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

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell as demand dried up ahead of a Reserve Bank update, with Meridian Energy and Vector hit hardest. The S&P/NZX 50 Index dropped 70.4 points, or 1 percent, to 6,795.71. Within the index, 35 stocks fell, eight were unchanged and six rose. Turnover was $181.9 million... Read more

The New Zealand dollar rose, reversing course from an overnight selloff in a sign traders are divided about what they'll learn about the outlook for interest rates from the central banks of Japan, New Zealand and the US this week. The kiwi rose to 68.75 US cents as at 5pm, in Wellington, from 68.45 cents at the start of the day and from 68.57 cents late yesterday. The trade-weighted index rose to 72.57 from 72.50 at the end of last week... Read more

A busy summer for tourists has left some Kiwis feeling ansty about the number of international visitors arriving in New Zealand. New "mood of the nation" research commissioned by Tourism New Zealand showed overall New Zealanders were positive about international tourism. Almost 60 per cent said tourism created economic growth, 55 per cent said it created employment and 44 per cent said it added to regions' vitality.... Read more

A top New Zealand property expert opposes a land tax and says a stamp duty is a far better option. Dean Humphries, a national hotel broker and a former Auckland University lecturer, was responding to PM John Key talking of a land tax and said that would not resolve the issues around foreign buyers purchasing houses here... Read more

Stamp duty or a new build restriction would be more effective than introducing a land tax for non-resident buyers, property experts say. Over the weekend, Prime Minister John Key raised the possibility that a land tax for non-resident property buyers could be introduced – if evidence shows they are pushing up house prices... Read more

Jury still out on impact of foreign property investors as Key floats land tax idea. New Zealand would need data on the activity and influence of foreign property investors before committing to the risks and costs associated with a selective land tax, says Bob Buckle, the dean of commerce at Victoria Business School who chaired the Tax Working Group... Read more

Treasury eyes asset 'buy-back' scheme to get Auckland Council housing shortage over the hump... Read more

Focus on helping KiwiSavers. Allowing people to contribute to KiwiSaver at less than 3 per cent for a limited time and shortening the contribution holiday from five years to one are just two of eight options being proposed to help get more people saving into the scheme. The Commission for Financial Capability has been consulting the KiwiSaver industry, government agencies and 2000 members of the public on what they think could be done to improve the scheme as part of its three-yearly review of retirement income policy... Read more

Banks keen to hold on to QFE model. Banks have argued in favour of being allowed to retain their existing QFE model and rejected attempts to better delineate between advice and sales, in their submissions on the Financial Advisers Act review... Read more

Global Dairy Trade (GDT), the Fonterra-owned company that runs twice-monthly international dairy auctions, says it will offer a complementary, 24/7, online trading platform for buyers and sellers looking to deal in smaller volumes from June. The introduction of "GDT Marketplace" would expand the quantity of dairy traded online, offering flexible access to a broad range of high-quality dairy products, GDT said... Read more

New research has shed light on potential factors driving A2 Milk's stellar sales growth in the booming yet notoriously fickle Chinese infant formula trade. Sharebrokers UBS surveyed 1279 parents and pregnant women in China in order to gain a better understanding of trends driving that country's baby milk market, which has been projected to grow to US$25 billion ($36.4 billion) by next year... Read more

Veteran corporate raider Ron Brierley has increased his takeover offer for Kirkcaldie & Stains after his earlier offer was rejected by the former retailer's board. Brierley lifted his offer to $3 a share from the $2.75 he offered in March and extended the closing date by a month to June 12, according to a statement to the NZX... Read more

SeaDragon missed its annual earnings guidance as a downturn in sales pushed down prices of Omega-2 oil and says the final cost of its Omega-3 refinery will be more than previously expected. Earnings before interest, tax, depreciation and amortisation in the 12 months ended March 31 were "lower than previously indicated to the market," the Nelson-based fish oil refiner said in a statement. The shares were unchanged at 1.4 cents, the same level they started the year at.... Read more

Quickflix has gone into voluntary administration, the company said in an ASX filing this afternoon. Ferrier Hodgson – the company most recently known for overseeing Dick Smith's final days – has taken control... Read more

Air New Zealand shareholders are the latest group of investors being asked to sell their shares for less than they are worth. In a statement posted to the New Zealand stockmarket on Tuesday , Air NZ said Zero Commission NZ had notified the airline of its intention to write to selected Air NZ shareholders with an offer to buy shares at $2.70 a share. Air NZ shares were worth $2.71 each in Tuesday afternoon trading.... Read more

