ASB Securities Morning Brief for Wednesday, 03 February 2016
Wednesday, 03 February 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, led by Fletcher Building after the country's biggest construction company bought a roading firm. Summerset Group gained while Mighty River Power and Nuplex Industries dropped. The S&P/NZX 50 Index rose 5.6 points, or 0.1 percent, to 6180.09. Within the index, 25 stocks fell, 20 rose and five were unchanged. Turnover was $151 million... Read more

The New Zealand dollar fell against its trans-Tasman counterpart after the Reserve Bank of Australia was less pessimistic about the global outlook than some traders had expected. The kiwi fell to 91.95 Australian cents from 92.14 cents immediately before the RBA announcement, though up from 91.61 cents yesterday. The local currency gained to 65.22 US cents from 65.12 cents at 8am and 64.74 cents yesterday as weaker than expected US data stoked speculation the Federal Reserve won't hike rates as aggressively as previously flagged... Read more

New Zealand commodity prices slid 2.3% in January, led by declines in wool, skins, cheese and whole milk powder prices. The ANZ Commodity Price Index fell to 232.4 in January, from 238.0 in December, for an annual decline of 15%. A fall in the New Zealand dollar limited the drop in the local index to 0.4% for the month, or 1.6% on an annual basis... Read more

NZ Online Retail Sales - Monthly update for December 2015... Read more

Focus already on expanding TPP. As nations gather in Auckland to sign giant trade deal, NZ eyes role as secretariat to steer in more members.... Read more

'New Zealanders' wealth will grow' - Kiwi businesses backing TPP. ... Read more

Fuel companies pay for regional discounts with higher city prices - AA. Wellington and South Island motorists are paying the price for regional fuel discounts, with petrol companies using higher margins in the capital to subsidise lower margins elsewhere. Despite being situated within minutes of major import terminals at Seaview in Petone - meaning minimal transport costs - Wellington's retail prices are much higher than inland areas nearby... Read more

Fewer homeowners lost their properties in mortgagee sales last year - despite soaring house prices - as near record-low interest rates make it easier for struggling property owners to afford repayments. Figures released exclusively to the Herald by data analysis company CoreLogic show a slight increase in forced sale numbers during the last quarter of 2015, but annual foreclosure numbers fell from 802 to 550 year-on-year... Read more

No end in sight for shortage. Discrepancy between Auckland’s construction activity and population growth and the impact on housing has been highlighted in a new report.... Read more

Compliance skills in demand. Financial services risk and compliance specialists are expected to be some of the most sought-after people in New Zealand this year.... Read more

Our comprehensive review of Balanced KiwiSaver fund returns to December 31, 2015, identifying who has the best long-term returns... Read more

Commerce Minister Paul Goldsmith wants the Retirement Commissioner to look at how retirees manage their assets using products such as annuities and reverse mortgages, and in a low interest rate environment. The terms of reference for the three-yearly review of retirement income policy due this year were today tabled in Parliament, and show several new additions from the 2013 review... Read more

More apply for CFA status. More than 10% more New Zealand and Australian candidates sat the level one exam for the Chartered Financial Analyst qualification last year than in 2014.... Read more

NZ wool auction volumes likely to drop 4.4% this season... Read more

NZ dairy prices drop sharply at GlobalDairyTrade auction. World dairy prices have dropped for the third straight period at the GlobalDairyTrade auction. The average auction price fell 7.4 percent to US$2276 a tonne at the auction overnight on Tuesday (Wednesday NZ Time). That compared with a 1.4 percent fall in the last auction a fortnight ago and a 1.6 percent drop on January 5... Read more

Homebrand milk has been pulled from supermarket shelves after customers complained it smelt and tasted like chemicals. Countdown spokesperson Keith Cowden-Brown said it voluntarily withdrew Homebrand 2 litre and 3 litre lite blue milk bottles with the expiry of February 11 from North Island stores over the weekend following customer feedback about the taste of the product... Read more

Trade Me stock was downgraded to 'sell' from 'buy' by brokerage Craigs Investment Partners, saying shares in New Zealand's largest online auction site were "fully priced."... Read more

