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

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, pushing the benchmark index to a new record as continued lower interest rates nudged investors to seek better returns from equities. Steel & Tube Holdings and Fisher & Paykel Healthcare gaining while Comvita and Restaurant Brands fell. The S&P/NZX50 Index gained 12.01 points, or 0.2 percent, to 7226.06. Within the index, 17 stocks gained, 31 fell and three were unchanged. Turnover was $108 million... Read more

The New Zealand dollar is heading for a 1.5 percent weekly decline against the greenback, reflecting the Reserve Bank's signal that it needs to cut interest rates to drive down the currency and stoke inflation. The kiwi traded at 70.03 US cents at 5pm in Wellington, from 69.88 cents late yesterday and down from 71.09 cents a week ago. The trade-weighted index was at 75.06, little changed from 74.97 yesterday and down from 76.01 a week ago... Read more

Innovation is key when it comes to building successful companies, but small business owners may be feeling out of their depth in changing things up. MYOB research shows 61 per cent of small business owners in New Zealand feel they face barriers in innovating their business.... Read more

Investors Displeased by Central Banks while May focus on Brexit. It was a very disappointing day for investors as nothing came good out of the ECB meeting and on the earnings front, there were no upbeat news either... Read more

Labour’s Finance spokesperson Grant Robertson told TV One’s Q+A programme that the Reserve Bank’s mandate is broken. ‘Actually, it is. And we do need to review monetary policy. Again, I don’t see any sign of the government doing that. But the Reserve Bank Governor has come to our Parliamentary Select Committee the last three times hoping to have brought the currency down and walked in and it’s gone up. So there are problems with that... Read more

Banks care more about income than equity. Homeowners who want to tap into their increased equity in their homes are being warned they may be disappointed, unless they have had an income boost, too. Mortgage broker Christine Lockie, of LoanPlan, said, provided borrowers met loan-to-value restrictions, banks were putting means, income and cashflow first... Read more

The property regions still to reach their price peak. With property prices up 13.5 per cent year-on-year to a national average of $591,000, what space is there left for more price growth? New data from NZ Property Investor magazine has pinpointed the top 10 places where rapid capital gains are still happening - and the boom could be yet to hit... Read more

New Zealand's only iwi-run savings scheme has ticked over $50 million and has signed on more than 20,000 members to save for their education, a home or retirement. Ngai Tahu's Whai Rawa savings scheme was launched in 2006 as a way to help give the money from the iwi's business investments back to its people... Read more

Businesses have blasted Auckland Council's unnecessary red tape which they say is holding them back and causing costly delays. Overly complicated systems, being shunted between departments and having queries taking up to three times longer than the Council's promised timeframe to process were just some of the issues faced. Auckland Council says it is working to improve its efficiency and service... Read more

Farmers warned about volatile dollar. The blizzard of economic information - good, bad but mostly uncertain - is making Kiwis' heads spin, but for farmers of all types it seems to roughly translate to "you have been warned". Like urbanites, farmers will welcome the prospect of even lower loan interest rates, with the Reserve Bank strongly signalling it will drop the official cash rate (OCR) even further because inflation - aside from house price inflation - is uncomfortably low. But the flipside is a high New Zealand dollar exchange rate which is worrying the Reserve Bank and exporters, and on top of a shrinking global economy, forecasts nothing good for farmgate returns... Read more

The Prime Minister's department was aware Zespri in China was warned about trade implications against New Zealand companies. However, the Department of Prime Minister and Cabinet (DPMC) did not brief Prime Minister John Key or his office, because it was judged the claims by a Chinese industry group were unsubstantiated... Read more

Inside Zespri's plans to grow 'Kiwi' kiwifruit in China. Zespri Kiwifruit has such a good brand in China that other people routinely counterfeit their packaging. But can that brand stand a "Made in China" label? ... Read more

Fonterra Cooperative Group says the decline in milk collection last month wasn't as big as previously thought because the extra day of a leap year mucked up its modelling... Read more

Thieves have made off with $500,000-worth of beehives from a pine forest in Northland. A public notice on Friday said 200 honey bee colonies - equating to 1 million bees - were stolen from the Topuni Forest, 10 Kilometres north of Wellsford some time in the week leading up to July 16... Read more

Livestock Improvement Corp, the farmer-owned dairy herd genetics, farm software and automation cooperative, dipped into the red in 2016 as farmers scaled back spending because of the dairy downturn, which weighed on the value of the company's elite breeding herd. LIC posted a loss of $4 million, or 13.6 cents per share, in the 12 months ended May 31, compared to a profit of $13.7 million, or 46.3 cents per share, a year earlier, it said in a statement... Read more

Silver Fern Farms informs shareholders of Shanghai Maling case... Read more

Keith Woodford says that with Silver Fern Farms drowning in financial underperformance, it is time to "get on with it". If OIO approval comes, there will be a wide variety of ownership models as options for farmers... Read more

