ASB Securities Morning Brief for Tuesday, 25 October 2016
Tuesday, 25 October 2016

New Zealand Headlines

New Zealand Market Report: The New Zealand Sharemarket was closed in observance of Labour Day. ... Read more

New Zealand share market on brink of correction. The New Zealand share market could fall into "correction" territory this week - more than 10 per cent down from its record high on September 7. US stocks fell again at the weekend despite some solid corporate earnings reports and the trend in the past two months has been for the NZX to fall harder than many markets around the world... Read more

Investors are overly cautious today and they have adopted a wait and see strategy. This is an immensely important week in terms of economic data and we may see some serious firecrackers which lightens up some bonfire. We could potentially see massive swings in the forex and equity markets as investors scrutinized the third quarter GDP number for the US economy which is due at the end of the week... Read more

Court action on 'shonky' steel mesh creates pressure for government inquiry. More than 100 home-owners have joined a class action against steel building mesh suppliers, as a Stuff investigation reveals widespread concern about builders' cost-cutting. Adina Thorn, the lawyer heading the court case, is this weekend calling for a government inquiry into dodgy mesh. The questions should be, "what has gone wrong, why, and recommend how to fix it," she said... Read more

Our comprehensive review of regular savings returns to September 30, 2016 for Aggressive KiwiSaver funds... Read more

Inland Revenue has launched a swathe of audits into the tax arrangements of international technology firms after the taxman detected what it described as "anomalies" in their accounts. While Inland Revenue would not name the companies being scrutinised, citing secrecy provisions in tax laws, four high-profile digital companies - Apple, Google, Facebook and Uber - this week declined to answer when questioned about whether they were currently subject to audit... Read more

The Inland Revenue Department appears to be buying a fight with farmers and their tax advisers as it seeks to change a rule that has been in force for more than 50 years. Polson Higgs tax partner Michael Turner said most would not see an incentive to change something that has worked well for the last 50 years... Read more

The RBNZ is keen to bolster its macro-prudential arsenal with a debt-to-income ratio limiting tool. What might this mean for borrowers, banks, the housing market & politicians?... Read more

Fonterra is conducting an internal review but denies any wrongdoing after Chinese police arrested 19 people in Shanghai for selling around 300 tonnes of the company's expired milk powder. The suspects were allegedly managing a company, which was packaging expired products of Fonterra - one of the most popular brands in China - into smaller packages for resale below market prices, according to the Shanghai Daily... Read more

AJ Hackett International is looking to double in size during the next three years with projects including a bungy jump off the glass bridge in China. The pioneer of bungy jumping has outlined three projects in the pipeline. They are a combination of fully-funded by AJ Hackett International, joint ventures or private/government investments.... Read more

Kiwibank fixes its Labour Day IT outage. Kiwibank has got its IT system operational again. At about 12.30pm on Monday all internet banking, phone banking, and fund transfers between accounts were not working.... Read more

Experts say Auckland Council not spending enough on social media. The Auckland Ratepayers’ Alliance is questioning the nearly $200,000 being spent by Auckland Council on Facebook and LinkedIn advertising. Figures obtained by the lobby group show $187,870 has been spent on social media advertising by Auckland Council in the 2015/16 financial year, with $164,287.32 being put toward Facebook advertising and $23,582.96 spent on LinkedIn... Read more

Energy efficiency proves its role in low-emissions economy. Energy efficiency proves its role in low-emissions economy – Annual Report 2015/16. Improved energy efficiency is helping New Zealand cut thousands of tonnes of carbon emissions, as well as saving millions of dollars a year... Read more

Good Grazing snack box delivery business is 'My Food Bag of snacks'. Most of us have experienced the 3pm slump, where we reach for the chocolate to stave off hunger, only to regret it later. Two Wellington mums have set out to change our eating habits one box of snacks at a time. Debbie Turner and Christina Hall have launched their national snack box delivery business, Good Grazing.... Read more

