ASB Securities Morning Brief for Monday, 25 April 2016
Monday, 25 April 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell from a record high as mixed results from the US reporting season weighed on global equity markets. Air New Zealand, Auckland International Airport and Tower declined. The S&P/NZX 50 Index dropped 40 points, or 0.6 percent, to 6,866.1. Within the index, 21 stocks fell, 20 rose and eight were unchanged. Turnover was $241.8 million... Read more

The New Zealand dollar is heading for a 0.1 percent weekly decline, having given up the gains that pushed it to a 10-month high, amid speculation rising commodity prices and an improving global economy argues for higher interest rates from the Federal Reserve. The kiwi traded at 69.09 US cents as at 5pm in Wellington, down from 69.73 cents late yesterday and little changed from 69.26 cents this time last week. The trade-weighted index fell to 72.76 from 73.19 yesterday... Read more

An OCR cut next week is a live call, but most economists think the Reserve Bank will wait a bit longer before cutting again. Anticipation is building as the countdown to the Reserve Bank’s OCR announcement next Thursday gets underway... Read more

Traders are evenly split on whether Reserve Bank governor Graeme Wheeler will deliver another interest rate cut next week, with the kiwi dollar flying above the central bank's projections, making imported products cheaper and keeping a lid on inflation... Read more

New Zealand Finance Minister Bill English scotched speculation that he is concerned about the Reserve Bank's performance after he stepped up his oversight of the central bank. English today released a letter setting out his expectations for the Reserve Bank board, which he penned in November last year for the first time... Read more

A land tax could be slapped on foreign buyers if new data shows overseas speculators are fuelling the residential property boom, Prime Minister John Key has hinted. Key said the Government was yet to make a call on a land tax but it was an option if foreign property speculation became "a runaway train"... Read more

Paris agreement could be ratified by NZ this year — Bennett... Read more

New Zealand has signed an historic climate change deal - and the Government says the pressure is now on business and households to get us to our target reduction in green house gas emissions. It has previously been estimated the Paris climate change accord will cost Kiwi households an $100 extra a year. The Paris agreement is the first to require all countries to tackle climate change and cut greenhouse gas emissions in a bid to limit global temperature rises to two degrees Celsius this century... Read more

A young couple who were told they would qualify for an $8000 government grant to help buy their first home are in shock after finding out they can only get half that. Feargus Norton, 23, has been in KiwiSaver since his parents opened an account for him when he was 15 - much longer than the minimum of three years required for a KiwiSaver HomeStart grant, and more than the five years required to get the maximum grant of $5000... Read more

The pros and cons of adding an insurance combo to your KiwiSaver. A look at the AMP KiwiSaver scheme that attempts to fend off circling sharks with an exclusive bundled insurance offering... Read more

NZX's milk price contract due for launch next month stands a good chance of success, despite the failure of most futures contracts, says Chicago-based futures executive Robert Chesler. Chesler, who is vice-president foods division at financial services advisory company INTL FC Stone, said he believed the contract would struggle to gain traction initially... Read more

Industry calls for Kiwi farmers to be allowed to grow cannabis. It's green, environmentally-friendly and growing in popularity around the world but some say a roaring cannabis market is about to pass New Zealand by. Growers and farmers are taking a keen interest in cannabis, as countries around the world legalise its cultivation for medicinal purposes. Some are looking at the plant's potential in light of falling dairy prices and restrictions around importing seeds, most recently due to an outbreak of the invasive weed velvetleaf.... Read more

Sky TV is warning shareholders about an unsolicited, low-ball offer from an outfit called Zero Commission. In an NZX filing, Sky says Zero Commission NZ has notified its intention to write to certain Sky shareholders with an unsolicited offer to buy their shares at $4.57 per share. Sky shares haven't been close to $4.57 since March 10 when they closed $4.55.... Read more

NZ finance company FE Investments (FEI) had its ‘B’ long-term and short-term credit ratings placed on CreditWatch Negative by Standard & Poor’s following the restructuring of its $1.7 million loan to loss-making wi-fi company Tomizone. Standard & Poor’s said it had changed the ratings on FEI in response to a potential increase in its credit risk through the Tomizone deal. It expects to lower its long-term rating to ‘B-‘ and the short term to ‘C’ if the finance company’s forecast risk-adjusted capital falls below 15 percent in the next two years... Read more

