ASB Securities Morning Brief for Thursday, 22 September 2016
Thursday, 22 September 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares dropped ahead of two cash rate announcements, with Orion Health Group, Air New Zealand and Scales Corp falling. The S&P/NZX 50 Index fell 27.28 points, or 0.4 percent, to 7,281.17. Within the index, 27 stocks fell, 15 rose and eight were unchanged. Turnover was $194.6 million... Read more

The New Zealand dollar fell below 73 US cents and gained against the yen after the Bank of Japan amended its monetary policy, prompting traders to sell the Japanese currency in favour of the greenback. The kiwi fell to 72.85 US cents as at 5pm in Wellington from 73.23 cents late yesterday. The local currency rose to 74.80 yen from 74.55 yen... Read more

NZ annual net migration rises in August, matching June record, on arrivals from Australia, UK, China... Read more

More evidence that housing demand won't ease anytime soon as new data reveals August’s annual population gain equalled previous record... Read more

Commerce and Consumer Affairs Minister Paul Goldsmith says he is considering advice from officials on wide ranging retail payments issues. This follows a report issued by Retail NZ last November suggesting NZ retailers and consumers may pay substantially more than overseas counterparts for credit and debit card transactions. Goldsmith says after considering Retail NZ's report, and following a meeting in February, he and Finance Minister Bill English asked officials to look into the issues it raised... Read more

The NZ Superannuation Fund is setting up an "investment hub" to discuss opportunities it can create with local partners such as iwi within New Zealand where it has a "hometown advantage." Chief executive Adrian Orr said the fund was talking to decision-makers who have access to particular resources such as land, agriculture, and aquaculture where it could bring in the necessary capital and global capability to make the investment "go better, faster."... Read more

Volatility hits NZ Super Fund. Negative returns on global equities have hit the NZ Super Fund’s return in the year ended June 2016.... Read more

Craigs has announced it is to repackage its kiwiSTART Defined KiwiSaver scheme as QuayStreet KiwiSaver. Quay Street will take over as the named manager of the fund from Craigs Investment Partners Superannuation Management, but the underlying product, and the funds it invest in remain unchanged... Read more

Fonterra has boosted farmer incomes and spirits with a 50c hike in its forecast farmgate milk price - to $5.25 per kilogram of milksolids (kg MS). The latest 50c lift means nearly an extra $1b nationally and $78,980 for the average New Zealand dairy farmer. It also brings the price to 20c above the break-even of $5.05 calculated by DairyNZ. The revised forecast is accompanied by a rise in Fonterra's advance payment rate, from $3.10/kg MS to $3.60/kg MS for the October payment. ... Read more

New Zealand Merino Co, a wool marketer that aims to develop higher-value markets for sheep products, posted a 19% lift in annual profit and said its business has doubled in value over the past three years. Profit rose to $2.7 million in the year ended June 30, from $2.3 million a year earlier, according to the Christchurch-based company's 2016 annual report. Revenue rose 4.9% to $114.7 million while the cost of sales gained 5.7% to $104 million... Read more

Synlait Milk, the NZX-listed dairy company, has completed the institutional component of its rights offer, raising about $59 million. As part of its earnings announcement on Monday, the company said it planned to raise a $98 million in a rights offer to expand its infant formula manufacturing, consumer packaging, infrastructure requirements and value-added cream manufacturing... Read more

Yellowbelly flounder breeding could replenish wild stock in Marlborough Sounds... Read more

Zespri International, the kiwifruit marketer, is to start the search for a new chief executive next year, with a plan to have the successful candidate in place for the start of 2018. Lain Jager has been in the role since December 2008, and will remain in the post until a new chief executive starts... Read more

Major meat processor Silver Fern Farms (SFF) has parted company with a joint venture selling merino meat to well heeled shoppers. The New Zealand Merino Company (NZM) announced on Wednesday it had taken outright ownership of Alpine Origin Merino for an undisclosed sum. Its merino meat brand had previously been owned by both companies and promoted as a shining example of cross branding in the primary industry... Read more

Kathmandu Holdings, which fended off a takeover proposal from its biggest shareholder Briscoe Group, lifted annual profit 64 percent and will pay a bigger dividend after more rigorous inventory management helped fatten margins. Net profit rose to $33.5 million, 16.6 cents per share, in the 12 months ended July 31, from $20.4 million, or 10.1 cents, a year earlier, the Christchurch-based outdoor equipment chain said in a statement. Gross margin widened to 62.6 percent from 61.5 percent, and sales rose 4 percent to $425.6 million... Read more