New marine park leaves D'urville Island fishing families facing uncertain future... Read more

China Construction Bank, that nation's second-largest lender, has provided $140 million of equity capital to its New Zealand subsidiary to help fund lending growth, the biggest such infusion since the local unit was established with $58.6 million in 2014. China Construction Bank (New Zealand), which counts former prime minister Jenny Shipley and former PwC chair John Shewan among its five directors, issued 100 million to its parent this month, tripling shares on issue to 158.6 million, according to the Companies Office. That brings its total capital position to about $200 million... Read more

Constellation Brands, Inc., a leading beverage alcohol company, announced today that its board of directors increased the size of the board from 10 to 11 members. ... Read more

Australian businessman Stephen Copulos said getting shares in listed Restaurant Brands, in which he is now the second largest shareholder, was a key part of the fast food brands company acquiring his family’s KFC franchise in New South Wales. Restaurant Brands, which operates fast food chains KFC, Pizza Hut, Starbucks and Carls Jr, paid A$82.4 million in April to purchase QSR, the largest KFC franchisee in New South Wales with 42 stores. It is the company’s first foray into Australia since its disastrous attempt to expand through Pizza Hut in the state of Victoria which it exited nearly a decade ago... Read more

Australian-owned carpet maker Godfrey Hirst has been given a small window to appeal a High Court ruling as it continues efforts to stop New Zealand's largest wool scouring operations from merging.... Read more

The battle for control of the late Hugh Green's $400m empire is set to resume tomorrow, when a four-day hearing begins in the Court of Appeal. Green, who died aged 80 in 2012, built up his businesess over decades after migrating from Ireland in the 1950s... Read more

A man who took tax from his employees' wages but didn't pass it on to the tax department has been sent to jail. Steven Wayne Morrow, 49, of Hamilton, owed Inland Revenue about $350,000 in PAYE and instead used the money for other purposes that included personal spending and shifting it between companies. But interest and penalties have been mounting since his offending and the total owing is now about $545,000... Read more

Opinion - Liam Dann: Collapses give rise to robust framework. Sometimes its takes a crisis to bring meaningful change. New Zealand's housing market, for example, is overdue the kind of painful crash needed to force some serious policy shifts in how we treat housing as an investment... Read more

Opinion - Brian Gaynor: The $5.7 trillion punt... Read more

Opinion - Shamubeel Eaqub: Population strategy needed. Rising house prices and rising net migration go hand in hand. Or so goes the popular narrative. Yet the facts are more complex. In the absence of a clear immigration policy and articulate experts, the conversations are tinged with suspicion at best, racism at worst. ​House prices are linked to net migration, but there are other factors too... Read more

Opinion - Fran O'Sullivan: Never mind the warships - passing the TPP is what matters now. China was the obvious elephant in the room when Joe Biden visited New Zealand as the Obama Administration moved to assert US supremacy in the region. "The United States is a Pacific nation. We are not going anywhere. We are here to stay," was the Vice-President's message for Beijing - not simply the two Oceania nations on his dance card: NZ and Australia... Read more

Opinion - Martin Hawes: Take shelter against a financial storm... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket is expected to start the week only slightly higher after commodity prices had one to two per cent falls on Friday. Wall Street closed higher on Friday, clinching the fourth straight week of gains, boosted by strength in telecom stalwarts AT&T and Verizon... Read more

The Australian dollar has recouped some losses as the greenback slides. At 0630 AEST on Friday, the local unit was trading at 74.95 US cents, up from 74.88 cents on Thursday... Read more

Economists this week turned their attention to the inflation figures due on Wednesday and the strong chance of another interest rate cut next month. HSBC economists Paul Bloxham and Daniel Smith said the consumer price index numbers are always important for the Reserve Bank... Read more

All eyes on inflation next week, but not everything is as it seems... Something quite odd is happening in the economy. Economic growth is quite robust and the jobless rate is falling. But price pressures are abating. How can that be?... Read more

Stark divide between young and old as Australian household incomes and wealth stall. Poverty in Australia has declined, welfare reliance has stabilised and long-term poverty is becoming rare - but overall economic wellbeing is no longer improving, and households wealth has remained static, despite rising property prices, according to Australia’s most respected longitudinal study of economic wellbeing... Read more

Is getting rich worth it? Or are we stuck on a treadmill, going nowhere? The biggest Australian study of income came out this week. It found strong growth on income and wealth among all kinds of households, as this chart of rising incomes shows.... Read more

WA is at risk of being overtaken by Tasmania to become the nation’s worst performing economy as slow growth and a deteriorating jobs market drag down the State. CommSec’s quarterly comparison of all State and Territory economies, to be released today, shows WA is now ranked seventh, just ahead of Tasmania. Last quarter, WA was sixth... Read more