GE’s top global cybersecurity manager has checklist for NZ directors. At the Institute of Directors’ annual conference last week in Auckland, Tim MacKnight, the global chief information security officer (CISO) at GE, had a checklist for how directors should manage cybersecurity... Read more

New Zealand’s technology links and export earnings with Vietnam will ramp up over the next year, NZTech chief executive Graeme Muller says. Vietnam is Asia’s new tech manufacturing hub and New Zealand tech companies are setting up offices in Vietnam to escalate tech business... Read more

Farmers and rural business professionals in Gisborne will have an opportunity to develop their businesses and strengthen their networks with the launch of the Gisborne Rural Business Network Hub next week. Gisborne will host the inaugural event on Thursday 28th of April at Bushmere Arms... Read more

Mumu says 'namaste' to global surf brand O'Neill partnership. Yogis and entrepreneurs Lara Jane Maloney and Keli Dierings have barely had time to take a breath since starting their designer eco-friendly yoga mat brand. The Aucklanders launched their online store Mumu in February and now, they have partnered with American surf brand O'Neill​. The partnership will see O'Neill products sold on Mumu's online store and a collaboration between the two brands on a new line of yoga wear... Read more

Postie Plus' more than 100-year history has not all been smooth sailing. From being one of New Zealand's oldest and largest retailers to voluntary administration in 2014, the recent part of the journey has not been easy, but new owners Pepkor are asking customers to give the brand a second chance. In 2014, Postie Plus was facing pressure from challenges including competition, debt and distribution issues. The company had the worst performing stock on the NZX... Read more

Leading beverage manufacturer Coca-Cola (NZ) Amatil (CCA) has appointed former television front man Neil Waka to lead its communications team, as Corporate Affairs Manager. He will advise on media relations, strategic policies and initiatives, government and stakeholder relations and help drive positive engagement with CCA. He will also develop communications strategies to support CCA’s community partnerships including Coca-Cola Christmas in the Park and Pride Parade... Read more

The High Court has confirmed the Real Estate Agents Authority's power to seek a wider range of information about people applying to become agents... Read more

Opinion/Analysis - Martin Hawes: Beat the rate of return. Savings are usually better than investments at delivering long-term financial growth.... Read more

Opinion - Jim Rose: Envy is the biggest gain from public tax returns... Read more

Opinion - Gareth Morgan: The biggest tax dodge of them all. Much of the kerfuffle globally around tax dodging pertains to the “rich” whoever they are – not paying their fair share... Read more

Opinion - Christopher Niesche: Reality biting for property high-flyer. Sydney real estate agent John McGrath has made many millions out of the city's booming property market over the past three decades... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket retreated from its four-month high today as profit taking knocked resources stocks. In a volatile day's trade, the S&P/ASX 200 index fell 0.9 per cent at the open, rallied to break-even as Dalian iron ore futures soared, and sold off again to close down 36.3 points, or 0.69 per cent, at 5236.4 despite soaring iron ore prices.... Read more

The Australian dollar is sliding after a sharp fall in crude oil prices. At 1200 AEST on Friday, the currency was trading at 77.65 US cents, down from 78.08 cents on Thursday... Read more

The big number for the week will most likely be a small one with Australia's already low inflation rate expected to keep tracking down. The big question the small number prompts is whether it will be low enough to inspire another cut in official interest rates from the Reserve Bank.... Read more

The government has ruled out any changes to negative gearing today, putting home ownership front and centre of the upcoming election. The decision to leave negative gearing untouched in the May 3 budget is at odds with Labor’s pledge to axe the measure for all but new homes. Prime Minister Malcolm Turnbull said that Labor’s “reckless” changes would reduce property values... Read more

The Victorian Government is expected to reap more than $250 million over four years by lifting the royalty rate for companies mining brown coal. The royalty rate charged per gigajoule of energy will rise from 7.6 cents to 22.8 per cents under the measure, which will be announced in the state budget on Wednesday. Treasurer Tim Pallas said the move would bring Victoria into line with New South Wales and Queensland.... Read more

Leigh Creek Energy Ltd is heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare. Earlier in the month the company was granted a Gas Storage Exploration Licence GSEL 662 for an initial period of 5 years... Read more

