ASB Securities Morning Brief for Friday, 22 May 2015
Friday, 22 May 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose after DNZ Property Fund reported an increase in annual earnings. Spark NZ fell while Chorus rose as investors looked ahead to a Commerce Commission decision on network pricing. The NZX 50 Index rose 13.478 points, or 0.2%, to 5769.265. Within the index, 25 stocks rose, 15 fell and 10 were unchanged. Turnover was $143 million... Read more

The New Zealand dollar held near the bottom end of its recent trading range as investors weighed up whether the Reserve Bank will cut interest rates to further stimulate a slowing economy. The kiwi traded at 73.33 US cents at 5pm in Wellington from 73.15 cents at 8am and down from 73.60 cents yesterday. The trade-weighted index fell to 75.93 from 76.20 yesterday... Read more

New Zealand’s weak inflation and ACC levy cuts contribute to a four year, $3.2 billion reduction in the Crown’s operating balance in Budget 2015 versus the half year update, prompting Finance Minister Bill English to axe savings incentives to fund welfare priorities... Read more

Apart from the much discussed announcement of extra funding for property tax compliance and a number of measures directed at providing extra tools to Inland Revenue for this work, there were refreshingly few changes to tax settings announced in today’s Budget. Deloitte CEO Thomas Pippos welcomed that there were no precipitous actions taken on the tax front noting that there is potential for more wholesale changes on the horizon... Read more

Budget 2015: Tax cuts on Government's to-do list for 2017... Read more

The Government has forecast a Budget surplus of NZ$176 million for 2015/16 in Budget 2015, which is one year later than it promised before the last two elections and thin enough to turn into a deficit with any economic downturn... Read more

Solo parents and low income working mums and dads are the big winners from a tight Budget that delivers them a pay rise - but Finance Minister Bill English has raided the pockets of travellers and future savers to pay for it... Read more

Budget 2015: $400m for rail but not Auckland... Read more

No surprise Budget leaves focus on Auckland housing market... Read more

Budget 2015: Property Related Initiatives. Finance Minister Bill English delivered his seventh Budget this afternoon: here is what he had to say on property related initiatives. Many of the property related initiatives have been heralded in recent days, but here is a summary of today’s pronouncements: Budget 2015 includes the following housing initiatives:... Read more

Budget 2015: Cautious welcome for moves to free up land... Read more

$52 million to address Auckland’s housing supply problem... Read more

An adviser to Chinese property players in Auckland believes many developers and investors in her home country will be interested to hear of moves to free up Crown land in the city.... Read more

Budget 2015: Income-related rent subsidies increase... Read more

People enrolling in KiwiSaver from now will no longer receive a $1,000 kick-start payment, Finance Minister Bill English says... Read more

The Government has promised not to make any further cuts to KiwiSaver after scrapping a $1000 payment which all members received upon signing up. Prime Minister John Key said the Government's remaining contribution to the savings scheme, an annual tax credit worth $521, was "rock solid" and there were no plans to scrap it... Read more

Airlines and tourism businesses are surprised and disappointed at a border levy that will push up the cost of a return flight out of New Zealand by around $22.... Read more

Prime Minister John Key says he hopes that plans to write off $1.7 billion in penalty payments on parents who missed child support payments will encourage those who have moved overseas to start paying child support again. Revenue Minister Todd McClay said the overly punitive system had resulted in "paralysing" debts for some parents which meant they had given up trying to pay and thousands had gone overseas... Read more

NZ migration rises to new annual record in April... Read more

Zespri says an "extraordinary season for growers" has seen the revitalised kiwifruit industry get back on track for growth. The total fruit and service payment is up 17 per cent on the previous year to $939 million and global sales reached $1.568 billion. Export earnings increased by 18 per cent to $1.086 billion.... Read more

Heartland New Zealand, the bank formed through the merger of Canterbury and Southern Cross building societies with Marac Finance, says it expects full year profit to be at the upper end of its guidance range. Shares of Heartland were unchanged at $1.29 and have gained 14 percent since the start of the year... Read more

DNZ Property Fund, the sixth-biggest property stock on the NZX 50 Index by market capitalisation, posted a 66% gain in annual profit as it benefited from its property divestment plan, selling five properties and boosting the value of its remaining assets, and costs fell... Read more

Rakon, the high tech components manufacturer, has returned to profitability while doubling its debt and turning to a negative cash outflow, after an overhaul of operations which saw it closes its UK plant and shift production to India and New Zealand. Shares of Rakon jumped 16 percent to 40 cents, but are well below their 2007 peak of $5.67.... Read more

Intueri Education Group, New Zealand's largest private training college, expects annual earnings will be at the bottom end of guidance based on current trading performance, having missed prospectus targets in calendar 2014. The Auckland-based company said it sees "similar operating conditions" as advised in February, and that the "current performance is tracking to the lower end" of its guidance for 2015 earnings before interest, tax, depreciation and amortisation of between $30-33 million.... Read more