Trade Me says foreign firms turning blind eye to local laws... Read more

Paymark's shareholders, ANZ, ASB, BNZ and Westpac, have officially hoisted a for sale sign.... Read more

Winston Peters wants the RBNZ to buy Paymark from the big 4 banks as step towards 'taking back control of our financial system'... Read more

Full break-up may be best option for 'under-valued' Fletcher Building, given outlook for Australia, ROW. Fletcher Building shares are worth 25 percent more than their current market price on a sum-of-the-parts valuation and a full break-up of the company may be the best option to lift returns from shareholders faced with under-performing Australian and rest-of-the-world operations, says brokerage First NZ Capital... Read more

Fletcher Building has paid $315 million for Higgins Group Holdings, New Zealand's third-largest road construction and maintenance company, while separately announcing it will restructure into five divisions. Fletcher Building shares last traded at $7.... Read more

Palmerston North mayor Grant Smith says there is no need to fear the buyout of prominent Manawatu company Higgins will be bad for the region. "I understand change is hard, but this is positive, and there is a commitment to the head office staying here," Smith said... Read more

Auckland Airport taxiway maintenance. Auckland Airport has announced today that it will be reducing the operating length of its runway for the next eight weeks to enable maintenance work to be undertaken on a neighbouring taxiway... Read more

Christchurch design and advertising agencies Strategy Design and Advertising and Simpatico have merged their local and international client books. Strategy Group managing partner Geoff Cranko said the melded business would be one of the largest media planning and buying agencies in the South Island... Read more

Augusta Capital, the listed property investor and fund manager, will buy a $A23 million industrial property in Brisbane, which it plans to put up for syndication. The Auckland-based company will offer the property to syndicate investors in mid to late March, with a view to raising A$14 million, it said in a statement. The acquisition is conditional on Augusta raising at least $A9 million by the end of May. The shares were unchanged at 99c, and have slipped 1% so far this year.... Read more

The ins and outs of Harmoney, LendMe, Squirrel Money and Lending Crowd compared from a borrower's perspective... Read more

Chatham Rock Phosphate says it intends reapplying for a licence to mine the seabed off the Chatham Rise for phosphate nodules, even as it prepares for court action with the Environmental Protection Authority over disputed fees from its unsuccessful first application... Read more

The Environmental Protection Authority is within a fortnight of filing court papers to pursue would-be seabed miner Chatham Rock Phosphate over $795,000 of unpaid marine resource consent application fees. The environmental regulator’s chief executive, Allan Freeth, told Parliament’s environment and local government select committee that affidavits would be filed next week or the week after, with court hearings set for the first week of March... Read more

Vodafone welcomes Advertising Standards Authority ruling - confirming Vodafone offers consumers New Zealand’s lowest standard Prepay rates... Read more

A five-year investigation into the sale of Motukawaiti Island near Northland's Matauri Bay failed to turn up enough evidence for the Overseas Investment Office to launch a prosecution. The Land Information NZ unit closed its probe into New Zealand company St Morris NZ's acquisition of the island using funds from Chinese businessman Zhang Jun on Oct. 30 last year without enough evidence to support criminal prosecution for breaching the Overseas Investment Act, the OIO said in a statement... Read more

Rabobank Australia & New Zealand Group has announced the appointment of Tim Hunt as new General Manager of its Food & Agribusiness Research (FAR) division. Mr Hunt takes on the role after five years with Rabobank in New York, where he served in the international position of Global Strategist – Dairy... Read more

The Real Estate Institute of New Zealand (REINZ) has appointed BayleysLocations, Queenstown General Manager, Gail Hudson to the REINZ Board.... Read more

Fairfax Media NZ appoints Chief Marketing Officer... Read more

Opinion - Raybon Kan: TPP - what could go wrong? Free study far easier to boast about than secretive trade deal that prioritises multinationals... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket declined today with oil-linked stocks and media companies taking a dive, while the Reserve Bank’s comments on global volatility further dampened sentiment. At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was down 50.3 points, or 1 per cent, at 4993.3, while the broader All Ordinaries index slipped 50.4 points, or 0.99 per cent, to 5043.9.... Read more