Gen Y choose travel over home ownership... Read more

How to prepare now for age pension rule changes in Australia... Read more

A plan for a $152 million marina at Port Hedland to revitalise the mining town has pitted one arm of the State Government against another, fuelling tensions between the Liberals and Nationals. Regional Development Minister and Nationals leader Terry Redman and Pilbara MLA Brendon Grylls championed the plan but the Pilbara Ports Authority, which reports to Transport Minister Dean Nalder, now opposed it on safety grounds... Read more

Ramelius Resources Ltd heads to market as shares sit near highs... Read more

BHP Billiton has agreed to sell its majority stake in the IndoMet coal project in Indonesia to its local joint venture partner Adaro Energy... Read more

Alicanto Minerals Ltd has a project acquisition update to provide, with the ASX granting the company a trading halt to prepare details.... Read more

Proponents of a $300-million solar battery power plant in outback South Australia believe they have enough backing to turn the plan into a reality. The project in Roxby Downs would include about 800,000 solar panels connected to shipping container-sized batteries, which have the ability to manage and store power... Read more

Gold and copper producer OZ Minerals says it is on track to achieve its full year production guidance, despite an unscheduled plant closure and bad weather during the June quarter. OZ Minerals shares gained six cents to $6.51.... Read more

Pioneer Resources has raised $4.8 million for the drilling programs at its most advanced lithium projects.... Read more

Mantle Mining Corporation Ltd is progressing towards the first gold concentrate production from the Norton Gold Mine.... Read more

Paladin Energy Ltd has been granted a trading halt by the ASX, with its shares placed in pre-open.... Read more

Dragon Mining has completed drilling activities at Orivesi gold mine and Jokisivu gold mine in southern Finland over the last 3 months.... Read more

Danakali Ltd has now outlined the parties from the non-binding offtake memoranda of understandings (MOU's) for sulphate of potash magnesia (SOP-M) from the Colluli Project in Eritrea. The company holds a 50% equity interest in the tier 1 project... Read more

The WA-arm of global agribusiness giant Bunge reported a loss of $2.1 million in the second year of operations at its Bunbury Port grain terminal and two receival sites in the Wheatbelt. It has racked up combined losses of $3.4 million in two years after investing $40 million in the port terminal... Read more

In terms of ASX listed companies, Favourit will be unique. It is Australian developed, yet globally focussed, being currently licensed through the UK, Ireland, Malta and Curacao, and having first launched its real money sports book in the UK in November 2014. Favourit is positioned to capture market share with younger, socially savvy punters, by owning and developing its own unique platform and user experience.... Read more

Updater Inc has processed nearly 90,000 unique household moves in June, equating to an estimated market share of 4.74% of all household moves in the United States. The company’s volumes have grown significantly by processing 89,347 moves in June, a 39% increase compared to 64,284 moves in May... Read more

Jobseekers are being warned about an increase in the number of employment scams, with criminals targeting legitimate recruitment websites to steal identities and money. Western Australia's consumer protection agency has linked the trend to the economic downturn, describing the increase in people searching for work on the internet as a "perfect storm" for scams... Read more

Woolworths kills off family business after council approved it to ‘increase competition’. After more than 50 years in the small business game Barry Entwistle is flat broke and busted after being “eliminated” by big business... Read more

Supermarket recycling business liquidated to escape $800,000 worker death fine. The operators of a prominent recycling company have sought to escape massive penalties for the death of an employee after shutting down the business and resurrecting it under another name. AB Recycling - listed as a cardboard recycler for Coles, IGA, Foodworks, Bunnings and Westfield - was found guilty of grave safety violations that led to the 2014 death of worker Steve Bower.... Read more

The West Australian newspaper moves to forced redundancies amid industry decline... Read more

International Headlines

U.S. Market Report: The high-defense, low-volatility stock cabal whose leadership has defined the rally of 2016 is beginning to see its influence wane. For the first time in two months, it’s been technology and commodity stocks -- not utilities or household goods makers -- that have led the S&P 500 Index as it climbed in the 12 days since since earnings season began... Read more

North/South Americas Market Report: North and South American markets finished higher on Friday with shares in Brazil leading the region. The Bovespa is up 0.64% while U.S.'s S&P 500 is up 0.46% and Mexico's IPC is up 0.36%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The FTSE 100 gained 0.46% and the CAC 40 rose 0.11%. The DAX lost 0.09%... Read more

Asian Market Report: Asian markets finished broadly lower on Friday with shares in Japan leading the region. The Nikkei 225 is down 1.09% while China's Shanghai Composite is off 0.86% and Hong Kong's Hang Seng is lower by 0.16%... Read more

Emerging markets are suddenly hot. A "stampede" of cash recently rushed into emerging markets -- to buy both stocks and bonds -- according to Bank of America and research firm EPFR.... Read more