Jade Software narrows FY loss as Master Terminal unit growth beats expectations... Read more

Augusta Capital, the listed property investor and fund manager, increased annual earnings by 5% as gains from its funds management business offset a decline in rental income... Read more

Chinese tourists to NZ rise to an annual record in April... Read more

AML audit rush feared. There are concerns there may be a rush of authorised financial advisers trying to get their AML audits done before the end of next month... Read more

Cable cut reminds us of the risk of isolation. The news that the Southern Cross Cable suffered its second cut in three months is a timely reminder of our reliance on that network for international connectivity from New Zealand to the rest of the world. ... Read more

New Zealand Assets Management (NZAM) has appointed Brigette Arnold to its senior management team. Arnold, who will have primary responsibility for NZAM client relationship management, comes with a wealth of investor relations and fundraising experience across markets in the UK, Europe, Asia, North America, Middle East and Australasia... Read more

AIA chief executive Wayne Besant is leaving New Zealand to take up a role with the company in Vietnam.... Read more

John Campbell to leave MediaWorks... Read more

Former chief executive officer of the New Zealand Wine Company (NZWC) has been found guilty on 17 fraud charges in the Auckland High Court today. Three years ago Peter John Scutts agreed to take a commission from an Australian wholesaler for advising his company to enter into a supply contract... Read more

Dirty dairying farmer Phillip Woolley has had his appeal against his effluent discharge conviction and sentence dismissed. In the High Court at Nelson on Monday, Woolley appealed against his dirty dairying conviction on the grounds of a typo and argued the sentence was excessive... Read more

The Financial Markets Authority is investigating a Christchurch company called Arena Capital, trading as foreign exchange services provider BlackfortFX, saying it is concerned investor funds may be at risk... Read more

Opinion - Tracy Watkins: Hole in the Budget forces crafty response. "Hardship Budget" delivers on the promise to look after NZ's poorest children... Read more

Opinion - Mark Lister: Fairer capital gains taxation the best approach. If capital gains tax is introduced in New Zealand, it makes sense to cut wage earners a break at the same time... Read more

Opinion - Budget 2015: Brian Fallow: 'This is a tight-fisted budget' (video only)... Read more

Opinion - Pattrick Smellie: Budget 2015: Carrot and stick budget measures for low-income families... Read more

New Zealand Herald Editorial: Election-year tax cuts can't be justified... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has bounced from a three-month low, posting its first gain of the week, as resources stocks pulled the market higher. At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index had added 52 points, or 0.93 per cent, to 5662.3, while the broader All Ordinaries index rose 49.6 points, or 0.88 per cent, to 5663.6.... Read more

The Australian dollar ended little changed in Asia today after a session of trading that saw it washed both higher and lower. Dovish signals from the US Federal Reserve overnight were the biggest influence on the day. At 5pm (AEST), the Australian dollar was trading at US79c, compared with US78.93c at the same time yesterday.... Read more

Saul Eslake warns RBA underestimating growth, cutting too hard. One of Australia's most prominent and respected bank economists is warning that the Reserve Bank has made serious errors in setting interest rates. Bank of America Merrill Lynch chief economist Saul Eslake is warning that the bank's growth assumptions are wrong.... Read more

China free trade agreement details within weeks of release. Six months after the deal was struck, the full details of Australia's trade agreement with China are expected to be released within weeks. Austrade's top official in Beijing, Michael Clifton, has told the ABC has officials from both countries are finalising the exact wording of the deal in English and Chinese... Read more

Rio Tinto adviser appointed to board advising Abbott government on how to increase tax transparency... Read more

Labor still mulling pension changes... Read more

Former prime minister Paul Keating believes it is "economic vandalism" to have a compulsory superannuation guarantee rate of less than 12 per cent in a low inflation environment.... Read more

Brazil's iron ore output to eclipse Australia's within three years with Chinese investment in Vale mines... Read more

Australia's liquefied natural gas industry has the potential to be the largest and most technologically advanced in the world, new research says. But the sector must improve international competitiveness, remove regulatory constraints and introduce more flexible labour relations to secure its top spot, according to a report by global consulting agency Accenture... Read more

West Australian premier Colin Barnett is confident iron ore prices will rebound from their record lows to above $US70 a tonne.... Read more

Fortescue chairman Andrew Forrest has queried the decision not to proceed with a government inquiry into the iron ore sector, noting there are a host of other inquiries currently underway in industries such as the wine, red meat, grain and aquaculture sectors that have not led to fears for Australia's investment reputation... Read more

Woodside Petroleum is speeding up its cost cutting program after already slashing 600 jobs, but says it will also invest in growth ahead of a major decision on its key Browse project... Read more