A former All Black captain and his wife are reaping the rewards of owning a business in the Hawke's Bay fruit bowl. Kiwigarden founders Joanne Edwards and Taine Randell produce a range of fruit-based snacks using freeze drying technology. Kiwigarden products have been finalists in the 2015 and 2016 NZ Food Awards and last week its crunchy coconut raspberry yoghurt drops, which they describe as "a smoothie with some serious crunch," won the novel ingredient award... Read more

Papakura Configure Express members claim refund demands going unanswered. Members of the women's gym Configure Express in Papakura, Auckland, say they are still waiting for refunds, more than two months after it closed. Dozens of members promised refunds by the gym believe they are being ignored and a number of staff who have resigned claim they are still owed wages... Read more

Eketahuna pub company ordered to pay $32,000 to former staff members... Read more

Opinion - Bernard Hickey: Auckland's funding juggling act. Bernard Hickey calls on Auckland to adopt targeted rates and look at selling its Port operating company, while Wellington should allow congestion charging and multiply its infrastructure fund for a huge and needed road, pipe and house building programme... Read more

Opinion - Sue Allen: Jury out on customer feedback rankings. Last week, Escape to Picton restaurant owner Juliearna Kavanagh gained notoriety (well in Marlborough at least) for taking on a Trip Advisor detractor who rubbished the service in her restaurant and took to the internet site to vent... Read more

Australian Headlines

Australian Market Report: Wall Street was flat on Friday, but the S&P/ASX 200 index dropped 21.8 points, or 0.4 per cent, to 5408.5 as domestic focused stocks were dumped, but it halved mid-session losses on bargain hunting in the major banks. The Australian dollar lost US0.3¢ to US76.10¢ as the US dollar extended gains against major currencies while government 10-year yields slipped 2 points to 2.265 per cent... Read more

The Australian dollar has fallen against the US dollar, which has found support amid expectations that Democrat candidate Hillary Clinton will win the race for the White House. At 1203 AEDT on Monday, the local unit was trading at 76.12 US cents, down from 76.38 cents on Friday.... Read more

Federal Treasurer Scott Morrison has called on states and territories to remove unnecessary land planning regulations, to increase the supply of housing.... Read more

Aussies rate happiness over home ownership when defining success. Keep calm and stop stressing over whether you’ll be able to own your own home. New research shows Aussies don’t really rate owning a home when defining success. In fact, according to NAB’s Rethink Success survey — which researched the views of more than 2000 Australians aged 16-70 — buying a house didn’t even crack the top 10 personal measures of success.... Read more

The housing auction clearance rate has hit its highest point since April last year. The proportion of auctions ending with a sale over the week to Sunday was 80.2 per cent, well up from 76.2 per cent the week before and 64.9 per cent in the corresponding week of 2015, figures from CoreLogic show... Read more

NAB blacklists loans for properties in ‘risky’ suburbs. First home-buyers can expect an even tougher battle to get into the market, after a major bank hiked its minimum deposits for loans in “risky” suburbs. Borrowers will have to fork out as much as 30 per cent to secure a mortgage in one of the 600 suburbs and towns on NAB’s blacklist, Fairfax Media reports... Read more

Western Australia's slide to the bottom of the economic ladder in Australia has seen the state's property market kicked from full steam ahead into reverse. But while property professionals see the post-mining boom market to be a readjustment to more 'normal' price levels, a looming apartment glut has many analysts concerned about further pain in that sector of the market... Read more

This is the capital city that landlords love because it has the tightest vacancy rate in Australia. Hobart has the tightest vacancy rate of any capital city in Australia with new figures revelling it sits at just 0.6 per cent, or 162 properties. Analysis by SQM Research reveal it improved a little in the past month, but only by 14 extra properties becoming available... Read more

APRA locks in tougher mortgage rules to ensure prudence of banks. No matter how low interest rates may fall, banks should make sure new borrowers can repay their debts with mortgage rates of at least 7 per cent, new guidelines have confirmed... Read more

