ASB Securities Morning Brief for Tuesday, 28 July 2015
Tuesday, 28 July 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell in lighter than usual trading, led by MightyRiverPower, as investors wait on a decision over the future of the Tiwai Point aluminium smelter. Fletcher Building and Ebos Group declined. The S&P/NZX 50 Index declined 22.12 points, or 0.4 percent, to 5872.06. Within the index, 26 stocks fell, 16 rose and eight were unchanged. Turnover was $69.7 million... Read more

The New Zealand dollar rose against the US dollar ahead of a speech by Reserve Bank governor Graeme Wheeler on Wednesday and a US interest rate review at the end of the week. The kiwi edged up to 65.88USc at 5pm in Wellington from 65.71USc at 8am and 65.76USc cents on Friday in New York. The trade-weighted index was little changed at 70.22 from 70.30 last week... Read more

John Key says a tax on foreign ownership would be 'better than a ban'... Read more

Prime Minister John Key has blamed the way the Labour-led government of the 2000s structured the free trade agreement with China for making it impossible for a future government to impose a ban on land sales to foreign investors, even though he doesn't support such a ban... Read more

There is scope for a 3 cents a litre fall in petrol prices, according to the Automobile Association. "At (current) commodity prices there is room for a price drop, easily 3cents a litre on all grades," AA analyst Mark Stockdale said... Read more

New Zealand banks approved three times as many mortgages for investors as they did for first home-buyers over the past year, Reserve Bank figures show. The Labour Party says the disparity in lending is further evidence that Auckland's housing market has become a "speculators' paradise"... Read more

Apartments are Auckland’s future. Greater densification is on the cards for Auckland - but Aucklanders will need to better embrace apartment living, commentators say.... Read more

Call for more height in Auckland suburbs. A developer is calling for a taller height limit of three storeys to go with no controls on density in Auckland's suburbs. Mark Todd of Ockham Residential said there should be one height limit of three storeys in the two residential zones where density controls are being relaxed... Read more

FMA issues first stop order against company taking deposits for Auckland property investment... Read more

Realty bosses back foreign buyer register. Century 21 chief says overseas investors should build new houses to add to stock.... Read more

BNZ's push for an expanded share of the mortgage market just became very aggressive. The bank has unveiled a -30 basis points cut from its previous 4.99% two-year rate to 4.69%... Read more

Fonterra Co-operative Group has put on hold plans to develop an Equity Partnership Trust that would have given its 10,500 farmer suppliers access to investor capital to help them with the compulsory purchase of Fonterra shares when they increase milk production... Read more

As Fonterra's NZX-listed units languish near an all-time low, analysts say the market will remain cool on the dairy giant until it begins delivering evidence of operational improvements and better financial results. The units, which provide outside investors with access to the co-operative's dividend stream, hit a record closing low of $4.60 last month.... Read more

Chinese owned Yashili International Holdings will collaborate with French dairy giant Danone on its new $212 million plant in Auckland, as part of a wider deal for the Chinese milk formula maker to buy Danone's Dumex China brand amid tightening competition in the world’s largest infant formula market... Read more

Concentrating on marketing its cuts rather than processing them is paying dividends for a niche meat exporter. Hastings-based Firstlight Foods markets premium grass-fed Wagyu beef and red deer venison cuts on behalf of its 160 farmer-suppliers but outsources processing of the animals to third-party operators... Read more

New Zealand onion growers are optimistic about a better season for the country’s largest fresh vegetable export after suffering a 16 percent decline in the past year as poor weather affected yields and returns were hit by a higher currency and increased competition from northern hemisphere rivals. Exports of onions fell to $81.4 million in the year through June, from $97.1 million a year earlier, according to Statistics New Zealand data. Export volumes declined 3.5 percent to 174,000 tonnes, according to the data... Read more

