to court claiming laws banning the exporting of unfinished swamp kauri are not being enforced.... Read more

Today’s prosecution in the Hastings District Court reinforces the Plumbers, Gasfitters and Drainlayers Board’s message to landlords and property managers last week, to make sure that they only use authorised tradespeople. Home handyman, Dennis Rosser was found guilty and sentenced to pay a $3,000 fine, $113 in solicitor’s fees and $130 in court costs, for conducting restricted sanitary plumbing work without authorisation... Read more

A former Auckland Airport employee has pleaded guilty to a $1.8 million fraud. Auckland Airport announced in February it had sacked a non-executive employee and called in police after discovering many unauthorised transactions... Read more

Auckland Airport welcomes ex-employee’s guilty plea... Read more

Trust beneficiaries treated equally, Court of Appeal told. Lawyers for Maryanne Green, the daughter of late NBR rich lister Hugh Green, told the Court of Appeal today that her status as trustee of Green's $400 million business empire did not hamper the operation of the trust and every beneficiary had been treated equally while Maryanne has been a trustee... Read more

Green family 'friction' not hampering trusts - lawyer... Read more

Opinion - Mark Lister: Investors' ride on the rollercoaster. At just past the halfway point in the year, it's been a highly eventful one already and investors probably feel they have experienced at least a year's worth of excitement. We had a rough start to 2016, with the US share market falling 11.4 per cent before we even got to Valentines Day. The worries seemed to fade quickly, with a 16.6 per cent rebound taking place in March and April... Read more

Opinion - Toby Moore: Bursting the bubble will hurt everyone.... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket eked out a modest gain at the close after enjoying a broad-based rally in afternoon trade, headlined by strength in the big miners and banks. At the closing bell, the benchmark S&P/ASX 200 index had edged up 3.9 points, or 0.07 per cent, to 5,537.5, while the broader All Ordinaries index tacked on 5.1 points, or 0.09 per cent, to 5,612.6... Read more

The Australian dollar was higher in late trade on Tuesday, as investors squared short positions ahead of second quarter inflation data Wednesday. At 5.40pm (AEST), the Australian dollar was trading at US75.15 cents, compared with US47.70c late on Monday.... Read more

Consumers are starting to feel a tad more upbeat about the economic outlook after fretting about the future for the past four weeks. The ANZ-Roy Morgan consumer confidence index rose 0.5 per cent in the week ending July 24, after falling over the previous four weeks.... Read more

ASX warns companies against secrecy. The Australian Securities Exchange has warned listed companies against trying to keep secret the names of business partners and bidders for assets. The ASX says, generally speaking, the names of counterparties to transactions are material to share prices.... Read more

Melbourne's apartment boom has spread to the suburbs as developers focus on boutique city-fringe projects instead of CBD and Southbank sites. Building approvals data shows City of Melbourne apartment projects made up just half of all approvals for the inner Melbourne area over the past 12 months, down from nearly three-quarters the previous year... Read more

The Buckeridge family’s BGC Contracting has won $114 million in work at two Queensland mining projects. The biggest contract will earns $97 million in revenue over five years at Incitec Pivot’s Phosphate Hill site south of Mt Isa... Read more

Dark Horse Resources Ltd gallops on lithium acquisition in Argentina... Read more

Hong Kong-listed China Hanking Holdings is looking to cash in on the superheated market for Australian gold assets, throwing its Southern Cross mining and processing hub into play in the hope of attracting bids above $400 million. Hanking has spent much of the year talking up a potential float of the Southern Cross mines, bought from St Barbara for $22.5 million in 2013... Read more

Pilot Energy Ltd is preparing to outline details of an acquisition, with the ASX granting the company a trading halt to prepare.... Read more

Carbon Energy Ltd has appointed Dr Chris Rawlings as the company's interim executive chairman, effective from 15th August 2016.... Read more

Lithium Australia made its first foray into Queenslands potential lithium exploration and development sector with the lodgment of applications for ground prospective for lithium on Cape York... Read more

ATC Alloys Ltd has been granted a trading halt by the ASX today, pending an update on the proposed takeover by Almonty Industries Inc.... Read more

Northern Star Resources has posted an unaudited 65 per cent surge in full-year profit to a record $151.4 million. The result comes on the back of a 5 per cent rise in revenue to $887.4 million. Underlying free cashflow was up 21 per cent to a record $224.3 million. Shares in the miner closed steady at $4.73.... Read more

Engineering firm Monadelphous has expanded into the renewable energy space through a tie-up with a wind farm specialist. The Zenviron joint venture with ZEM Energy has been selected as preferred tenderer to complete a wind farm in northern NSW for developer CWP Renewables. Monadelphous’ shares were up 36¢, or 3.78 per cent, to $9.89 at the close.... Read more

Altech Chemicals Ltd has been granted addition time by the ASX to provide details of a capital raising, in the form of a voluntary suspension... Read more