IkeGPS, the laser measurement toolmaker, could use funds left over from the $8 million raised in the past two months to make acquisitions and may look to raise more capital, as it works towards dual-listing on the Australian Securities Exchange. Shares in ikeGPS last traded at 59c, down 15.7% since the start of the year.... Read more

Crown-owned Southern Response has sunk millions into legal help over the past four years and been ordered to pay aggrieved homeowners hundreds of thousands of dollars. In November 2015, Southern Response set aside an extra $4 million for its legal costs. At the time, former chief executive Peter Rose said the company had spent $10m on legal fees since its inception. The figure has since increased to $15 million.... Read more

The Earthquake Commission (EQC) has confirmed it will slash its Canterbury workforce by about a third, but the number of remaining staff will be higher than originally thought. The sweeping job cuts, which also cover Wellington and Hamilton, have been made despite EQC having a backlog of defective repair jobs on its books. In Christchurch the changes will reduce the total number of staff by 150 to 216, part of a move that will reduce EQC's operating costs from $190 million to $95m... Read more

The Treasury will publish just one major report on the government's major project pipeline, replacing the other two reports with high-level updates in an effort to cut costs.... Read more

$200-300 million redevelopment of Auckland's reviled former council headquarters and Civic Square. Auckland Council’s despised former headquarters are to be transformed into apartments and food outlets.... Read more

The Port Nicholson Block Settlement Trust (PNBST) has ended negotiations to buy Wellington railway station. Last October the trust's commercial arm triggered a process to begin negotiations to purchase the site, after KiwiRail chief executive Peter Reidy said it was too big for the state-owned company's needs... Read more

How to avoid becoming an affinity fraud victim It's a sad fact that many people who are ripped off are conned by someone they know and trust – it is what's known as affinity fraud. Here are some tips from the Commission for Financial Capability. +video... Read more

ANZ customers air feelings of betrayal. Broken promises and pleas falling on deaf ears were the recurring themes among Milton residents who voiced their frustrations at a public meeting last night over a proposal to close the last bank in the town.... Read more

Westpac Bank has confirmed it is closing 19 of its branches throughout New Zealand. The branches are in both rural and metro areas, including a number in Christchurch... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket rallied after the Bank of Japan did little to drive bond yields higher and disrupt global demand for risky assets as investors had feared. Ignoring the flat lead from Wall Street last night, the S&P/ASX 200 was up 0.6 per cent before the BOJ monetary policy announcement... Read more

The Australian dollar is slightly lower in muted trading as investors await a decision on interest rates from the Bank of Japan. At 1200 AEST on Wednesday, the local unit was trading at 75.5 US cents, down from 75.56 US cents on Tuesday.... Read more

Why it’s harder than ever to buy your first home. If you feel like it’s never been more difficult to break into the housing market, you could be right. An analysis of house price and household income by a former Reserve Bank economist reveals that the gap between the two has never been higher.... Read more

Job vacancies edge back toward 4-year highs... Read more

Does your pension pass the assets test? Determining who gets the age pension and how much they receive is a bureaucratic nightmare that the Federal Government endures every fortnight.... Read more

A superannuation group has warned that consumers could lose out if employers are allowed more leeway to choose their default workplace retirement fund. The Federal Government's Productivity Commission is reviewing the default superannuation fund system, MySuper, for workers who have not selected a workplace super fund... Read more

Don't get used to cheap strawberries. Australia could be facing a looming fruit shortage due to the “disastrous” backpacker tax, South Australian Senator Nick Xenophon has warned. The controversial tax, introduced in the 2014-15 Federal Budget and set to take effect from 1 January 2017, would slug working holiday visa holders with 32.5 per cent tax on every dollar they earn... Read more

Pilbara Minerals Ltd's shares have been halted on the ASX today, and placed in pre-open status.... Read more

Vimy Resources has placed its shares in a trading halt ahead of a capital raising. The Cheryl Edwardes chaired, Mike Young led uranium explorer is focused on the development of its Mulga Rock project, which it claims is the third biggest undeveloped uranium deposit in Australia... Read more

Marmota Energy Ltd has successfully completed its share purchase plan, with eligible shareholders applying for $530,000 of shares, which is more than 75% over the $300,000 target. The shares will be issued at $0.015 each... Read more

BHP Billiton chief executive Andrew Mackenzie has had his pay halved after leading the resources giant to a record full-year loss on the back of the Samarco dam disaster in Brazil and plummeting commodities prices... Read more

BHP Billiton has vowed to fight a $1 billion claim by the Australian Taxation Office for taxes owed on Australian iron ore and other minerals sold through its controversial Singapore marketing hub. The escalation in the battle between the global miner and the ATO comes as BHP revealed the value of taxes and other payments to governments around the world almost halved last financial year, as a prolonged downturn in commodities prices weighed on profitability... Read more