Bethunes Investments, formerly known as Mowbray Collectables, is looking to raise up to $2.87 million at a 93 percent discount to the current share price, and wants new investors to help keep its struggling auction houses afloat. The Wellington based antiques dealer is looking to raise cash via a 15 for one renounceable rights offer, priced at 1.5 cents per share, with plans to raise a minimum of $1.5 million, it said in an announcement on the NZX... Read more

Pathfinder banks on property. Pathfinder has passed the $100 million mark in funds under management and launched its fourth fund. Its latest offering is focussed on listed global property stocks, which is being seeded by a financial planning firm... Read more

Heieneken extracts fatter annual dividend from DB than profit in 2014... Read more

G3 Group, the mail operations and document management company listed on the new small-cap NXT market, says first-quarter trading was in line with targets. Gross margin as a percentage of revenue was 24.5 per cent in the three months ended June 30, tracking closely with its 21.9 per cent full-year target, the Auckland-based company said. Operating margin as a percentage of revenue was 22.7 per cent in the quarter, against an annual target of 20.1 per cent... Read more

G3 Group, the mail operations and document management company which is listed on the new small-cap NXT market, says first quarter trading was in line with targets. ... Read more

The FSC wants RFAs to choose: Operate at the level of AFAs or declare themselves salespeople. Submissions closed last week on the Financial Advisers Act review issues paper. Among them was one from the FSC, which represents product providers... Read more

Robo-advice – The regulator’s choice?... Read more

Wellington craft breweries are impressing festivalgoers in the United States beer capital. Panhead, Tuatara, Garage Project, Parrot Dog and Yeastie Boys gave the US beer capital of Portland a taste of New Zealand this week at the Oregon Brewers Festival... Read more

Developer Willis Bond has taken deposits on more than half of its planned 164 new Wynyard Quarter apartments. Roger Twose, project director of Willis Bond which is developing the 113-unit Wynyard Central and 51-unit 132 Halsey blocks, said demand had been strong... Read more

Westpac has denied that a mass restructuring is underway with hundreds of jobs on the line. First Union general secretary Robert Reid said he had received a tip that hundreds of Westpac staff faced losing their jobs "but the bank is still denying that it is large-scale"... Read more

TVNZ says it will be disestablishing about 30 roles in the next couple of weeks. In a statement, chief executive Kevin Kenrick says, "This is about responding to the rapidly changing media market and aligning resources towards shaping TVNZ’s future – particularly in the digital space."... Read more

Liquidators go after 'fictitious' profit paid out to investors. A bust company that owes clients $7 million has been put into liquidation, with allegedly "fictitious" profits paid out by the Christchurch firm being targeted for possible clawback. Arena Capital, which traded as BlackfortFX, has been in receivership since May after the Financial Markets Authority (FMA) froze its assets.... Read more

Justice Forrest Miller, who sits on the Court of Appeal, says class actions provide an extra avenue to help enforce the Commerce Act, but legislation governing the way they should be run is still "in purgatory."... Read more

Luigi Wewege firm appeals against FMA move... Read more

FMA issues first stop order against Green Gardens Finance Trust taking public deposits... Read more

Opinion - Peter Lyons: Market forces work against needs of society. The lead articles on the evening news last week highlighted the fragility of this government's economic philosophy. The Serco debacle, the Charter schools' experiment and the Auckland housing market contain a commonality. Market forces and the self interest of the private sector do not always deliver the best outcomes for a society.... Read more

Opinion - Mike Yardley: Stamp duty could 'stop the rot' caused by foreign house buyers... Read more

Opinion - Liam Dann: Fonterra at crossroads as slump fuels discontent. Dairy slump exposes areas of discontent for farmers and vulnerability of company... Read more

Opinion - Jane Kelsey: Labour needs to stand firm on TPPA... Read more

Australian Headlines

Australian Market Report: A rebound in mining stocks has helped push the Australian sharemarket to its first stronger close in four sessions. At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 was up 23.8 points, or 0.43 per cent, to 5589.9, while the broader All Ordinaries index had gained 22.4 points, or 0.4 per cent, to 5579.2.... Read more