Tesla Motors Inc TESLA.O and SolarCity Corp SCTO.O have made progress in putting together a deal that will merge the electric car maker and the solar panel installer, people familiar with the matter said. The two companies, which count billionaire Elon Musk as a major shareholder, are in the final stages of carrying out due diligence on each other, and could agree on the terms of a deal in the coming days, though it is still possible that their negotiations end unsuccessfully, the people said on Saturday... Read more

Companies around the globe are launching an increasing number of satellites, crowding Earth’s orbit in an effort to satisfy the ravenous on-demand desire for more broadband, satellite television and communications... Read more

Skechers is in a serious slump. Wall Street kicked Skechers to the curb on Friday, knocking the sneaker maker's stock down by an incredible 24%. The selloff was sparked by an alarming slowdown in Skechers' sales and a warning of more trouble ahead. It's the latest blow for the one-time sneaker darling, whose stock has lost more than half its value since August... Read more

Apple Inc found itself on the receiving end of a small, short-lived anti-U.S. protest this week in China, the tech firm's biggest overseas market and a country where foreign firms have suffered damaging boycotts following international spats. A handful of unofficial Apple stores were picketed and social media users encouraged each other to destroy their Apple goods, in a rare instance of the tech firm being targeted as a symbol of perceived injustice following an international ruling against Chinese territorial claims... Read more

GE’s earnings report may not be wrong, but it may still mislead investors. Some industry experts believe GE could have been more clear about its bottom line. The Securities and Exchange Commission has huffed and puffed about how companies’ earnings reports may be misleading investors, but some companies continue to tread the fine line between wrong and just not right... Read more

Verizon Communications Inc will announce an agreement on Monday to buy Yahoo Inc for about $5 billion, according to a person familiar with the matter... Read more

Few Small Businesses Take Advantage of Mini-IPOs. Some companies aren’t prepared for all the marketing required to attract potential investors... Read more

G20: Chancellor eyes clarity on Brexit deal 'later this year' as vote raises global risks... Read more

G20 will use 'all policy tools' to lift growth as Brexit weighs... Read more

UK explores multi-billion pound free trade deal with China. Chancellor Philip Hammond has begun discussions with China on an ambitious free trade deal which could see greater access for major Chinese banks and businesses to the UK economy. The Chancellor told the BBC it was time to explore "new opportunities" across the world, including with China, one of the UK's biggest inward investors.... Read more

UK banks prepare response to expected interest rate cut. Lloyds among high street operators facing pressures sparked by Brexit vote, which could lead to further job cuts and closures... Read more

Gambling groups Rank Group and 888 Holdings are preparing a shock double bid for William Hill, Britain’s biggest bookmaker. Rank, which owns Mecca Bingo and Grosvenor Casinos, and 888 Holdings, the online gaming group, announced on Sunday that they are weighing up an ambitious bid for the bookie which could cost upwards of £3bn.... Read more

The French energy giant EDF is expected to make its long-awaited final investment decision on a new nuclear power plant at Hinkley Point in Somerset next week. The company says it has called a board meeting for 28 July and the investment decision is on the agenda... Read more

Iran Seeking $60 Billion From Total to Mitsui for Petrochemicals... Read more

Nike Inc.’s sales growth in Greater China outpaced those of Adidas AG and local rivals Li Ning Co. and Anta Sports Products Ltd. since the 2008 Beijing Olympics. ... Read more

North Korea's economy shrank at its sharpest pace in eight years after a fall global commodity prices hit the value of its coal and iron ore exports. Gross domestic product fell by 1.1% last year compared to a 1% gain in 2014, according to an estimate from South Korea's central bank... Read more

Malaysian Fund Pilfering Claim Shines Light on Law Firm’s Role. When U.S. prosecutors moved this week to seize $1 billion in assets they say were stolen from a Malaysian development fund, they detailed a money flow through a New York law firm that renews questions about whether a lack of regulations on lawyers encourages money laundering by their clients.... Read more

General Motors is re-evaluating its planned $1 billion investment in India and has put on hold moves to bring a new car platform to India as it re-assesses its strategy in the country, according to company officials. The rethink comes as GM's India sales have fallen nearly 40 percent in the year to end-March, and its share of the domestic passenger vehicle market is now below 1 percent... Read more

Why $14 Billion in Taxpayers’ Money Still Isn’t Enough to Fix India’s Struggling State Banks. India's government announced this week that 13 state-owned banks would get even more funds to help them stay healthy... Read more

Opinion - Larry Elliott: Brexit offers key opportunity to reboot UK economy. Britain urgently needs a version of Abenomics, involving monetary policy, fiscal policy and structural reform... Read more

Opinion - Roger Bootle: The Brexit pill has not choked us as expected ... Read more

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