Energy and infrastructure contractor Valmec has won $13 million worth of work for John Holland on a highway project north east of Perth. The contract includes the bulk earthworks and drainage packages on the southern section of NorthLink WA... Read more Ltd has leveraged its commission free offering to property sellers with a 44% increase in revenue to about $375,000 for the June quarter.... Read more

Stand-in Western Power boss Guy Chalkley has been appointed to lead the State-owned electricity distributor after the State Government signed off on the move. Mr Chalkley, 50, has been acting in the role since former Western Power chief executive Paul Italiano left the utility in March to take up a highly paid position with Sydney network operator Ausgrid... Read more

Like banks and telcos before it, power companies are falling short of expectations, with most consumers believing they don't get value for money, and few holding out much hope of an improvement any time soon. This is the finding of the first detailed, nationwide survey of the satisfaction of energy users with service providers... Read more

Privatisation has damaged the economy, says ACCC chief. Selling public assets has created unregulated monopolies that hurt productivity and damage the economy, according to Australia's consumer and competition tsar, who says he is on the verge of becoming a privatisation opponent... Read more

Inside the race to overhaul Medicare's payments system. Fifteen minutes in the national spotlight hasn’t brought the creaky Medicare payments system any closer to a long-overdue replacement, but Canberra insists it is working on bringing the platform into the modern day... Read more

Internet service providers and mobile telcos could be forced to reveal actual data speeds achievable on their networks and how they manage network traffic under a planned crackdown on broadband marketing. It comes amidst a rise in complaints about slow internet speeds to the Telecommunications Industry Ombudsman... Read more

Woolworths shares have given up some of the previous day's gains as investors take stock of the retailer's plans to axe jobs and close stores. Shares in the supermarket giant fell back about three per cent on Tuesday, a day after they surged more than eight per cent on news of a $959 million restructure that includes shedding 500 office and supply chain jobs and closing 30 underperforming stores... Read more

Aldi to grow by 16 per cent a year... Read more

Oyster shucking, cheese and wine tastings and boutique mustard on tap: a trip to the supermarket isn't what it used to be. Independent supermarkets are pulling out all stops to remain relevant in one of the most competitive times for Australia's food and grocery sector.... Read more

Bank incentives get the chop as ING Direct dumps two per cent cashback deal... Read more

Protean Wave Energy Ltd appoints Steve Rogers to spearhead strategy... Read more

SAI Global confirms that it is reviewing a possible sale of its assurance business. This process was initiated by SAI Global following approaches from, and subsequent meetings with, a number of the leading global sector participants... Read more

Seven West Media says it is looking forward to discussions with Verizon Communications concerning the future of its Yahoo7 joint venture. US-based Yahoo announced yesterday it had sealed a deal to sell its core internet business to US telco giant Verizon for $US4.8 billion... Read more

The High Court will today rule on whether ANZ customers were overcharged tens of millions of dollars in credit card fees. The decision on the six-year legal battle will have huge ramifications for thousands of bank customers, with the lawyers suing ANZ also pursuing other cases against Westpac, CBA and their subsidiaries... Read more

Court told Oswal put company money into 'Taj on Swan', other personal ventures.... Read more

Opinion - Ian Verrander: Don't expect super reform to come without a fight. The Government's proposed superannuation changes will help rein in the budget deficit and provide equity to the system. So of course Canberra's vested interests are howling in opposition. Ian Verrender writes... Read more

International Headlines

U.S. Market Report: U.S. stocks swung between small gains and losses on Tuesday afternoon as mixed earnings reports kept investors on the edge ahead of the Federal Reserve's two-day policy meeting and Apple's results... Read more

North/South Americas Market Repots: North and South American markets are lower today with shares in U.S. off the most. The S&P 500 is down 0.08% while Mexico's IPC is off 0.02% and Brazil's Bovespa is lower by 0.01%... Read more

European Market Report: European markets finished higher today with shares in Germany leading the region. The DAX is up 0.49% while London's FTSE 100 is up 0.21% and France's CAC 40 is up 0.15%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.14% and the Hang Seng rose 0.62%. The Nikkei 225 lost 1.43%... Read more

Crude oil wasn't invited to the big party on Wall Street this month. Not long ago, oil prices looked poised to fly back above the $60 mark. All of a sudden now, the next stop looks more like $40 a barrel. Crude crumbled to three-month lows of $42.36 a barrel on Tuesday. That leaves oil down 12% in July alone, making it a big outlier in a month that's been great for other assets like stocks, bonds, emerging markets and of course, anything to do with Pokemon Go... Read more

The U.S. Federal Reserve is expected to keep interest rates unchanged this week, deferring any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation. Central to the debate at the Fed's July 26-27 policy meeting will be how to reconcile upbeat U.S. economic data, highlighted by strong job gains in June, with a global growth slowdown and other headwinds threatening the inflation trajectory... Read more