Weak commodity prices have kept the Australian dollar trading within a narrow range below US73c. At 5pm, the currency was trading at US72.79c, down from US73.02c on Friday. The Aussie dollar dropped to US72.60c, its lowest level since May 2009, on Friday night following surprisingly weak Chinese manufacturing data... Read more

Treasurer Joe Hockey flags removal of GST threshold for all overseas online purchases... Read more

Rates, jobs encouraging spending. Low interest rates, a pick-up in jobs growth and a strong lift in new home building are all helping to support retail spending. News figures suggest buoyant shopping is likely to extend into at least the next three months... Read more

Australia should be aspiring to a target of 50 per cent renewable energy by 2030, Labor says. In addition the party's national conference has agreed to a policy platform including application of carbon emission standards on motor vehicles... Read more

Prime Minister Tony Abbott has described Labor’s 50% renewable energy target by 2030 as “truly bizarre” which will lead to “massive overbuild of wind farms”.... Read more

Consumer confidence may have been unsettled in recent months, but that hasn't stopped people applying for loans or new credit cards. It suggests that in a low-interest rate environment Australia's retail and housing sectors will continue to benefit, and help offset the impact of the downturn in mining-related construction, credit data provider Veda says... Read more

The National Australia Bank has joined the Commonwealth Bank and ANZ Bank in raising the interest rates it charges property investors, following measures announced by the banking regulator. NAB will lift variable interest rates on interest-only home loans and line of credit facilities by 0.29 percentage points... Read more

Westpac will look to raise $750 million through a notes offer to lift its capital reserves ahead of a move from the banking regulator... Read more

Older Australians are increasingly accepting of the need to work until later in life but many are still overly optimistic about having saved enough to live comfortably once they do retire. A report, released on Monday by the Financial Services Council and Commonwealth Bank, says the notion of retiring at 60 is becoming redundant, with 72 per cent of Australians over the age of 50 willing to stay in the workforce for longer... Read more

The Maritime Union of Australia is willing to use its power over the country's ports to disrupt a new free trade deal with China. MUA Queensland branch secretary Bob Carnegie says his union controls all imports and exports and they're prepared to act against the deal, which he says is aimed at "breaking the back of trade unionism"... Read more

Goldminer Northern Star Resources sold a record amount of gold in the June quarter, putting it well within its sales guidance for the full year. Western Australia-based Northern Star is the second biggest gold producer listed on the Australian share market. Shares in Northern Star closed 15 cents, or 7.43 per cent, higher at $2.17.... Read more

Shares in Atlas Iron have fallen heavily after rejoining the boards of the ASX following its $87.2 million capital raising... Read more

Phoenix Gold has advised that Evolution Mining is now its largest shareholder with a stake of about 19.8% after acquiring 49 million PXG shares at $0.12 each... Read more

Apartment developer Finbar has forecast a full-year profit of $25.5 million, down from a record $36.5 million the previous year. Finbar shares were up three cents, or 2.42 per cent, to $1.27 at the close.... Read more

Australian Pacific Coal's shares in pre-open... Read more

Sunbird Energy has been granted an ASX trading halt in relation to financing.... Read more

The Indian gold baron who paid $US200 million ($274 million) for one of the world's largest gold refineries on Monday insists that an Australian acquisition is next on his agenda. Rajesh Mehta, whose company Rajesh Exports is one of the world's biggest private sector gold buyers and the operator of more than 80 jewellery stores across the subcontinent, is the new owner of the Valcambi gold refinery in Switzerland, after buying it from a syndicate led by Newmont Mining on Monday... Read more

Shareholders of internet services provider iiNet have overwhelmingly approved a proposed $1.6 billion takeover of the company by TPG Telecom. A merger of iiNet and TPG will create Australia's second biggest fixed-line internet provider, behind Telstra... Read more

Shares in Seafarms were higher after the company announced its $1.45 billion aquaculture plan had achieved “major project status” with the NT and Federal governments. Seafarms shares closed up 0.2 cents, or 2.99 per cent, to 6.9 cents at the close after touching an intraday high of 7.3 cents.... Read more