A Singaporean investment company that began life smelting tin has flipped a large 26-storey office building in Melbourne's William Street just one-year after purchasing it, netting a profit of $36.5 million. Singapore-listed Straits Trading Company offloaded the glass and concrete tower at 114 William Street, in the legal district, for $161.5 million... Read more

Wolf Minerals gains more time at Drakelands. Wolf has rescheduled debt repayments and secured a £20 mln bridge to allow it to move towards commerciality at Drakelands.... Read more

Self-managed superannuation funds buying in to Argyle pink diamonds. One of the exclusive sellers of Argyle pink diamonds says a number of the stones are being purchased for self-managed superannuation funds (SMSF). Rio Tinto's Argyle mine in the East-Kimberley, in the far north of Western Australia, is the only source of the diamonds, and it is scheduled to close production within a few years... Read more

AusGroup backs court-ordered review of port project. AusGroup says the Federal Government is expected to take four to six weeks to reconsider environmental approval for its port facilities off Darwin.... Read more

Montezuma Mining Company Ltd now holds 4.2 million shares, or 6.52%, of Lefroy Exploration Ltd.... Read more

Energy giant Santos has agreed to sell its Victorian gas assets to junior explorer Cooper Energy for up to $82 million.... Read more

Metallica Minerals has loaded its maiden shipment of bauxite at the barging and transhipping facility at Hey Point near Weipa on the west coast of QLDs Cape York... Read more

Transerv Energy Ltd has been granted a trading halt by the ASX, pending the company's response to an ASX price and volume query... Read more

Antipa Minerals Ltd has been granted a trading halt by the ASX... Read more

Argent Minerals Limited is the first company to secure an exploration licence (EL8213) for the Pine Ridge gold mine area since its release from a 15 year lockup under a 3rd party Assessment Lease Application (ALA). Reverse circulation drilling data under JORC 2012 code includes: 21 metres at 5.6g/t gold from 50 metres... Read more

Syndicated Metals has commenced RC drilling at Korong and diamond drilling is scheduled to commence this week at the Monument gold project... Read more

Masters dents Supercheap Auto sales. Super Retail Group says its 2017 financial year has started solidly, but competitive clearance sales from rival Masters has dented tools sales for its Supercheap Auto business. "Sales performance in the automotive categories within the Supercheap Auto business has been solid, however, competitor clearance activity in the hardware retail sector has had a negative impact on sales in the business' tools categories," chief executive Peter Birtles said in a trading update on Monday... Read more

Helloworld has raised $29.75 million to fund the purchase of 50% Mobile Travel Holdings and its subsidiaries... Read more

Seafarms Group says it has completed a $1.3 million upgrade of an aquaculture facility at Exmouth associated with its $1.5 billion prawn growing and export project across Australia’s north. Shares in the company were off 0.1 cents, or 1.11 per cent, to 8.9 cents at 10.15am.... Read more

Salmon farmer Tassal has issued a statement to the ASX defending its farming and certification practices after an interview by the ABC's Four Corners program. Tassal said on Monday that earlier in October, a Four Corners crew had interviewed chief executive Mark Ryan about sustainable salmon farming in Tasmania... Read more

Simon Crean to hold talks in Jakarta amid concerns over new cattle breeding rule. Australian live cattle representatives have flown to Jakarta for talks amid fears a proposed new trade rule stipulating one in every six cattle imported to Indonesia must be for breeding could threaten the viability of the industry... Read more

CBA, Wells Fargo complete 'world first' blockchain trade. The Commonwealth Bank and Wells Fargo have tested blockchain technology on a real-life international cotton trade in what they are touting as the world's first international transaction between independent banks facilitated by a distributed ledger... Read more

S Kidman and Co: Gina Rinehart's company claims bid price 'essentially the same' as Australian syndicate... Read more