Caterpillar’s outlook is the gloomiest so far this earnings season. Machinery maker sees no rebound in mining, energy or construction... Read more

Verizon Communications Inc disappointed Wall Street on Tuesday by reporting a smaller-than-expected subscriber gain for its main wireless business, while its CEO gave few details about plans to increase revenue from its planned purchase of Yahoo Inc's internet assets. Shares of the No. 1 U.S. wireless company, which had risen about 21 percent this year, fell 2 percent shortly after midday... Read more

Verizon Communication reported a drop in its second-quarter earnings, one day after announcing plans to buy struggling internet giant Yahoo. Profit for the period between April and June fell by 83% to $702m (£535m). The company blamed the decline on a strike by 40,000 employees that started in April and lasted seven weeks... Read more

The all-day breakfast glow may be starting to wear off at McDonald's. The fast-food chain's comeback was dealt a setback as U.S. sales growth decelerated in the last three months.... Read more

General Electric Co. is getting rid of its much-imitated employee rating system as the manufacturing giant overhauls performance reviews in favor of more-flexible options. The decision to scrap the five-point scale follows a pilot program involving 30,000 workers, Susan Peters, GE’s senior vice president of human resources, said in a message to employees Tuesday... Read more

At a time when some discount airlines are leaving the U.K., at least one American airline smells opportunity. Despite the Brexit turmoil in Europe, JetBlue revealed on Tuesday it's considering flights to Europe for the first time ever.... Read more

The European Commission will launch an arbitration procedure to resolve a dispute between Norwegian Air Shuttle and U.S. regulators over the budget carrier's wish to fly to the United States from Ireland, two sources said. The EU executive will take the unprecedented step as it considers the delay in granting flying rights to Norwegian's Irish subsidiary a breach of the EU-U.S. Open Skies agreement, one of the people said... Read more

Brexit forces changes to the biggest beer deal in history. Anheuser-Busch InBev has sweetened its offer for rival SABMiller, increasing its promised cash payment by £1 per share after a sharp decline in the pound stoked investor unrest over the deal. If the takeover is completed, SABMiller investors now stand to receive a cash payment of £45 ($58.83) per share... Read more

Twitter Inc. is scheduled to report second-quarter earnings after the market closes Tuesday. Since its last earnings report, Twitter TWTR, -2.26% has made multiple product updates aimed at simplifying the platform and jump-starting slowing user growth. But these updates have been met with fear that the platform is still too complicated and rumors that the company may be acquired by a bigger player... Read more

McDonald's is getting some illustrious company. "Billions served" might apply to Apple's signature product as well. Wall Street analysts predict that Apple sold its 1 billionth iPhone on Monday.... Read more

Goldman is sued in U.S. over merger linked to Malaysia's 1MDB... Read more

Fiat Chrysler Automobiles NV says its longstanding streak of year-over-year sales gains actually ended in 2013 instead of continuing into 2016, a change that reflects a new accounting method it has adopted amid a federal investigation into allegations related to the way it reports U.S. sales numbers... Read more

The Royal Mint has struck gold with its bullion trading business. The company, which is owned by the U.K. government, makes billions of coins for 40 countries. It posted the highest revenues in its 1,100-year history on Tuesday, as revenues from gold and silver trading soared 64%... Read more

BT's Openreach division, which runs the UK's broadband infrastructure, should become a distinct company within the BT group, according to regulator Ofcom. Campaigners said the changes could not come soon enough for the millions of people who have suffered "woeful levels of service from Openreach"... Read more

Second-quarter profits at oil giant BP have almost halved from a year earlier as the company suffered from lower oil prices and weak refining margins. Underlying replacement cost profit for the quarter fell to $720m (£550m), down 44% from $1.3bn a year earlier... Read more

The German luxury carmaker Porsche says it is creating 1,400 jobs to develop its electric car - the Mission E. The sports carmaker, owned by VW, is pushing to get its battery-powered model on to the market in 2019 and is spending about €1bn (£836m; $1.1bn) to get it on the road... Read more

Vicenza: dark heart of Italy's banking crisis where locals have lost millions. Collapse of BPV has left citizens with nothing and the ramifications could damage the whole of Italy and the eurozone... Read more

Shares in Japanese games company Nintendo increased slightly after record losses on Monday when it had warned that the Pokemon Go success would have a limited impact on profits. Nintendo rose by 1.6% following the 17.7% plunge on Monday.... Read more

Losing the X-factor: Hyundai fumbles in U.S. as former hit car Elantra stalls... Read more

Myntra, a subsidiary of Indian online shopping giant Flipkart, says it has bought rival fashion shopping site Jabong for $70m (£53m) in cash. The deal is expected to be completed in the third quarter. Once a big player in India's online retailing industry, Jabong has fallen on hard times in the past year amid poor sales and management shake-ups... Read more

Reuters Special Report: Alexandra Ulmer and Girish Gupta: In Venezuela's murky oil industry, the deal that went too far. ... Read more

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