Ten CEO Hamish McLennan resigns; ACCC closely examining Foxtel deal... Read more

Outgoing Ten Network boss Hamish McLennan has declared his work is done, but he could hardly be said to be leaving the third-placed commercial broadcaster in outstanding shape... Read more

Interest rate computer glitch costs Westpac over $1m a day. Westpac Banking Corp is missing out on $1 million a day that its competitors are now creaming from landlords because its computer systems will not allow it to charge differing interest rates... Read more

Restaurant Brands International, parent of Burger King and Tim Hortons, posted a stronger-than-expected second quarter profit as both chains recorded same-store sales growth driven partly by new product launches. Ontario-based Restaurant Brands said Tim Hortons same-store sales were up 5.5 per cent, while Burger King same-store sales rose 6.7 per cent. Systemwide sales were up 8.4 per cent and 11.6 per cent, respectively, at the burger and coffee chains... Read more

A crackdown on international student visa rorters from India and Nepal has hit higher education provider Navitas. The Perth-based company says enrolment growth has been flat in Australia in the 12 months to June 30 due to a number of challenges. Its share price was down more than six per cent, or 29 cents, at $4.27 at 1325 AEST.... Read more

Angry Pizza Hut franchisees have launched legal action against the company after a price war with rival Domino's forced them to slash the price of pizzas, sending many out of business... Read more

ICAC targets TAFE IT manager over alleged $1.7m fraud... Read more

An internal tax office briefing document, released to the ABC under freedom of information laws, warns people will commit fraud by taking illegitimate advantage of the Government's instant asset write-off for small business. The ability to instantly deduct the cost of assets worth up to $20,000 was central to the Government's suite of small business measures announced in the May budget... Read more

Opinion - Michael Pascoe: Gold is no miracle metal for investors... Read more

International Headlines

U.S. Market Report: The Dow Jones Industrial Average saw a triple-digit tumble Monday, helping lead a sharp drop in the main U.S. indexes sparked by a Chinese stock-market rout. Investors sold risky assets such as equities and commodities and piled into havens such as Treasurys and gold. The Dow Jones Industrial Average fell 135 points, or 0.8%, to 17,433, with all of its 30 components trading lower.... Read more

North/South Americas Market Report: North and South American markets are mixed. The S&P 500 is higher by 22.81%, while the IPC is leading the Bovespa lower. They are down 0.94% and 0.66% respectively... Read more

European Market Report: European markets finished sharply lower today with shares in France leading the region. The CAC 40 is down 2.57% while Germany's DAX is off 2.56% and London's FTSE 100 is lower by 1.13%... Read more

Asian Market Report: Asian markets finished broadly lower today with shares in China leading the region. The Shanghai Composite is down 8.48% while Hong Kong's Hang Seng is off 3.07% and Japan's Nikkei 225 is lower by 0.95%... Read more

Oil prices fell further in Asia Monday, hurt by a slump in the manufacturing sector in China, the world's top energy consuming nation. A strong dollar and signs of increasing US oil production added pressure on prices, which have already been depressed by a global crude oversupply, analysts said. US benchmark West Texas Intermediate (WTI) for September delivery fell 20 cents to $47.94 and Brent crude for September tumbled eight cents to $54.54 in afternoon trade.... Read more

Television-maker Vizio files for IPO... Read more

Extreme fear is back in the stock market, according to CNNMoney's Fear & Greed Index. Just how bad is it? The index has a 100 point scale -- with 0 indicating nightmare level fear and 100 signaling "buy everything in sight" greed. On Monday, the Fear & Greed Index fell as low as 7... Read more

McGraw Hill Financial said Monday it has agreed to buy SNL Financial from private-equity firm New Mountain Capital LlC for about $2.225 billion in cash. The financial data company and owner of Standard & Poor's ratings agency said the impact of the deal will be partly offset by tax benefits of $550 million... Read more

