ASB Securities Morning Brief for Wednesday, 26 August 2015
Wednesday, 26 August 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, led by Westpac Banking Corp, as dual-listed stocks rebounded from a sharp drop yesterday. Australia and New Zealand Banking Group and Spark New Zealand gained. The S&P/NZX 50 Index rose 5.98 points, or 0.1 percent, to 5613.29, somewhat reversing yesterday's biggest drop in four years. Within the index, 15 stocks rose, 28 fell and seven were unchanged. Turnover was $260 million... Read more

The New Zealand dollar bounced from a six-year low after two days of turmoil spurred by the prospect of deteriorating Chinese economy. The kiwi rose to 64.99 US cents at 5pm in Wellington, having briefly slumped as low as 62.44 cents, and is down from 65.89 cents yesterday. The trade-weighted index was little changed at 70.01 from 71.04 yesterday... Read more

Shockwaves after Black Monday. Chinese sharemarket tumble sparks fears of hard economic landing ahead ... but also brings petrol price drop... Read more

Investors looking to bonds for better returns warned about the risks... Read more

New Zealand businesses expected monetary conditions to be looser by the end of the third quarter and one year out, compared to their expectations three months ago, the Reserve Bank's latest survey shows... Read more

Slumping equities, commodities may continue, but not another GFC, fund managers say... Read more

Prime Minister John Key and Finance Minister Bill English have downplayed the potential for last night's global stock market rout and growing signs of a hard landing in China to force New Zealand into recession. Talking to reporters after Wall St fell another 4% on Monday night and Chinese stocks fell 9%, Key and English said the New Zealand economy was in much better shape than others, including Australia... Read more

Trade Minister Tim Groser has lashed out at public opposition to the Trans Pacific Partnership, saying he won't let "anti-trade forces" stand in the way of the contentious deal. Speaking to Southeast Asian and New Zealand entrepreneurs at a summit in Kuala Lumpur, he said resistance to the TPP was deeply ideological and extreme claims were being made, including that it would lead to the end of democracy... Read more

Bright line test one step closer. Capital gains on property sales are the target of the Taxation (Bright-line Test for Residential Land) Bill, which has just been introduced into Parliament.... Read more

PM says house buyers expecting unending capital gains in Auckland may get a surprise, just as stock investors have; says RBNZ should have said interest rates won't be low forever... Read more

Investors increasing Auckland price pressure – RBNZ. Growing investor demand for Auckland property has exacerbated the price pressures arising from the underlying supply shortage, the Reserve Bank says... Read more

Investors are not to blame for Auckland’s skyrocketing prices, says the NZ Property Investors Federation which has come out swinging following yesterday’s Reserve Bank claims that small investors are driving up... Read more

Sale of $2m house puts spotlight on density push... Read more

Property Talk: will China’s sharemarket meltdown have an effect on New Zealand property? (with audio)... Read more

Skip Auckland, investors urged. Property investors should consider making their next purchase outside Auckland, it has been suggested. ANZ has released its latest Property Focus report, which notes that affordability is worsening, debt servicing is becoming more difficult and nationwide consent issuance is flatlining, although it is picking up in Auckland... Read more

RBNZ's Grant Spencer points out almost one-third of new borrowers take out mortgages equivalent to more than 6 times their incomes... Read more

NZ whole milk powder futures decline amid global equity slump... Read more

Beingmate Baby & Child Food Co shares fell to their lowest since February 2013, after being caught up in the global sharemarket rout that's dented Chinese equity markets, slicing more than $200 million from Fonterra Cooperative Group's investment in the Hanzhou based infant formula maker.... Read more

Goat milk demand growing... Read more

Delay on Filipino workers hits dairy industry... Read more

Halfway mark in 2015 Sheepmeat and Beef Referendum. One in five registered voters have cast their vote at the halfway mark in the 2015 Sheepmeat and Beef Levy Referendum. Beef + Lamb New Zealand Chairman James Parsons said the turnout was pleasing and he was encouraging farmers to vote before the voting closes on September 10.... Read more