Spark overhauls executive team. Spark New Zealand's head of digital Tim Miles and ventures unit boss Rod Snodgrass will leave the country's biggest telecommunications company at the end of the year in an overhaul of its executive structure. The shares last traded at $3.54 and have gained 7.7% this year.... Read more

Peter Jackson, Fran Walsh resign as Park Road Post Production directors... Read more

Oaktree Capital, the US hedge fund that owns MediaWorks Investments, has imposed restrictions on spending or liabilities the media company's executives can incur without recourse to the board. The MediaWorks constitution sets a $2 million annual limit on any new investment, liabilities, or litigation by chief executive Mark Weldon and his team that hasn't been approved by directors... Read more

UK start-up Seekhana chooses NZ to launch new platform... Read more

P2 Power, a new, innovative energy provider, has launched the country’s first peer-to-peer solar power platform on Waiheke Island. Auckland-based P2 Power developed the technology, named SolarShare, to enable those who don’t have solar panels to buy solar power directly from those who contribute excess amounts to the grid... Read more

Climate Change Minister Paula Bennett is "taking advice" on whether to cancel some or all of the so-called 'dodgy' carbon credits bought mainly by power and petrol companies to cover New Zealand's future obligations to reduce emissions of greenhouse gases that cause climate change. Asked on TVNZ's Q&A programme last weekend about whether the government would cancel any of the 122.2 million tonnes of 'dodgy' credits, Mrs Bennett said she was "not ruling it out but it's not my focus right now."... Read more

Trade Minister Todd McClay says he sees no reason why big pharmaceutical firms would stop supplying new medicines in New Zealand as they have always done, despite threats from lobby group Medicines NZ over the government's stance on intellectual property protections under the Trans-Pacific Partnership agreement. Medicines NZ chairwoman Heather Roy, a former consumer affairs minister, has indicated drug companies may not bother to register drugs here unless the government makes more concessions on the TPP... Read more

Measuring taxpayer-funded investment in science using a simple dollar value approach is "stupid", says Motu economist Adam Jaffe, who is welcoming a new government big data project to allow richer measurements in the future. The Ministry of Business, Innovation & Employment was embarking on a process to create a "government-wide data infrastructure" which would make it easier to track the public science effort Jaffe said at the Future for Scientists in New Zealand conference at Wellington's Te Papa this morning... Read more

Over half of Rolleston is now connected to fibre broadband. Today 52 percent of homes and businesses in Rolleston are connected and benefiting from fibre broadband – a remarkable uptake rate that sees the town leading the country. New Zealand’s national ultra-fast broadband (UFB) uptake rate is currently a little over 20 percent with some towns approaching 30 percent. Rolleston is well ahead with 52 percent of its community connected... Read more

Insurance shake up. Shock Court of Appeal insurance decision means residential landlords are now liable for accidental damage caused by tenants. The long-running case involved a dispute between landlords, Andreas Holler and Katherine Rouse, and their tenants Kenji and Tieko Osaki... Read more

Airline "drip-pricing" is again under scrutiny in New Zealand after a ruling in Australia. Drip-pricing, or adding on extra costs after a headline fare is selected, is common practice, particularly for low-cost carriers. The Australian Competition and Consumer Commission (ACCC) has forced Jetstar and Virgin to warn passengers booking online that there might be more fees to pay when a flight is selected... Read more

A formerly bankrupt, struck-off lawyer is facing charges brought by the Serious Fraud Office for allegedly defrauding his bank. Edward Errol Johnston, 59, appeared in the Auckland District Court today on three charges of dishonestly taking or using a document... Read more

New Zealand businessman William Yan has been refused the chance to go to the Supreme Court over whether the police should be liable for losses incurred from the seizure of his assets. Yan, also known as Bill Liu, is number five on China's Top 100 extradition list, Prime Minister John Key said last week... Read more

Opinion/Analysis - Roger J Kerr says speculation on both the NZ and Australian currencies is back in vogue... Read more

Opinion/Analysis - Fran O'Sullivan: Weak measures solve nothing. John Key's calculated punt to threaten land taxes on foreign investors won't solve the Auckland housing crisis. It will play well among National's voting heartland. But it will not make home ownership more affordable for the many young New Zealanders who are finding it difficult to even get on to the Auckland housing ladder... Read more