The Australian dollar has softened slightly amid lacklustre trading in Asian markets and a strengthening Japanese yen. At 5pm (AEDT) on Tuesday, the local unit was trading at US70.70c, down from US70.77c on Monday.... Read more

RBA holds cash rate at 2%... Read more

Consumers have started the year on a pessimistic note for the first time since the global financial crisis. The ANZ-Roy Morgan consumer confidence index fell 0.9 per cent in the week ending January 31, and has fallen 4.4 per cent over the past four weeks.... Read more

The cost of building renovations has fallen in Queensland but is still more expensive than Victoria, according to a new report.’s quarterly Renovation Consumer Price index found that renovation costs in Queensland fell by 0.35 per cent to $62.09 an hour in the last three months of 2015 compared with a national average increase of 1.48 per cent... Read more

Federal Government to create tougher authority to oversee nation's building industry... Read more

Building approvals to bounce in December... Read more

Treasurer Scott Morrison has used the first parliamentary sitting day of the year to assure voters the Australian economy is improving, even in the face of “very serious” global headwinds... Read more

The National Farmers' Federation (NFF) is calling on the Federal Government to abandon plans to increase the rate of tax paid by backpacker workers. From July this year, the Government will remove the tax-free threshold for backpackers employed on working holiday visas and tax them at a rate of 32.5 per cent from the first dollar they earn... Read more

Indian mining giant Adani has cleared a major hurdle for its controversial Carmichael coal mine, with the Queensland government issuing the project with a final environmental permit... Read more

Ratings agency Standard & Poor's could force BHP Billiton's hand on its controversial dividend policy after lowering the resources giant's credit rating by a notch and putting it on negative watch. BHP shares, which have slid by about 50 per cent in the past year, were down more than two per cent at $14.92. Rio Tinto shares, which have declined nearly 40 per cent in the same period, were trading 3.7 per cent lower at $37.64... Read more

Central Australian gold mine Old Pirate to close: around 100 jobs lost... Read more

Aspiring North West prawn fishing company Mareterram will buy Focus Fisheries for about $1.3 million.... Read more

Education provider Navitas has announced an on-market share buyback along with a 44 per cent increase in interim net profit to $45.5 million.... Read more

Former National Australia Bank subsidiary Clydesdale has delayed its long-awaited IPO by 24 hours, in order to give institutions time to digest the release of immaterial new details on its deposit rating. The listing price has been tentatively set at £1.80, midway in the revised range of £1.75 to £1.85 flagged earlier this week, with the IPO multiple times covered.... Read more

Heavy engineering company Civmec has bought NSW defence shipbuilder Forgacs for about $21 million. Civmec said it had completed the acquisition, flagged last November, of the privately owned company following due diligence and negotiations... Read more

ATM operator Stargroup has strung together eight quarters of record revenue growth from its ATM business, but is also benefitting from a 19.25% investment in Korean ATM machine supplier and manufacturer NeolCP after it booked half year EBITDA of A$1.9 million. NeolcapCP also owns 7.3% of the tightly held Stargroup... Read more

News Corp's online real estate firm REA Group has cleared the last obstacle in its $750 million takeover of Southeast Asia-focused rival iProperty. The Federal Court of Australia on Tuesday approved a scheme of arrangement under which a subsidiary of REA Group will acquire all the shares in iProperty... Read more

Private education provider Navitas remains optimistic on its longer-term outlook as it reaffirmed guidance for flat earnings this year, despite a solid rise in interim net profit. At the 4.15pm (AEDT) official market close, Navitas shares were 3.91 per cent higher to $4.78 against a benchmark rise of 1 per cent.... Read more

Bega Cheese is better off losing the contract to supply Coles with its no name cheese, say investors and a long-term adviser of the company. The supermarket chain dumped Bega in favour of Murray Goulburn, which will produce Coles' home brand cheese from January next year... Read more

Aldi Australia is about open its first stores in Adelaide as part of a major expansion into South Australia... Read more

Woolworths has lost its crown as Australia’s most valuable brand, in another blow to the retailer’s fortunes. After seven years at the top of Brand Finance’s annual list, Woolies has been overtaken by Telstra as its brand value took a 14 per cent hit, sinking to $11 billion ($US7.8 billion)... Read more