Mortgage insurer Genworth will get new owners after Chinese conglomerate China Oceanwide Holdings agreed to acquire its New York-listed parent company Genworth Financial Inc. for $US2.7 billion ($A3.6 billion).... Read more

The Jamie’s Italian chain and the Chophouse grill in Cloisters Square have been excluded from an agreed sale of eateries and bars owned by the collapsed Keystone Group. Keystone’s receivers and managers, Ferrier Hodgson, confirmed today Melbourne-based, privately-owned Dixon Hospitality had struck a deal to take seven of the failed group’s Sydney venues as preferred bidder... Read more

Quickstep Holdings is collaborating with Futuris Automotive Group to develop a composite front seat back for automotive manufacturers... Read more

The sharing-economy phenomenon, made famous by the likes of Airbnb and Uber, is about to get a push in Australia with the launch of the country’s first start-up accelerator dedicated to the trend. The accelerator is the brainchild of four of Australia’s influential sharing-economy experts: Steve Orenstein, the founder and CEO of on-demand express courier service Zoom2u; Alexis Soulopoulos, the CEO and co-founder of Australia’s leading pet-sitting network MadPaws; Will Davies, the CEO of car-sharing and rental service CarNextDoor; and Mike Rosenbaum, CEO and co-founder of self-storage marketplace Read more

Vitaco Holdings has been advised by the Foreign Investment Review Board that the Australian government has no objections to the proposed acquisition... Read more

Former Optus reseller Allphones has fallen at its first attempt to get compensation from the telco for miscalculation of commissions throughout the pair's long-running partnership. Allphones was an authorised Optus dealer until August 2013 when the telco revealed it would dump its retail distributors and open more Optus-branded stores. The move resulted in Allphones losing $25 million in the following year... Read more

Spectacular cost blowouts show need to keep governments honest on transport. Last week Fairfax Media revealed that the Parramatta Light Rail, a vital part of the New South Wales Government's plan to cement Parramatta as Sydney's second central business district, is set to cost not $1 billion as budgeted, but a whopping $3.5 billion... Read more

The SA Police has issued a warning to companies after a local business was scammed out of $1.5 million by offshore attackerss masquerading as a supplier, having obtained sensitive business information through a targeted phishing campaign. South Australian police suspect the scammers initially used an email phishing attack to identify the supplier-client relationship between the two companies... Read more

Opinion - Clancy Yeates: 'Tracker' home loans shouldn't be put on the scrapheap yet. Corporate cop Greg Medcraft has a suggestion for the banks – one that he reckons would help their image problem, boost competition and improve transparency... Read more

International Headlines

U.S. Market Report: U.S. stocks touched their highest levels in two weeks as a flurry of deal activity and strong quarterly earnings boosted investor confidence. Investors are also parsing quarterly earnings reports from companies. More than a third of the S&P 500 components are scheduled to report earnings this week, including heavyweights such as Apple and Boeing... Read more

North/South Americas Market Report: North and South American markets are mixed today. The S&P 500 is up 0.37% while the Bovespa gains 0.20%. The IPC is off 0.19%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The DAX gained 0.47% and the CAC 40 rose 0.36%. The FTSE 100 lost 0.49%... Read more

Asian Market Report: Asian markets finished broadly higher today with shares in China leading the region. The Shanghai Composite is up 1.21% while Hong Kong's Hang Seng is up 0.98% and Japan's Nikkei 225 is up 0.29%... Read more

Oil prices fell on Monday after Iraq said it wanted to be exempt from an OPEC production cut, though prices drew some support from a rally in Wall Street shares and a draw in crude inventories at the U.S. storage hub of Cushing, Oklahoma. The Organization of the Petroleum Exporting Countries (OPEC) announced plans last month to cut output to boost prices, but has not yet given details on how it will reach the target. Members meet in Vienna on Nov. 30... Read more