Australian Headlines

Australian Market Report: The Australian share market has closed slightly lower as weaker prices for oil and iron ore weighed upon resources stocks. At 1615 AEST, the benchmark S&P/ASX 200 index was down 15.8 points, or 0.3 per cent, at 5,220.6 points, and the broader All Ordinaries index was down 15.6 points, or 0.29 per cent, at 5,283.6 points.... Read more

The Australian dollar has fallen back as traders take a breather before the US Federal Reserve meeting. At 5.45pm (AEST) on Tuesday, the currency was trading at US77.35 cents, down from 77.55c on Monday.... Read more

A surge in commodity prices will not be enough to save Scott Morrison overseeing a blowout in Budget deficits that will crimp the Turnbull Government’s election giveaways. Forecasters Deloitte Access Economics, in a report released today, said a combination of slow growth, static wages and low inflation means the Government faces the loss of another $21 billion over the next four years... Read more

Cheapest ANZAC Day petrol in 11 years... Read more

Tumbling fuel and fruit prices are likely to have kept a lid on inflation in the first few months of the year, leaving room for a rate cut by the central bank... Read more

Signs of an economic downturn plain to see... Read more

Budget 2016: Deficit likely to keep blowing out, Deloitte forecast warns... Read more

Chinese property investors remain interested in the Sydney and Melbourne markets despite a recent housing slowdown, an Australian architect working with Chinese developers says. Despite recent official warnings of a property slowdown, Chinese developers are still interested in putting their money into new Australian residential developments, architect Drew Dickson says... Read more

Treasurer Scott Morrison denies wealthy Australians benefit most from tax breaks for property investors. Analysis by the Grattan Institute shows the top 10 per cent of income earners receive almost 50 per cent of the tax benefits of negative gearing - which Labor wants to limit to new properties... Read more

Bracket creep tax cut on way: report. Australians earning more than $80,000 are set to get an income tax reprieve in a move to counter the effect of `bracket creep'... Read more

BHP Billiton has slashed its shareholder dividend and abandoned its progressive payout policy after a collapse in commodity prices forced it into a $US5.67 billion ($A7.84 billion) half year loss. The move had been expected after the resources giant was forced to take a $US7.2 billion writedown against its US oil and gas assets in December and as rivals Rio Tinto, Glencore and Vale all slashed their own payouts in recent weeks. BHP’s first half net loss was a far cry from its $US4.26 billion profit a year ago.... Read more

Marenica Energy Ltd received strong support for its U-pgrade technology from investors by raising $697,400 through a share purchase plan and placement, well in excess of the target of $500,000. A total of $506,000 was raised at $0.107 per share from the share purchase plan, exceeding the $400,000 underwritten amount... Read more

Boss Resources Ltd has appointed experienced uranium executive and ex-Kalahari Resources Plc founder, Mark Hohnen as chairman of the board of directors. Boss has increased the resource base at its Honeymoon project by 330% to to 52.5 million pounds of contained U3O8 at 640 parts per million since its acquisition in December 2015... Read more

BP fell into a hefty loss during the first quarter, hit by low crude prices and costs related to the 2010 Gulf of Mexico oil spill, the British energy giant said Tuesday. BP announced a net loss of $583 million (517 million euros) for the first three months of the year, which compared with a profit after tax of $2.6 billion during the first quarter of 2015... Read more

RBR Group Ltd has closed the acquisition of its Australian Registered Trading Organisation (RTO). It also has a Mozambican business administration subsidiary, PacMoz, which is cash flow positive and self-funding... Read more

Embattled media company Quickflix has appointed voluntary administrators after it fails to clinch a deal with rival, and investor, Stan. Quickflix founder Stephen Langsford, who once famously invited Netflix to come “through the front door” to compete in Australia, today issued a statement saying Ferrier Hodgson had been appointed as administrators... Read more

Australians have once again topped the list as the biggest Game of Thrones pirates, despite Foxtel revealing the latest episode of the mega-popular series generated the biggest subscription TV audience ever... Read more

Wellington-based med-tech company, Volpara​ Health Technologies, is listing on the Australian stock exchange to further its global growth. Volpara, which was established in 2009 under the name of Matakina Technologies, provides digital health 'solutions' to improve clinical decision-making for early detection of breast cancer... Read more