Energy giant Santos looks to have turned a corner, as spending and cost cuts offset weak oil prices to deliver a quarterly revenue increase. Sales revenue rose one per cent to $835 million in the three months to March, as production increased by 11 per cent to 15.6 million barrels of oil or equivalent (mmboe). Shares in the company dropped one cent to $4.62.... Read more

St George Mining Ltd has been granted a trading halt by the ASX, pending assays from exploration drilling at the Mt Alexander Project in Western Australia. The program will cover 1425 metres and test eleven targets for massive nickel-copper sulphide mineralisation... Read more

Struggling steelmaker Arrium to be boosted by new import duties imposed on cheap Chinese steel. Import duties will be imposed on "unfairly priced" Chinese steel products by the Federal Government in a bid to help embattled South Australian steelmaker Arrium remain competitive.... Read more

Ratings agency Fitch has downgraded its outlook for two major Australian energy producers due to low oil prices and weakness in liquefied natural gas markets. While thecredit ratings for Woodside and Origin Energy remain unchanged, Fitch has downgraded its outlook on the ratings for each company, from stable to negative.... Read more

White Cliff Minerals Ltd recently commenced field exploration targeting a 45 g/t gold zone at its 89% owned Aucu gold deposit in the Kyrgyz Republic. The company has a maiden resource at Aucu of 1.15 million tonnes grading 4.2 g/t gold for 156,000 ounces of contained gold at a 1 g/t gold cut off... Read more

Queensland Nickel's creditors have raised serious concerns about a government plan to pursue Clive Palmer and make sure taxpayers don't foot the bill for his workers' entitlements. Creditors have voted to liquidate the federal MP's company, and the federal government has said taxpayer funds will be used to pay most of $74 million owed in entitlements to almost 800 sacked workers... Read more

Liquidators expect federal MP Clive Palmer to fight the recovery of assets that could see Queensland Nickel creditors get some of the $200 million they're owed.... Read more

Shaver Shop will rapidly build its store network in the next three years as it ramps up expansion plans ahead of a possible public listing. The 96-store chain was believed to be pursuing a $80 million IPO earlier this year but chief executive Cameron Fox said a float was only one of a number of options under consideration for the 30-year old business... Read more

Property crowd-funding entity DomaCom has received $70 million in pledges in its bid for Kidman... Read more

Tavistock MD urges Australians to invest in agriculture. One of the biggest foreign investors in the nation’s cattle sector has a sobering perspective on the debate surrounding foreign investment in agriculture and, specifically, delays to the approval of the sale of the iconic Kidman cattle company... Read more

Groceries making Aussies anxious as food puts a strain on the household budgets... Read more

Supermarket giant Aldi gears up for price war... Read more

The mysterious case of synchronised petrol prices and why Australians are getting screwed. Every so often, the price of petrol rises mysteriously. What costs $1.10 on Wednesday costs $1.30 by Saturday. Why? The case of the extra 20 cents per litre should be an easy one to solve. There are only a handful of major fuel retailers in Australia. Caltex and Woolworths are in a joint venture. Coles bought out Shell. Then there are 7-Eleven and BP. These players control the majority of the market.... Read more

Fastbrick Robotics Ltd is preparing to outline details on the proof of concept tests on the Hadrian 105 Technology Demonstrator, with the ASX granting the company a trading halt to prepare.... Read more

The continued decline of big mainstream beer brands Victoria Bitter and Carlton Draught is causing major headaches for owner SABMiller five years after it paid $12.3 billion for the Foster's beer business. The global brewing conglomerate has been unable to stem the long and slow slide of VB and Carlton Draught, the two biggest brands in the prized Australian portfolio, even though stablemate beers Carlton Dry and Great Northern are making solid headway... Read more

A Wine Mogul Says Fidelity Cheated Him Out of Millions. Peter Deutsch hit it big bringing affordable Australian wine to the U.S. Then he poured a fortune into a troubled Chinese stock. And when his brokerage stood in his way, he fought back... Read more

Senate inquiries into issues such as white collar crime, tax evasion and the collapse of listed retailers are at risk of being derailed by Malcolm Turnbull's drive for an early election. Just 14 of the 67 current Senate inquiries will report back before the May 11 deadline for the Prime Minister to call his expected double dissolution election for July 2, leaving the rest hanging in the balance... Read more