Australia’s rollercoaster love affair with fancy grocers... Read more

AMP Capital has emerged as one of the unsecured creditors for the Dick Smith chain, with a worst case scenario debt of about $30 million, following the collapse of the business... Read more

Australia's corporate regulator has started legal action in the federal court against German construction group Hochtief for insider trading.... Read more

German construction company Hochtief admitted to breaking insider trading rules in Australia in 2014, the nation's financial regulator said Tuesday as the firm said any breach was "inadvertent". The Australian Securities and Investment Commission (ASIC) said it had started legal action against holding company Hochtief Aktiengesellschaft... Read more

BMW's Australian car finance provider has been forced to pay nearly $700,000 in fines for irresponsible lending. The corporate watchdog says BMW Australia Finance has been slapped with two hefty penalties in the past 12 months for breaching consumer protection provisions between November 2014 and May 2015... Read more

McDonald's Australia was able to more than halve its tax bill last year after routing payments via the low-tax nation of Singapore. Each year McDonald's reduces its profit, and thus its local tax bill, by paying McDonald's Asia Pacific based in Singapore, and registered in Delaware, a "service fee" amounting to hundreds of millions of dollars... Read more

Billionaire mining magnate Gina Rinehart has been ordered to hand over secret family trust documents after losing a Supreme Court battle with her eldest children to keep them hidden.... Read more

The Telstra Australian Business Awards will include a Charity Award for the first time this year. Telstra said the category had been included to recognise the significant contribution charities made to WA communities and the economy... Read more

Opinion - Bill Evans: Why the RBA will hold steady... Read more

Opinion - Kevin Davis: Australian banks are hitting Asian roadblocks. History shows that successfully becoming a multinational bank operating in many countries is difficult... Read more

Opinion - Malcolm Maiden: Reserve Bank's inaction on rates is the right action this time. The Reserve Bank met on rates on Tuesday, and did nothing. It did good: rates are already set for a wait-and-see strategy, and that is what is needed... Read more

Opinion - Ken Henry: Australia is knocking at the door of opportunity... Read more

Opinion - Michael Pascoe: Government spending: a AAA-rated furphy... Read more

International Headlines

U.S. Market Report: The Dow average dropped 285 points as U.S. equities joined the global selloff in risk assets. Exxon Mobil Corp. fell after reporting its biggest earnings slide in more than a decade, while BP Plc was among the biggest losers in Europe after its quarterly earnings slumped 91 percent. Russia’s ruble led a retreat in high-yielding currencies after U.S. oil dropped as much as 4.6 percent. Yields on 10-year Treasury notes sank below 1.90 percent... Read more

North/South Americas Market Report: North and South American markets are broadly lower today with shares in Brazil off the most. The Bovespa is down 3.90% while U.S.'s S&P 500 is off 1.47% and Mexico's IPC is lower by 0.77%... Read more

European Market Report: European markets finished sharply lower today with shares in France leading the region. The CAC 40 is down 2.47% while London's FTSE 100 is off 2.28% and Germany's DAX is lower by 1.81%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 2.26%, while the Hang Seng led the Nikkei 225 lower. They fell 0.76% and 0.64% respectively... Read more

Gold is 2016's most beloved asset. Gold bugs are among the only smiling investors these days. Prices have jumped 6% this year to $1,127 an ounce. That makes gold the best performing commodity and one of the only major assets to post a sizable gain in 2016... Read more

Crude prices were down on Tuesday as hopes for production cuts from major producers faded and investors focused back in on the weak fundamental factors underpinning the oil markets. The global crude benchmark Brent fell 1.66 per cent at $US33.67 a barrel for April loading while its US counterpart West Texas Intermediate was down 1.93 per cent at $US31.00 for March deliveries on the New York Mercantile Exchange. ... Read more

Most OPEC members against emergency meeting... Read more

Saudis not being rational, says Madeleine Albright. Oil is extremely cheap right now. Saudi Arabia could change that, but former U.S. Secretary of State Madeleine Albright predicts the Saudis won't act to hike prices.... Read more