Unlisted, the share trading platform, has been granted an exemption from licensing requirements of the Financial Markets Conduct Act by Commerce Minister Paul Goldsmith. Unlisted sought an exemption to run its 12-year-old market, owned by Efficient Market Services (EMS), under the Financial Markets Conduct Act, which came into force in December. Unlisted currently requires minimal disclosure, keeping costs low for the 14 securities that trade on its platform... Read more

As of November this year New Zealand Bloodstock Airfreight will begin monthly transportation of horses from the United Kingdom to Australia. With an established reputation for providing first-class service for flights between Australia and New Zealand, NZB Airfreight will now apply their expertise to a service between the two hemispheres, as NZB Airfreight Manager Greg Northcott explains... Read more

Air New Zealand investors will be watching closely as the company looks set to announce a fourth straight year of earnings growth. The company will on Wednesday announce whether it has met its earlier forecasts that pointed to a huge 60 per cent gain in earnings for the year... Read more

Air NZ to continue alliance with Cathay Pacific, targets Asian tourists... Read more

Auckland Airport chief executive Adrian Littlewood says the arrival of Jetstar on to regional routes will be a welcome boost for his company and passengers nationwide. Although not a big part of the airport's total business, more regional flying by Jetstar will be an "interesting" feature of aviation... Read more

Listed steel products supplier Steel & Tube has bought the Canterbury-based pipe-maker Aquaduct NZ for $8 million. Aquaduct, a supplier of piping to the Central Plains Water (CPW) irrigation scheme, went into receivership in April. The company specialises in large, long bore polyethylene pipe and won an innovation award for its transportable 'pop up' pipe factory... Read more

Wynyard Group, the intelligence software developer, widened its first-half loss while boosting sales 39 per cent and predicts faster revenue growth from the second half as it rolls out a new product. The Auckland-based company said it posted a net loss of $17.6 million, or 14c a share, in the six months ended June 30, from $10.2 million, or 9c, a year earlier... Read more

Mercer, worst-performing NZX stock this year, increases annual loss... Read more

SLI Systems chief executive Shaun Ryan says the company's share price is "significantly under-priced" and could be at least four times higher based on other public software-as-a-service valuations. The Christchurch-based company's share price has sunk about 42 percent since the start of the year, closing at a record low 70 cents yesterday, less than half its offer price of $1.50 in 2013 and not quite a quarter of the $2.85 high in January 2014. The stock is the second-best performer on the NZX main board today, up 14.3 percent to 80 cents, albeit on thin volume, with $77,132 worth of shares traded... Read more

Genesis profits up 12 per cent, CEO Albert Brantley to retire... Read more

Smiths City, which is selling its flagship Colombo St store in Christchurch to repay debt, said sales fell in the first four months of the year after it shuttered unprofitable outlets and spending dipped in rural areas. Sales in the new financial year started May 1 are down 2 percent on the year earlier, chairman Craig Boyce said in notes for delivery at the company's annual meeting in Christchurch today. Excluding the impact of store changes, sales were up 1 percent, he said. Smiths City shares dropped 2 percent to 50 cents, in line with a 1.9 percent drop in the S&P/NZX All Index today. The stock has declined 5.6 percent this year, compared with a 2.2 percent drop in the broader index.... Read more

nib New Zealand says it expects its growth to accelerate and is planning a new adviser offering later this year.... Read more

KiwiRail needs $200m a year, Finance Minister says. Taxpayers will have to continue to subsidise KiwiRail hundreds of millions of dollars a year to keep it in operation, the Finance Minister says. KiwiRail had not generated the kind of income that was in the turnaround plan which included over $1 billion of investment from the Government, Bill English said... Read more