Eastern state gas suppliers and pipeline operators have abused their monopoly pricing power to gouge higher prices out of domestic users according to a detailed study from the Australian Competition and Consumer Commission. In a damning assessment of east coast gas industry, the ACCC found that, not only was there evidence that a large number of pipeline operators have been engaging in monopoly pricing, but there was little regulatory pressure to stop the market abuse... Read more

Perth's business community is mourning the death of one the city's best, and most popular, dealmakers after Geoff Rasmussen lost his battle with cancer last night. He was 45. Adrian Arundell, a director at advisory firm Azure Capital which was run by Mr Rasmussen, confirmed the news this morning... Read more

A Melbourne photographer has accused a major international fashion retailer of copying one of his images in an advertising campaign. Photographer Jack Hawkins said a photo he took more than a year ago and circulated on social media bares a striking likeness to an image used in a Calvin Klein advertisement... Read more

Opinion - Michael Pascoe: Federal Budget 2016: Unhappy Scott Morrison's significant challenge... Read more

Opinion/Analysis - Michael West: Beaconsfield-style disasters should put executive bonuses at risk. It was on this day, 10 years ago, that the Beaconsfield gold mine in Tasmania collapsed, killing 44-year-old Larry Knight and trapping two other miners nearly a kilometre beneath the surface. The two miners, Brant Webb and Todd Russell, were rescued two weeks later as the drama unfolded on television screens around the world... Read more

International Headlines

North/South Americas Market Report: North and South American markets finished mixed as of the most recent closing prices. The IPC gained 0.12%, while Brazil's Bovespa was off 1.35%. Shares in U.S. were unchanged with the S&P 500 at 2,091.58... Read more

European Market Report: European markets finished broadly lower on Friday with shares in London leading the region. The FTSE 100 is down 1.11% while Germany's DAX is off 0.60% and France's CAC 40 is lower by 0.29%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 1.20% and the Shanghai Composite rose 0.22%. The Hang Seng lost 0.72%... Read more

President Barack Obama said he expects the U.S. Congress to vote on a trade deal with Asia-Pacific nations after the primary season over, and that his administration will complete negotiations on a similar pact with the European Union by the end of his presidency... Read more

Thousands of people have marched in the German city of Hannover against a proposed Transatlantic Trade and Investment Partnership (TTIP) deal. They say the deal would drive down wages, and weaken environmental protection and labour rights... Read more

First-round bidders for Yahoo! Inc. could find out as early as next week whether they’ve made it through to the next stage. Yahoo’s advisers will spend the weekend narrowing down the field of bidders after receiving more than 10 initial offers for the Internet company ranging from about $4 billion to $8 billion, according to people with knowledge of the matter... Read more

Even with a spate of high-profile earnings disappointments in recent days from the likes of Caterpillar, Microsoft and Google's parent company, the profit recession that has dogged U.S. stocks since last fall is still expected to come to an end in the second half of this year. But while that probably protects Wall Street from another vicious downdraft like the one that came with the start of the year, the return to positive earnings growth is unlikely to drive prices sharply higher, and buying stocks now with the market back near its record high could prove a rough bet... Read more

For all the attention paid to the massive snap-back in riskier stocks in the last two months, a somewhat less glamorous group has quietly been reaching record valuations. They’re the companies that peddle soap, diapers and ready-to-eat food that also happen to be the market’s biggest payers of dividends. ... Read more

Apple, Exxon expected drag on earnings during peak week... Read more

Disappointing earnings reports erased $68 billion from shares of Netflix Inc., Microsoft Corp. and Alphabet Inc. and sent the Nasdaq 100 Index to its biggest weekly drop since February. Netflix saw its stock fall the most among the trio after rattling investors with forecasts for weakening subscriber growth overseas. The Los Gatos, California-based online video provider slid 14 percent, the largest drop since September... Read more

Ford not interested in tie-up with Fiat Chrysler: CEO Fields... Read more

Airline fares are down and likely to stay that way for a while, American Airlines told investors Friday. That's good news for passengers but bad news for airline stocks, which were lower across most of the U.S. industry... Read more

EU Seeks Tax Deal to Counter Populists Bolstered by Panama Leaks... Read more

A bond-market gauge of Germany’s inflation outlook reached a 2016 high this week amid a jump in commodity prices and European Central Bank President Mario Draghi’s forecast that price growth in the euro region should pick up in the second half of the year... Read more