US oil giant Exxon Mobil has said its profits fell 58% to $2.78bn (£1.93bn) in the three months to the end of December, compared with $6.57bn for the same period a year earlier. It saw annual profits halve to $16.2bn, from $32.5bn in 2014... Read more

More bad news for oil investors and workers: BP is cutting thousands of jobs after it sank to a huge loss in 2015. The company posted an annual loss of $5.2 billion, compared with a profit of $8.1 billion in 2014... Read more

Shares in BP have ended the day almost 9% lower after it reported that annual profits had more than halved. The oil giant said its profits had fallen by 51% to $5.9bn (£4.1bn), compared with $12.1bn in 2014 following a dramatic slide in oil prices... Read more

These American companies are exposed to the Zika virus... Read more

Sorry, Apple. Alphabet now the most valuable company... Read more

Alphabet Faces $500 Billion Challenge That Others Failed: Chart... Read more

Unemployment in the eurozone dropped in December to its lowest rate in over four years despite worries about the global economy. Eurostat, the EU's statistical agency, said the jobless rate in the 19 country eurozone had fallen to 10.4% from 10.5% in November. This means 16.75 million people are jobless, down 49,000 from November.... Read more

Should they stay, or should they go? The European Union is proposing to change in an attempt to convince Britain to stay in. Prime Minister David Cameron has promised the British people a vote on the so-called 'Brexit' question by 2017. It's the first time in 40 years the issue has been put to the test, and the U.K. is deeply divided... Read more

Sainsbury's aims to "future-proof" its business with the £1.3bn offer to buy Argos owner Home Retail Group. Chief executive Mike Coupe said the deal would allow consumers to shop "whenever and wherever" they wanted... Read more

UBS Group AG dropped the most in more than a year after profit at the wealth management and investment-banking businesses slumped in the fourth quarter. At the wealth-management unit, the bank’s largest, pretax profit fell 47 percent to 344 million Swiss francs ($337 million) from a year earlier, with 3.4 billion francs in net new money outflows, while the investment bank reported a drop of 63 percent to 80 million francs, the Zurich-based lender said in a statement Tuesday... Read more

Scottish Power cuts gas prices by 5.4%... Read more

British Gas is to cut 500 jobs primarily in its energy efficiency business as it tries to reduce its costs. Most of the posts being cut are based in Leeds, Oxford and Leicester and will include staff who deal in loft insulation and cavity wall insulation... Read more

VW Sales Plunged 15% in U.S. During January After Emissions Scandal... Read more

Russia is lining up seven state companies, including airline Aeroflot, for potential privatisation. Kremlin spokesman Dmitry Peskov said the list of companies to be privatised and the size of the stakes were yet to be finalised... Read more

Prudential Selloff Erases $4 Billion Amid Fresh China Fears... Read more

ChemChina Nearing Deal to Buy Syngenta for Record $43 Billion... Read more

Nintendo has reported a drop in profits, after relatively weak sales of games for its Wii U console. The Japanese company's net income for the September-to-December quarter was 29.1 billion yen ($241m; £168m) - 36% lower than for the same period in 2014... Read more

South Korea's finance minister on Tuesday flagged a new government stimulus plan to help offset an extended export slump that is threatening growth in Asia's fourth-largest economy. The stimulus package for the first quarter will be unveiled on Wednesday, Yoo Il-Ho told a business forum in Seoul... Read more

Indian carmaker Tata Motors is to rename its forthcoming Zica hatchback after the similarly-named Zika virus sparked a global health emergency. Tata Motors said that "as a socially responsible company", it had decided to rebrand the vehicle... Read more

India's central bank holds interest rates at 6.75%... Read more

Argentina agreed to pay $1.35 billion in cash to a group of Italian investors who hold its defaulted bonds, marking the first time the Latin American nation has reached an accord with holdout creditors who refused to participate in earlier restructurings... Read more

The absence of decision-making capacity in Venezuela’s government is so acute that the country is likely to default by accident later this year, according to Nomura International Plc. The country’s cash shortage means it would need to cut imports by $32 billion to almost zero this year in order to avoid running out of money, Siobhan Morden, the head of Latin American fixed-income strategy at Nomura, wrote in a note to clients... Read more

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