The creditors for failed state-owned coal miner Solid Energy have voted against setting up a committee to liaise with the company's administrators, Brendon Gibson and Grant Graham of KordaMentha, who got approval from the lenders. Solid Energy's creditors, which includes Bank of New Zealand, ASB, Australia & New Zealand Banking Group, Westpac Banking Corp, and Bank of Tokyo, held their first meeting today where they voted against forming a creditors' committee and decided to retain Gibson and Graham, ahead of the Sept. 17 watershed meeting where the mining company's future will be decided, the company said in a statement... Read more

RFAs not impressed by push for one standard. PAA may want just one class of financial adviser – but not all of its members agree... Read more

Bridgecorp's Rod Petricevic granted parole... Read more

Six out of seven IAG repairs found to be deficient in Govt investigation... Read more

Opinion - Greg Harris: GST on overseas services. Following global trends and OECD recommendations, the Government last week released a discussion document detailing proposals to impose GST on imported services... Read more

New Zealand Herald Editorial: Good ship NZ can cope with rough waters... Read more

Opinion- Pierre Ducret: Shifting to a resilient economy is an economic conundrum... Read more

Analysis/Opinion - Rob Stock: KiwiSaver and ethical investing. "Super is your voice," says Michael Salvatico . "You can use it now." Salvatico is a specialist in analysing the ESG, or "environmental, social and a governance" standards of stockmarket listed companies in which KiwiSaver funds invest... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has staged a stunning comeback today on solid bargain hunting after one of the most volatile 24 hours of trading in recent years. The local market defied expectations of another day of heavy losses after a 4.1 per cent drop yesterday saw about $60 billion wiped from the value of Australian shares... Read more

The Australian dollar on Tuesday recovered from a mini "flash crash" the night before that saw it close to dropping beneath US70¢ for the first time since April 2009. The currency plunged close to US2¢ to US70.5¢ on Monday night in sympathy with a dramatic start to Wall Street trading that saw US equities slump... Read more

Some of the nation’s most senior business leaders have urged investors to look beyond the volatility ravaging global stockmarkets, labelling it a short-term correction and talking up the Australian economy. “The fundamentals are good and they are a lot better than they were a year ago, than they were five years ago, (and) then that’s something to build on,” Qantas chief Alan Joyce said at a Male Champions of Change event in Sydney today... Read more

The goldrums could be a good time to buy big... Read more

Farmers confident rural economy will improve despite droughts in eastern Australia, survey shows. Strong commodity prices have boosted rural confidence to a four-year high, despite continuing drought in parts of eastern Australia, according to a national survey... Read more

WA's business reputation 'will be damaged' by FIFO industrial action, business lobby warns. Western Australia's reputation as an investment destination will be damaged if workers at Chevron's $55 billion Gorgon LNG project go ahead with industrial action, the state's peak business lobby has warned. More than 1,000 workers voted on Monday in favour of industrial action as part of their fight for a more family-friendly roster... Read more

Hazelwood Resources confident on capital raising for ferrotungsten plant... Read more

Pacific Energy shares have surged 10 per cent despite the power generation company reporting a drop in annual profit. Managing director Jamie Cullen said the result was credible for the owner of Kalgoorlie Power Systems given the mining industry climate... Read more

BHP profit shows why some sharemarket investors are buying again. The giant group's profit was sharply lower, but its dividend crept up as it maintained its progressive dividend policy. With its shares down about 15 per cent this year it has in fact become a dividend yield play for bargain hunters, along with more conventional blue chip giants... Read more

Mining giant BHP Billiton has defended its increased dividends and cut spending after annual profit halved to $US6.4 billion... Read more

Oil Search expects some pain ahead despite defying plunging oil prices to lift half year profit by 50 per cent. The PNG-focussed company is targeting cuts of between 15 and 20 per cent in operating and capital costs from 2016, and has allocated $US10 million on restructuring in 2015... Read more

Greenland Minerals & Energy granted additional time for capital raising... Read more

Metals X has lifted its annual profit by 9 per cent to $40.9 million on the back of higher revenue from gold and tin sales. Revenue was up 32.13 per cent to $315.25 million for the year. The company will pay a final, partially-franked dividend of 2.95 cents a share.... Read more