Austal has won a contract potentially worth $US9.9 million as part of its $US3.5 billion Littoral Combat Ship (LCS) program with the US Navy. The contract is for procurement and engineering efforts in support of scope changes on fiscal 2015 and fiscal 2016 ships. Austal shares were up four cents, or 2.61 per cent, to $1.57 at the close.... Read more

France has won a $50 billion contract to build Australia’s next fleet of submarines. Prime Minister Malcolm Turnbull confirmed this morning that shipbuilder DCNS will build the replacement for the Collins class submarine... Read more

A refugee from the old Soviet Union who delivered pizzas at night to earn a crust has been revealed as the mystery multi-millionaire behind Sydney’s biggest buyout of harbourfront property. Ukraine-born Leon Kamenev has been ­identified as the $80 million ­Vaucluse Harbourfront mystery buyer.... Read more

After the Terminus Hotel was abandoned for 30 years it sells for ‘around’ $5 million... Read more

Shares in tough seed breeder Abundant Produce have soared on debut, more than doubling their issue price in a performance that indicates continuing strong interest in the Australian food sector. Shares in the specialised seed producer, which breeds robust seed varieties for vegetables that can survive extreme conditions, climbed as high as 54 cents in a busy first day of trade on Tuesday, more than doubling their 20 cent issue price... Read more

The NSW government will allocate $63 million over the next year to design a single state-wide radio network to replace 70 emergency services communications networks currently in operation. Finance Minister Dominic Perrottet today said a single network for all of the state's police, emergency and essential services agencies would eliminate the inefficiencies that come from operating dozens of separate and overlapping networks... Read more

BlueScope Steel plans to raise $US300 million ($A388.93 million) on the US debt market as it takes advantage of a ratings upgrade and improved fund raising conditions. The steelmaker said it will raise the debt in the US high yield bond market through senior unsecured notes under Rule 144A. BlueScope shares closed down 21 cents, or 3.1 per cent at $6.57 each.... Read more

Western Australia’s health department has thrown in the towel in its hunt for a permanent chief information officer, instead handing the organisation’s IT leadership to a newly-appointed chief executive who has taken control of the state’s health support agency. WA Health hasn’t had a substantive CIO since 2010... Read more

Basslink has completed the first stage of repairs to its damaged Bass Strait cable by laying 1355 metres of new cable on the seabed. The company located the long-running fault on the electricity cable last month and advised a mid-June return to service. The faulted was first identified last December and has restricted electricity and data services to users since... Read more

The West Australian government has again been accused of planning to use taxpayer funds to campaign and set the groundwork for the sale of energy utility Western Power. Opposition treasury spokesman Ben Wyatt said the reshuffle of a utility sector advisory panel weeks out from the budget made him suspicious the government was seeking a mandate to sell Western Power and would use public funds to promote it through an ad campaign... Read more

Opinion - Michael Janda: Is Morrison right about 'mums and dads' and negative gearing? Ditching the naff political cliche of "mums and dads", what Scott Morrison is saying is that it's mainly the middle class who use negative gearing to get ahead. Michael Janda looks at whether this argument stacks up... Read more

Opinion - Ben Phillips: The tax myths that cloud our judgement. Polling shows voters want to tax their way to surplus rather than cut spending, but clouding the debate is the fact many Australians are confused by our tax system and myths still rule, writes Ben Phillips... Read more





International Headlines

U.S. Market Report: Energy shares lifted the S&P 500, while the Dow and Nasdaq remained little changed as investors await the outcome of a two-day meeting of the U.S. Federal Reserve. U.S. stocks had opened slightly higher, with the Dow briefly crossing the 18,000 mark, as oil prices rose 2.9 percent due to a weaker dollar and hopes for an easing of the oil glut.... Read more

North/South Americas Market Report: North and South American markets are mixed today. The Bovespa is up 1.96% while the S&P 500 gains 0.08%. The IPC is off 0.52%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The FTSE 100 gained 0.38%, while the DAX led the CAC 40 lower. They fell 0.34% and 0.28% respectively... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.61% and the Hang Seng rose 0.48%. The Nikkei 225 lost 0.49%... Read more

Oil markets rose about 3 percent on Tuesday as a tumbling dollar boosted commodities denominated in the greenback after bets the Federal Reserve will hold U.S. interest rates where they are. Crude oil futures also rose on the back of a 3-percent hike in U.S. gasoline and ultra-low sulfur diesel, or heating oil, prices. U.S. gasoline margins climbed as high as 4 percent in early trading in part on a series of refinery unit outages in the U.S. Gulf Coast market, traders said... Read more