Drugmaker Novartis aims to dispose of a 13.5 billion Swiss franc ($13.8 billion) stake in its local rival Roche (ROG.S) and has already hired banks to support the selling process, a Swiss paper reported on Sunday. The world's biggest prescription drugmaker started building up the stake - worth 33 percent of Roche's voting shares - as a basis for a possible merger more than a decade ago, but the plan never materialized... Read more

A German emissions probe conducted following the Volkswagen scandal suggested that some Fiat vehicles showed irregular levels of diesel exhaust pollution if the cars ran for longer than 22 minutes, Bild am Sonntag said. A spokesman for Fiat in Italy declined to comment... Read more

UK retailer BHS could file for administration as early as Monday, threatening 11,000 jobs, the BBC understands. Sources close to the owners told the BBC that "things don't look good". Talks are continuing with Sports Direct to buy some of BHS's 164 stores but it is understood any buyer would only do so if it did not have to take on its £571m pension deficit... Read more

The owners of BHS were tonight holding eleventh-hour talks to prevent the high street stalwart from falling into administration tomorrow and threatening 11,000 jobs. Retail Acquisitions, a consortium led by former bankrupt Dominic Chappell, were this evening struggling to keep the 88-year-old high street stalwart afloat... Read more

HSBC Holdings Plc shareholders approved the bank’s executive pay by a larger majority than last year after Chief Executive Officer Stuart Gulliver took a bonus cut and the bank lengthened deferrals for top managers. More than 90 percent approved the executive pay report for 2015, after about 24 percent of shareholders opposed it in last year’s vote, the bank said Friday at its annual general meeting in London... Read more

The family behind Europe's biggest steelmaker has lost more than £2bn in the past year, the annual Sunday Times Rich List has revealed. Lakshmi Mittal, owner of ArcelorMittal, who held the top slot in 2008 with £27.7bn now has a fortune of £7.12bn and is number 11 on this year's list. The number of London billionaires fell for the first time since the financial crash - from 80 in 2015 to 77... Read more

Proxy adviser Glass Lewis has recommended shareholders in Credit Suisse reject the amount of remuneration set for the bank's management and board members, Swiss newspaper NZZ am Sonntag reported. The advisory firm criticized a lack of transparency at the world's fourth biggest private bank in connection with the termination package of former Chief Executive Brady Dougan, the paper said, citing a Glass Lewis analysis... Read more

Sir Arnold Clark has become Britain's first billionaire car dealer, according to the Sunday Times Rich List 2016. The newspaper has estimated the 88-year-old and his family's fortune at just over £1bn, putting them at 114th in the list... Read more

Hong Kong-based REX Global Entertainment Holdings, which specializes in entertainment-related businesses, has purchased a stake in Russia’s Yota Devices for $46.5 million.... Read more

Toyota to launch plug-in, hybrid cars in China in 2018... Read more

Japan's Toshiba Corp is in final talks to replace President Masashi Muromachi, with Senior Executive Vice President Satoshi Tsunakawa a leading candidate as it aims to turn the scandal-hit firm back to growth, a source told Reuters on Sunday... Read more

They may not realize it yet, but Japan Inc.’s executives are increasingly working for a shareholder unlike any other: the nation’s money-printing central bank. While the Bank of Japan’s name is nowhere to be found in regulatory filings on major stock investors, the monetary authority’s exchange-traded fund purchases have made it a top 10 shareholder in about 90 percent of the Nikkei 225 Stock Average, according to estimates compiled by Bloomberg from public data. It’s now a major owner of more Japanese blue-chips than both BlackRock Inc., the world’s largest money manager, and Vanguard Group, which oversees more than $3 trillion.... Read more

Mitsubishi Motors Corp is unlikely to issue an earnings forecast for the current financial year when it announces annual results this week, due to uncertainty about the financial impact of its misleading fuel economy data, a person close to the company told Reuters on Sunday... Read more

Opinion - Larry Elliott: Much like the Queen, we're all going to be working a lot longer. The Queen exemplifies a trend that will have a profound economic effect in the future, and needs to be addressed now... Read more

Opinion - Roger Bootle: The things economists know. . . and don’t know ... Read more

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