Metals X has lifted its annual profit by 9 per cent to $40.9 million on the back of higher revenue from gold and tin sales. Revenue was up 32.13 per cent to $315.25 million for the year. The company will pay a final, partially-franked dividend of 2.95 cents a share.... Read more

Australia's largest IVF provider, Virtus Health, is targeting the United Kingdom as its next opportunity for international expansion. Virtus, which has been facing intense competition and flat growth in Australia, already has a fertility centre in Singapore and three clinics in Ireland. Shares in Virtus closed 17 cents higher at $4.76.... Read more

Medibio Limited has been granted an ASX trading halt in relation to the completion of an agreement to trial its corporate stress product... Read more

Clay forces Hope Downs rethink. Rio Tinto and Gina Rinehart have been forced to rethink the mining plan at the massive Hope Downs 1 iron ore project because of clay clogging up processing equipment... Read more

Costa Group chief executive Harry Debney​ said Australia's biggest fruit and vegetable company will need to prove itself to investors before it starts moving into positive territory on the ASX. Costa, which listed on the ASX in July, posted underlying revenue of $723.5 million, 2.7 per cent higher than its prospectus estimate, while net profit was 1.3 per cent higher at $38.3 million... Read more

Village Roadshow's profits dampened... Read more

Westfield's Australian business is selling four shopping centres and funnelling the proceeds into redevelopments. Scentre Group, which operates Westfield shopping centres in Australia and New Zealand, expects to reap $783 million from the sale of its Figtree, Warrawong and North Rocks centres in NSW and the Strathpine centre in Brisbane. The company's shares rose 13 cents to $3.74.... Read more

Bank shares may still have some way to fall: Morgan Stanley.... Read more

ASX-listed grain handler GrainCorp has hired a new executive into its vacant chief information officer role as it embarks on new efforts to integrate its numerous technology platforms... Read more

Pacific Brands is forecasting better times ahead for its long-suffering shareholders - but shoppers will soon be paying more for its Bonds underwear and Sheridan bed linen. The clothing and bedding maker has narrowed its annual losses and expects earnings to rise in the year ahead, with plans to recommence paying dividends fiscal 2016... Read more

Indus Energy appoints Jonathan Whyte as non-executive director... Read more

Todd Sampson steps down as Leo Burnett chief executive... Read more

Queensland's health department is still struggling with the SAP-based payroll platform implemented by IBM in 2010, continuing to overpay workers by close to $17 million in the last financial year. Queensland and its one-time IT partner front the Supreme Court this week in Brisbane... Read more

BBY clients closer to getting back missing millions after Supreme Court decision... Read more

Opinion -Michael Janda: Market volatility: Is this ASX rally a 'dead roo hop'? Don't be too sure that the worst has passed. If we see further steep falls in China and across Asia, the Australian stock market will certainly feel it, writes Michael Janda... Read more

Opinion - Philip Wen: China Analysis: interest rate cut raises fresh questions... Read more

Opinion - Allan Sloan: Don't freak out over China stock market: it's a decline, not a meltdown. If you want to understand what's going on in the stock market and what you should do with your own investments, don't assume the past three trading days have been rational. And don't talk about a market "correction." Doing that will rot your brain... Read more

Opinion - Michael Pascoe: ASX: Don't follow the herd but watch out for opportunities... Read more

International Headlines

U.S. Market Report: After five straight days of losses, Wall Street finally took a breather when buyers returned Tuesday. The Dow jumped more than 200 points after China flooded its economy with more cheap money in a bid to calm markets and stabilize growth.... Read more

North/South Americas Market Report: North and South American markets are mixed today. The S&P 500 is up 1.41% while the IPC gains 0.17%. The Bovespa is off 1.64%... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The DAX gained 4.97% and the FTSE 100 rose 3.09%. The CAC 40 lost 1.43%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.76%, while the Shanghai Composite led the Nikkei 225 lower. They fell 7.63% and 3.96% respectively... Read more