Orders for long-lasting U.S. manufactured goods rebounded far less than expected in March as demand for automobiles, computers and electrical goods slumped, suggesting the downturn in the factory sector was far from over. Tuesday's report from the Commerce Department also implied that business spending and economic growth were weak in the first quarter. Prospects for the second quarter darkened after another report showed an ebb in consumer confidence in April... Read more

Solar developer SunEdison Inc, which filed for Chapter 11 bankruptcy protection on Apr. 21, has agreed to sell two energy projects in Chile to power company Colbun for an undisclosed amount, both companies said on Tuesday. SunEdison, once the fastest-growing U.S. renewable energy company, filed for Chapter 11 bankruptcy after a short-lived but aggressive binge of debt-fueled acquisitions proved unsustainable... Read more

DisneyLife goes offline in China after just 5 months... Read more

Procter & Gamble Co, the maker of Tide detergent and Gillette shaving products, reported a better-than-expected quarterly profit, boosted by cost-cutting and higher selling prices. However, P&G's sales declined for the seventh quarter in a row as higher prices weighed on volumes and as the company shrinks its vast product portfolio to focus on faster-growing brands such as Pampers diapers and Pantene shampoo... Read more

Apple revenue to shrink but options traders unfazed... Read more

Apple is about to announce that it had its worst quarter in 13 years. On Tuesday afternoon, Apple is expected to say that its sales and profit both fell last quarter -- a rarity for a company that has been growing at a rapid pace, even as it has become the largest technology company on the planet... Read more

U.S. fund managers' newfound love of media stocks will soon be put to the test. Shares of Time Warner Inc, Twenty-First Century Fox, and CBS Corp are all up by double digits since the start of the year... Read more

Oculus founder Palmer Luckey hit back at some of his most vocal critics on Reddit early Tuesday morning, calling one of them "an insufferable fanboy." Luckey and his Facebook-owned company have been accused of botching the launch of the Oculus Rift, a VR headset that went on sale in January.... Read more

Standard Chartered Plc shares surged after the bank reported a surprise first-quarter decline in loan impairments and capital increased more than some analysts estimated. Pretax adjusted profit fell 64 percent to $539 million, from $1.5 billion a year earlier, the London-based bank said in a statement Tuesday... Read more

Whirlpool just got sucked into the vortex of global turbulence. The washer and dryer maker's sales in North American were positive. But they tanked in almost all overseas markets, rocked by slow growth and the strong U.S. dollar. Whirlpool (WHR), the world's biggest appliance manufacturer, has become the poster child for the deep challenges facing multinational companies these days.... Read more

BP is still hurting from the oil price crash despite several attempts to slash costs. The company slumped to a second consecutive quarterly loss after three rounds of spending cuts last year that included shedding thousands of jobs by the end of 2017. It posted a net loss of $583 million in the first quarter of 2016, compared with a profit of $2.8 billion a year ago... Read more

Retail billionaire Sir Philip Green is feeling the heat in the U.K. The Topshop entrepreneur is the former owner of department store BHS, which stumbled into bankruptcy this week, putting 10,000 jobs at risk and leaving about 20,000 retirees and employees facing losses on their pensions. Now Green, who sold BHS just over a year ago, is facing calls to use his fortune to help guarantee the pensions. He and his wife are reportedly worth about $6 billion... Read more

VW takes global sales lead from shutdown-hit Toyota... Read more

Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to a dovish script this week, there would be no obvious trigger for a greenback rally and resulting cue for Chinese companies and savers to squirrel money out of the nation... Read more

Japanese car maker Mitsubishi Motors Corp said on Tuesday it used fuel economy testing methods that did not comply with Japanese regulations for 25 years, much longer than previously known. It said aggressive internal targets may have put pressure on employees to overstate the fuel economy of its vehicles, and would set up an external committee to investigate the matter... Read more

SK Hynix Inc., the world's second largest chipmaker, posted its lowest quarterly profit in three years Tuesday as slowing computer and smartphone demand hit chip prices. The South Korean company, a key Apple supplier, said net profit totaled 448 billion won ($390 million) in the January-March period, down 65 percent from a year earlier... Read more

South Korea's Growth Slows as Investment, Consumption Wane... Read more

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