The Federal Communications Commission voted Friday to approve AT&T’s $49 billion acquisition of DirecTV, blessing the biggest merger of the year and ending a months-long negotiation between AT&T and the nation’s top telecom regulator. The deal gives AT&T control of DirecTV’s 20.4 million customers and valuable programming, turning it into a media giant in addition to a telecommunications company.... Read more

Federal safety regulators said Sunday that Fiat Chrysler Automobiles will pay a record $105 million for mishandling 23 recalls. The National Highway Traffic Safety Administration said Chrysler admitted to violating federal safety law. The agency has been pressing the automaker over its handling of recalls for several years... Read more

Planet Fitness sets terms for planned IPO to raise up to $216 million... Read more

U.S. companies with the most to lose in China. China's stock market is in freefall mode again. If it gets any worse, that could become a problem for some big American companies.... Read more

China and the dollar may be about to collide... Read more

The Israeli drug maker Teva Pharmaceuticals said on Monday that it had agreed to acquire the generic drug division of Allergan for $40.5 billion in cash and stock. The transaction, if completed, would be the latest in what has been a frenzied period of deal-making in the pharmaceutical sector as drug makers look to strengthen their mix of products through acquisitions... Read more

IMF warns of gloomy eurozone outlook. Reforms and action needed urgently as fears over Greece, high unemployment, structural flaws and a still-shaken bank sector slow growth... Read more

EU steps up PR campaign to overcome U.S. trade deal hostility... Read more

Libor trial: jury considers verdict in Tom Hayes case. Former trader being tried in London has denied conspiring to defraud by manipulating interbank lending rates... Read more

Android phones can get infected by merely receiving a picture via text message, according to research published Monday. This is likely the biggest smartphone flaw ever discovered. It affects an estimated 950 million phones worldwide -- about 95% of the Androids in use today... Read more

‘Grexit’ Could Have Been a Better Option, Survey. The last-minute deal struck in July between Greece and its creditors for a fresh bailout for the country has left investors skeptical. Almost half of more than 400 global managers surveyed by Nomura say ‘grexit’, or a Greek exit from the eurozone, would have been a better option for the country, according the research released Monday.... Read more

Greece's secret plan to hack its own tax system. Greece's former finance minister was ready to hack into the country's tax collection system as part of contingency planning for a possible exit from the euro.... Read more

Will China's slump sink Europe's recovery?... Read more

Scottish government turning to more private money for public projects... Read more

Irish airline Ryanair has reported a 25% rise in quarterly profits and says its full-year results will be at the top end of expectations. Net profits for the three months to June were €245m (£174m), up from €197m a year earlier, it said. Revenues in the quarter grew by 10% to €1.5bn... Read more

German business confidence improved more than expected in July, pointing to robust growth in Europe's largest economy this year. The Ifo think tank said on Monday its business climate index rose to 108.0 in July from a revised 107.5 in June and was higher than a forecast of 107.5 in a Wall Street Journal poll of analysts... Read more

The Chinese stock markets plummeted Monday in the biggest one-day drop since 2007. The Shanghai Composite Index fell 8.5 percent, weighing on Japanese, Hong Kong and U.S. markets. The trend is raising doubts about the effectiveness of Beijing’s recent efforts to prop up the market, as well as the health and direction of the world's second-largest economy.... Read more

Why Uber is winning in China, where most U.S. tech companies have failed... Read more

China's market meddling could do more harm than good... Read more

Nestlé’s New India Head: ‘We Can Overcome’. Nestlé SA will use advertising and social media, as well as the courts, to try to repair the damage done to its reputation by a recent food scare in India, said the newly-appointed head of the company’s Indian arm... Read more

Opinion - Chuck Jaffe: Donald Trump fails the fiscal-responsibility test in his fund picks... Read more

Opinion - Nigram Arora: Which is more likely, $33 or $75 oil? At a time when stocks are hitting highs, oil prices have been cut in half. Relative to past prices, it is tempting to call oil “cheap” and buy it... Read more

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