Hunting for yield in Caltex. As the likely beneficiary of lower oil prices and with a defensive profile plus the potential for higher dividends, Caltex deserves consideration as a ‘yield’ stock.... Read more

South Boulder Mines has appointed Gordon Tainton as its head of market development effective immediately.... Read more

Ratings agency Fitch has downgraded its outlook for Fortescue Metals Group because of lower than expected iron ore prices. Fitch has revised its outlook for the West Australian iron ore producer from stable to negative in response to lower expectations for the steel-making commodity... Read more

Former Mirabela Nickel boss Nick Poll will be parachuted in as Caeneus Minerals’ new managing director after the company’s surprise $2.7 million deal for the Silver Swan nickel mine yesterday. Shares in Caeneus initially jumped 5 per cent to 1.8 cents this morning, but were down 5.88 per cent at 1.6 cents at 10am. Poseidon, which is seeking to restart the Lake Johnston, Black Swan and Windarra nickel mines, was trading 3.57 per cent higher at 14.5 cents.... Read more

Eden Energy raises funds through shortfall placement... Read more

BHP $32m fine signals hospitality warning. BHP Billiton's $US25 million ($A31.75 million) fine for breaking bribery laws at the Beijing Olympics has been described as a new warning for business about corporate hospitality.... Read more

Digital payments company Digital CC has raised $3.5 million at $0.22 each but could have raised a lot more such is the fervour to be aboard for its AirPocket global remittance product race to market. The company trades as DigitalBTC, Australia’s first ASX-listed bitcoin business... Read more

An investor in the infrastructure and environmental services company Cardno has sold down a 10.1 per cent stake in the business... Read more

Australia's largest listed childcare operator G8 Education has reassured shareholders its growth plan is nothing like the now defunct ABC Learning Centres.... Read more

Woolworths and its home improvement partner Lowe's Companies have injected another $45 million of equity into Masters, after losses blew out to $66 million in the March quarter, taking forecast losses for the year to more than $200 million... Read more

Shares in building materials supplier James Hardie have soared to a record high after it almost tripled its annual profit and announced plans to pay shareholders an extra dividend. Sales growth in Australia, Europe and the US helped James Hardie lift its profit for fiscal 2015 to $US291 million ($A369.57 million), from $US99.5 million a year earlier... Read more

Perth's roads will become Australia's most congested and its key rail lines approach "crush capacity", an audit of Australia's infrastructure needs reveals... Read more

NAB to open branch in Beijing.... Read more

Domino’s seeks 3,000 new delivery drivers... Read more

Consumers are still getting slugged by excessive surcharge fees levied by merchants on credit card payments, the Reserve Bank of Australia says. The RBA is examining Australia's card payments regulation after the Murray Financial System Inquiry raised concerns about a number of issues, including interchange fees and card surcharges... Read more

Opinion - Malcolm Maiden: Wesfarmers focuses on company's retail superstars. After telling investors and analysts on Wednesday that Coles could drive revenue and earnings higher by lifting fresh produce quality and service levels, the supermarket group's managing director, John Durkan, was asked how he would manage the move... Read more

Opinion - Mark Gregory: Is an NBN compromise still possible?... Read more

International Headlines

U.S. Market Report: U.S. stocks climbed on Thursday, sending the S&P 500 into record territory as investors assessed a number of economic reports a day after the Federal Reserve minutes signaled a June interest-rate hike was unlikely. The S&P 500 added 5 points, or 0.2%, to 2,130.91, trading above its previous record close. The Dow Jones Industrial Average DJIA, ticked up 15 points to 18,299, within shouting distance of its record. The Nasdaq Composite gained 21 points, or 0.4%, to 5,092, also trading above its previous record close... Read more

North/South Americas Market Report: North and South American markets are mixed. The S&P 500 is higher by 0.32%, while the Bovespa is leading the IPC lower. They are down 1.63% and 0.34% respectively... Read more

European Market Report: European markets finished higher today with shares in France leading the region. The CAC 40 is up 0.26% while Germany's DAX is up 0.14% and London's FTSE 100 is up 0.09%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.87% and the Nikkei 225 rose 0.03%. The Hang Seng lost 0.18%... Read more

Oil prices rose in Asia Thursday after a decline in US petroleum stockpiles and production boosted hopes of an easing in the global supply glut, analysts said. US benchmark West Texas Intermediate (WTI) for July delivery rose 22 cents to $59.20 while Brent crude for July gained 32 cents to $65.35 in afternoon trade.... Read more

Consumers’ Expectations for U.S. Economy Drop Most Since 2013... Read more

The Federal Reserve is 99% unlikely to raise interest rates in June. Reason No.1: America's economic growth is slowing down... Read more