Venus Metals Corporation Ltd's shares are in pre-open this morning, following the ASX granting the company a trading halt. Venus requested the halt to prepare capital raising details... Read more

Vimy Resources Ltd is heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare.... Read more

Emerging gold miner Blackham Resources has more than doubled the size of its hedge book, forward selling a further 34,250 ounces worth $60.75 million. The deal with Investec Australia was locked in at an average price of $1774 per ounce and the gold will be delivered over the next 18 months. Shares in Blackham were off one cent, or 1.23 per cent, to 80 cents at 10.30am.... Read more

BBX Minerals continues work at Juma East... Read more

Tyranna Resources Ltd is preparing to divulge details of a material project related transaction, with the ASX granting the company a trading halt to prepare... Read more

Kin Mining says Sydney-based investment firm Kamara Group has agreed to underwrite its $4.9 million rights issue to the tune of $3.8 million. Under the terms of the rights issue announced on August 1, shareholders can subscribe for one new share priced at 22 cents for every four shares they hold... Read more

The row between Pilbara Minerals and Mineral Resources over lithium off-take rights looks set continue, as a new dispute flares over MinRes’ right to buy product from the Pilgangoora lithium project. MinRes entered the emerging Pilbara lithium sector in June through the acquisition of Global Advanced Metals’ Wodgina tantalum mine. Pilbara Minerals shares were down 4.5¢, or 8.26 per cent, to 50¢ at 1.20pm, with MinRes down 17¢, or 1.55 per cent, to $10.81.... Read more

Ram Resources Ltd is preparing to reveal details of a capital raising, and the ASX has granted the company a trading halt to prepare.... Read more

PAKs Canadian coal licenses renewed... Read more

Tennis legend Ken Rosewall has told a Supreme Court hearing into the collapse of broking firm BBY he had concerns about the financial viability of the firm as far back as 2011, four years before its spectacular collapse. "BBY always seemed to be on the wrong side of the ledger financially," Mr Rosewall, who was a director, told liquidators... Read more

BidEnergy Ltd has formally launched its cloud-based source-to-pay energy management platform in the U.S. market. BidEnergy’s platform provides enterprises with multiple sites control over their energy spend, from sourcing to billing and accounts payable... Read more

Pharmacy group Terry White has lifted its annual profit by half after merging with rival Chemplus, and is looking for more mergers to fuel further growth. The company's net profit rose to $1.84 million in the 12 months to June 30, up from $1.22 million in the prior year, as earnings doubled following the acquisition of Chemplus pharmacies in July 2015... Read more

Fairfax Media reported Emeco was negotiating a three-way deal with private equipment companies Orionstone and Andy's Earthmoving. Emeco and Orionstone last year discussed a merger before calling off the talks... Read more

Seeds and pesticide supplier Nufarm expects to lift earnings in the year ahead despite challenging conditions in agricultural markets and soft commodity prices. The company made a net profit of $27.5 million in the year to July 31, a drop of 36 per cent from the previous year due to $81 million in restructuring costs... Read more

Wesfarmers chief executive Richard Goyder has paid a price for the conglomerate’s profit fall, with his annual pay packet reduced by more than 40 per cent. The heavy write-downs and losses at the group’s Target and coal businesses were also felt across Wesfarmers’ senior management ranks, where bonuses and share rewards were down more than $10 million in the year to June 30... Read more

Emeco Holdings Ltd's shares in pre-open... Read more

NAB nears finish line in core banking overhaul. National Australia Bank has marked the completion of its core banking overhaul rollout with the deployment of the final foundation piece in the program, last week setting live its new originations platform for personal banking customers... Read more

Seeds and pesticide supplier Nufarm expects to lift earnings in the year ahead despite challenging conditions in agricultural markets and soft commodity prices. The company made a net profit of $27.5 million in the year to July 31, a drop of 36 per cent from the previous year due to $81 million in restructuring costs... Read more

Telstra has confirmed it wants to cut 27 jobs from its Netley site in Adelaide's west as part of a national restructure. About 50 jobs will be axed from the company's high-speed data department across the nation, with the other jobs going from Tasmania and regional Victoria... Read more

Telstra will appoint a “customer CTO” to work in its global enterprise and services (GES) division, focused on growing the size of the telco’s key accounts. The “customer chief technologist” is expected to be “a seasoned CIO, CTO, chief architect, principal consultant or technical pre-sales lead”, who is “recognised in the Australian technology industry as a thought leader”... Read more

Stop complaining about your Netflix library. That’s the message from a company exec who said it’s totally ridiculous that customers outside the US lament the fact they don’t have access to the level of content on offer to American subscribers.... Read more