Prices of crude oil and most other commodities rebounded in Asia Tuesday but stayed under pressure following a global sell-off sparked by the faltering economy in China, the world's top user of industrial metals and energy. US benchmark West Texas Intermediate (WTI) for October delivery was trading at $38.92 in afternoon Asian trade after closing at $38.24 a barrel on the New York Mercantile Exchange, its first below-$40 close since February 2009.... Read more

Liberia's state oil company said Monday it was laying off its entire staff as part of a revamp aimed at saving it from collapse as falling oil prices hit the sector hard... Read more

Goldman Sachs: Here's How Much the Turmoil in Financial Markets Could Hurt U.S. Growth... Read more

The U.S. services sector expanded at a slower pace in August than July as new business growth softened, an industry report showed on Tuesday. Financial firm Markit said its preliminary or "flash" reading of its Purchasing Managers Index for the services sector slipped to 55.2 in August from the final 55.7 reading in July, below the 56 level expected by economists in a Reuters survey... Read more

U.S. consumer confidence hit a seven-month high in August and new single-family home sales rebounded in July, suggesting underlying strength in the economy that could still allow the Federal Reserve to raise interest rates this year... Read more

These stocks are getting crushed. Is it time to buy now?... Read more

Decisions to step away from stocks by everyone from professional speculators to clients of U.S. mutual funds are proving prescient amid the worst rout since 2011. Hedge funds that aim to profit from global economic trends, a group that oversees some $550 billion, spent July putting on trades that profit from declines in equities, data from Credit Suisse Group AG showed. Owners of mutual and exchange-traded funds yanked $78.8 billion from U.S. shares in the first seven months of 2015, more than in any full year since at least 1993... Read more

Ashley Madison, parent company sued in U.S. over data breach... Read more

Best Buy Tops Estimates as CEO Makes Good on Growth Promise... Read more

New Jersey Governor Chris Christie won a judge’s approval of a $225 million settlement with Exxon Mobil Corp. to end litigation over decades-old pollution, an accord Democratic lawmakers and environmental groups call inadequate... Read more

Johnson & Johnson agreed to sell its Splenda lineup to Heartland Food Products Group, abandoning a product that has ascended to the top of the low-calorie sweetener market over the past two decades but also brought controversy... Read more

Syngenta AG, the Swiss agricultural chemicals maker, was seen opening up more than 7 percent after a source said Monsanto Co. had sweetened its takeover offer, according to premarket indicators in Zurich. U.S.-based Monsanto increased its offer to buy Syngenta to around $47 billion, or 470 Swiss francs ($503.70) per share from 449 francs per share previously, a person familiar with the matter said on Monday. The stock had closed at 357.60 francs on Monday.... Read more

‘Black Monday’ inflicts further damage on Russian markets... Read more

Hammered by sanctions, Russia is eyeing new methods of gaining access to international capital, including the multi-trillion dollar world of Islamic Finance.... Read more

China cuts interest rates by 0.25 percentage points amid economic slump; Western markets rebound... Read more

Foreign automakers brace for China slowdown... Read more

Ouch! Asia's richest man Wang Jianlin has lost about $13 billion in China's stock market crash. Since Chinese stocks peaked in June, shares of Wang's publicly traded companies have tumbled in Hong Kong and Shenzhen -- eroding his personal wealth. He lost a whopping $3.6 billion in just the past two trading sessions -- roughly a third of his total losses this summer... Read more

Toyota says testing potential alternatives to Takata air-bag inflators... Read more

Brazilian Stocks Advance on China's Stimulus as Real Declines... Read more

'Don't overburden central banks,' says India's Rajan... Read more

Bad news from China has sparked a firestorm in the developing countries that feed its vast industrial machine, leaving a swath of economies with few good ways to escape a crunch. But countries that have reduced their external vulnerability have fared at least slightly better in the latest rout. India’s currency shed a quarter of its value over a few months in 2013 after the Federal Reserve hinted it might reduce its monthly bond purchases. At the time, India relied heavily on foreign capital to fund imports.... Read more

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