Time Warner, AT&T shares fall amid concerns over deal clearance... Read more

Tesla third-quarter earnings: What to expect. Proposed SolarCity deal has been a drag on Tesla’s stock... Read more

Discount brokerage TD Ameritrade is buying rival Scottrade in a deal worth $4 billion. The move, announced Monday by both companies, will allow TD Ameritrade to quadruple the size of its branch network, to about 450... Read more

TD Ameritrade faces scrutiny over Scottrade purchase... Read more

Wells Fargo used to be able to brag of a superior reputation, rich in history, and mostly clean of the mud from the Great Recession. But over the past two months, the storied Wells Fargo name has been tarnished by a scandal. And unlike complex financial crisis-era crimes, this is one all Americans can understand... Read more

A massive trade deal between Europe and Canada is on life support. Last-minute negotiations to salvage the European Union's signature free trade agreement have been dealt a major blow by a rogue regional government in Belgium.... Read more

British manufacturers' investment intentions recovered over the past quarter as sterling's slide brightened export prospects, but skills shortages and rising costs are a growing worry, industry figures showed on Monday. The Confederation of British Industry said businesses believed that sterling's slump of more than 15 percent since Britain voted to leave the European Union in June had boosted their export competitiveness to its highest in years... Read more

British Prime Minister Theresa May said on Monday she was aware of the importance of financial services to the country's economy and was in discussions with the sector about what its priorities were in upcoming Brexit negotiations. "I have been clear ... (about) the importance that we place on being able not just to trade with but to operate within the European market, and that is for both goods and services... Read more

Microsoft products are about to get a whole lot more expensive for U.K. buyers. The U.S. tech firm announced price increases on Monday that will boost the cost of some products by 22% following of a steep drop in the value of the pound. The increases, which will take effect on Jan. 1, 2017, apply only to Microsoft's (MSFT, Tech30) business customers... Read more

British broadcaster ITV to cut 120 jobs over Brexit uncertainty... Read more

Syrian refugee children have been making clothes for British shoppers, an undercover BBC investigation has found. Panorama investigated factories in Turkey and found children had been working on clothes for Marks and Spencer and the online retailer Asos. Adult refugees were also found working illegally on Zara and Mango jeans... Read more

Chinese aviation and shipping conglomerate HNA Group said on Monday it would buy about 25 percent of hotel operator and manager Hilton Worldwide Holdings Inc from biggest shareholder Blackstone Group LP for $6.5 billion. Shares of Hilton, whose brands include Conrad Hotels & Resorts, Curio and Double Tree as well as Hilton, rose as much as 3.71 percent to $23.76 in early trading... Read more

For $2.7 billion, Genworth becomes latest U.S. company to get a China buyout. Genworth Financial Inc., a dominant carrier in U.S. long-term-care insurance, agreed to sell itself to a Chinese investment firm as persistent low interest rates and rising costs hobble its business... Read more

This industry is freaking out over the Philippine president's anti-U.S. rhetoric. When Philippine President Rodrigo Duterte declared a military and economic "separation" from the United States last week, many Filipinos saw his announcement as more than just diplomatic posturing. They saw it as a threat to their jobs. His comments sent a shudder through industries that rely heavily on the U.S. market, particularly the big business of handling call center work and other tasks for American companies.... Read more

Shares in embattled South Korean shipper Hanjin have tumbled on Monday after the company said it would close its European business. The firm said it planned to pull out of more than 10 countries, including its regional headquarters in Germany. Shares plunged to close 12% lower... Read more

Tata Sons has replaced its chairman with a blast from the past. The massive Indian conglomerate unexpectedly removed Cyrus Mistry as chairman on Monday, marking a major shift in strategy for the owner of Jaguar, Land Rover and Taj hotels. Ratan Tata, the company's former chairman, will come out of retirement to lead the firm on a temporary basis.... Read more

Opinion/Analysis - Paul R. La Monica: Why Wall Street doesn't like the AT&T - Time Warner deal... Read more

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