The U.S. economy was on a modest growth path early in the second quarter with home resales falling in April and manufacturing activity on the backfoot in May, although the labor market continued to tighten... Read more

The Bernie Sanders plan to fix income inequality... Read more

50 stocks that ‘matter most’ to hedge-fund Masters of the Universe... Read more

Fast food giant McDonald's is facing pressure from both workers and investors, who are increasingly unhappy with the firm's business strategy. Hundreds of fast food workers and supporters converged in front of McDonald's corporate headquarters on Thursday morning before the company's annual shareholder meeting... Read more

CVS Health Corp. has agreed to buy pharmacy-benefits provider Omnicare Inc. in a deal valued at $12.7 billion, a tie-up that will boost the pharmacy chain’s services for the growing senior patient population. The offer for $98 a share in cash is a 3.6% premium to Omnicare’s closing price on Wednesday. The deal value includes $2.3 billion in debt... Read more

Lumber Liquidators, under scrutiny for months as it faces accusations that it sold products with dangerous levels of formaldehyde, said Thursday that its chief executive had left the company. The chief executive and president, Robert M. Lynch, resigned “unexpectedly,” the company said. Thomas D. Sullivan, the company’s founder, will serve as acting chief executive... Read more

Etsy Inc. may have an inspiring commitment to social good, as its designation as a B Corporation suggests, but its decision to go public is turning into a sticky mess. Shares of Etsy which operates an e-commerce site comprised largely of hand-crafted goods, have fallen 42% in the five weeks since its IPO, with nearly half of that -- 18% -- occurring on Wednesday, the day after the company reported a worse-than-expected quarterly loss... Read more

Prosecutors in Detroit have joined the U.S. federal probe into Takata Corp's defective air bag inflators that are linked to at least six deaths globally. The U.S. Attorney’s Office for the Eastern District of Michigan and the U.S. Department of Justice’s Criminal Division, Fraud Section in Washington "are jointly handling the criminal investigation into Takata," Gina Balaya, spokeswoman for the Detroit office, said on Thursday... Read more

Inequality to keep rising: OECD... Read more

The European aerospace and defence giant Airbus would reconsider investment in the UK in the event of Britain leaving the European Union. Paul Kahn, president of the 16,000-employee Airbus UK, said Britain must compete for international investment... Read more

German train drivers call off rail strike... Read more

German Chancellor Angela Merkel on Thursday dashed hopes Ukraine would be awarded a visa waiver, alongside the prospect of eventually becoming a European Union member, at the EU’s Eastern Partnership summit that starts later Thursday in Latvia... Read more

German lender Deutsche Bank AG opened its annual general meeting Thursday by appealing for shareholders to be patient as it strives to overhaul a business culture that has cost it billions of euros in fines and to boost lagging profitability... Read more

Tesco could claw back former chief executive's £1.2m pay-off. Supermarket says that it will pursue recovery of Philip Clarke's £1.2m termination fee if it can be shown that there was gross misconduct during his reign... Read more

Formula 1 tycoon Bernie Ecclestone has gone to court to challenge the basis of assessments that have left him facing a UK tax claim of more than £1bn. The 84-year-old, at the F1 helm for 40 years, wants the assessments quashed, and HM Revenue and Customs (HMRC) held to an earlier April 2008 agreement... Read more

Grand bargain emerging on Europe as Germany adjusts to Cameron victory. “Everybody is very aware that Britain is the next big problem on the horizon. The mood is that we’ve got to save the British from themselves,” said Friends of Europe... Read more

Russian–Japanese Forum on Cooperation in Business, Investment and Sport opens in Tokyo... Read more

The Russian Central Bank has begun replenishing its foreign-exchange reserves by purchasing U.S. dollars. Russian analysts disagree on the significance of the move, with some arguing these purchases are directed primarily against the strengthening of the ruble, which would call into question the plans for import substitution, while others say the small amounts involved indicate that the regulator is merely sending a signal to the market... Read more

Lenovo's annual revenue up 20% but profits miss target... Read more

China's manufacturing activity contracted at a slower pace in May, an HSBC survey showed Thursday, but companies cut back production and jobs despite government attempts to reinvigorate the world's second-largest economy... Read more

Japan fights back against China bank. Japan's Prime Minister Shinzo Abe has announced a $US110 billion investment plan for infrastructure projects in Asia in an apparent counter to China's move to launch a new development bank.... Read more

Searching for the next Alibaba in India. Indian e-commerce firms are offering funding help and tech support to woo small retailers, emulating a strategy used by Chinese online retail giant Alibaba Group Holding Ltd to expand into the towns and villages home to the majority of consumers. India's biggest e-tailers such as Flipkart, Snapdeal and the local arm of Inc are online marketplaces, with commission from sellers accounting for the bulk of their revenue.... Read more

Renault Unveils Its Cheapest New Car in India, the Kwid... Read more

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