International Headlines

U.S. Market Report: Stocks rose with Treasuries and the dollar fell as Federal Reserve officials lowered their outlook for long-term interest rates. Oil rallied. The S&P 500 Index extended gains, while a gauge of the U.S. yield curve flattened as the shortest-maturity debt underperformed... Read more

North/South Americas Market Report: North and South American markets are mixed today. The IPC is up 0.58% while the S&P 500 gains 0.52%. The Bovespa is off 0.25%... Read more

European Market Report: European markets finished higher today with shares in France leading the region. The CAC 40 is up 0.48% while Germany's DAX is up 0.41% and London's FTSE 100 is up 0.06%... Read more

Asian Market Report: Asian markets finished broadly higher today with shares in Japan leading the region. The Nikkei 225 is up 1.91% while Hong Kong's Hang Seng is up 0.59% and China's Shanghai Composite is up 0.10%... Read more

The U.S. Federal Reserve left interest rates unchanged on Wednesday but strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further. The Fed said U.S. economic activity had picked up and job gains were "solid" in recent months... Read more

Harley-Davidson Inc. shares jumped nearly 7 percent early on Wednesday as speculation resurfaced the company was a buyout target of equity firm Kohlberg Kravis and Roberts. Shares then pared gains after a company spokesperson said the company was not "aware of" anything specific that boosted the shares about 6.8 percent. At midday Harley shares were up about 3 percent... Read more

Heat rises on Wells Fargo CEO after lawmaker grilling... Read more

Viacom's interim CEO and President Tom Dooley will be leaving the company after November 15. Dooley's departure was announced after a board meeting Wednesday... Read more

Leon Cooperman, a billionaire investor and hedge fund manager, was charged on Wednesday with insider trading by the SEC. Cooperman and his firm Omega Advisors were charged with using non-public information he learned from a corporate executive about a 2010 energy deal... Read more

Microsoft increases dividend by 8%, OKs $40B buyback... Read more

The heads of two major Wall Street companies have warned that the UK financial services industry could be damaged by Brexit. President of investment bank Morgan Stanley, Colm Kelleher, said the City would "suffer… the issue is how much"... Read more

Brexit has had 'no major effect' on economy so far. There has been little impact of the Brexit vote on the UK economy so far, says the Office for National Statistics (ONS). "The referendum result appears, so far, not to have had a major effect," its chief economist Joe Grice said... Read more

Apple Inc. is in talks with British luxury car maker and Formula One team owner McLaren Technology Group about a potential deal, according to a report Wednesday in the Financial Times. Apple is considering a full takeover or an investment, the newspaper said, citing people familiar with the negotiations. Talks started “several months” ago, it said... Read more

Pilots at one of Europe's biggest airlines are so tired they may be about to go on strike about it. EasyJet pilots voted Wednesday by a huge majority to take industrial action, according to their union, the British Airline Pilots' Association.... Read more

Volkswagen investors are demanding more than $9 billion in damages for the losses they sustained as a result of the automaker's huge diesel emissions scandal. Around 1,400 lawsuits have been filed against Volkswagen in Germany. The investors want payments totaling 8.2 billion euros ($9.1 billion), according to a statement from a court in Volkswagen's home state of Lower Saxony... Read more

It's the biggest initial public offering of 2016, and the largest since Alibaba sold shares in 2014. China's state-owned Postal Savings Bank is set to debut on the Hong Kong Stock Exchange next week after raising $7.4 billion in its IPO on Wednesday... Read more

The Bank of Japan made an abrupt shift on Wednesday to targeting interest rates on government bonds to achieve its elusive inflation target, after years of massive money printing failed to jolt the economy out of decades-long stagnation. While the BOJ reassured markets it would continue to buy large amounts of bonds and riskier assets, the policy reboot appeared to open the door for an eventual winding down of its huge asset purchases, and tried to repair some of the damage caused by its shock move to negative rates early this year... Read more

Samsung has found itself in a row with Chinese consumers, with some accusing the firm of being biased against them. The South Korean firm has not issued a recall of its Galaxy Note 7 in China, despite local media reports of two devices catching fire... Read more

India's cabinet cleared the purchase of 36 Rafale fighter jets from Dassault Aviation on Wednesday, paving the way for signing a deal that Prime Minister Narendra Modi is betting on to modernize the air force, a government source told Reuters. The acquisition is part of a $150-billion military overhaul India has launched, drawing global arms makers into one of the world's most promising markets... Read more

Opinion -Therese Poletti : Oracle’s Larry Ellison has a new target: Amazon. Oracle still has long way to go in the cloud... Read more

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