ASB Securities Morning Brief for Friday, 20 November 2015
Friday, 20 November 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, led by auction site Trade Me Group, while a rally in Australian shares helped lift Westpac Banking Corp and Australia & New Zealand Banking Group. The S&P/NZX50 rose 15.4 points, or 0.26 percent, to 5995.24. Within the index, 23 stocks rose, 19 fell and 8 were unchanged. Turnover was $127 million... Read more

The New Zealand dollar rose after minutes to the last Federal Reserve policy meeting showed an interest rate hike was still on the cards next month without offering more guidance, prompting some traders to cash in on their bets on the greenback. The kiwi gained to 65.31 US cents at 5pm in Wellington from 64.35 cents at 8am, and up from 64.65 cents yesterday. The trade-weighted index advanced to 71.15 from 70.77 yesterday... Read more

Small businesses choosing to "pop up" rather than stay long-term... Read more

Len Brown urged to release council assets ahead of finance meeting... Read more

Big 5 banks giving little away on whether residential property investors will face higher mortgage rates to reflect new RBNZ rules. Will new Reserve Bank rules see residential property investors hit with higher mortgage rates than owner-occupiers?... Read more

Borrowers Choose Long Term Pain over Short Term Gain. NZCU Auckland today released the findings from a survey conducted amongst its customers regarding their borrowing habits and to what degree they understand the long term impact of those decisions. NZCU Auckland General Manager Rob Collins commented that “we wanted to understand better what our Members thought about the options open to them when it comes to making borrowing decisions”... Read more

'Apocalyptic scenario in Auckland housing market unlikely to occur'. Major fall in Auckland house prices only likely if all of foot & mouth, Rangitoto's volcano coming alive and houses being built at half current prices happens, BNZ's Tony Alexander says... Read more

New Zealand’s rental market is slowing down with the national median rent staying at $360 for the third month in a row, reveals the latest Trade Me Property rental data. Even in Auckland, median rents have now stalled. In October, the median rent eased back slightly to $495 per week from $499 in August and September. In Christchurch, the median rent continues its decline as supply from the city’s rebuild continues to come on to the market... Read more

Auckland renters thousands of dollars better off than homeowners... Read more

Waikato's auction houses steam ahead... Read more

Commissioner for the Environment warns more homes in NZ lie less than 50cm above the spring tide level, than those red zoned after the Canterbury quakes. The Commissioner for the Environment is calling for an “overhaul” of the way we prepare for rising sea levels, identifying at least 9,000 homes that lie within only a half a metre of spring tide levels.... Read more

Auckland for sale: Councillors push on... Read more

Roboadvice a game-changer: Resnik. Roboadvice is being tipped to be the most significant development in the delivery of financial advice in this country in the past three decades.... Read more

PAA offers FSC support. Mud-slinging between different factions of the financial services industry is damaging and could harm its reputation, the chairman of the Professional Advisers Association says... Read more

Trustpower cuts the value of its Snowtown wind farm... Read more

Dairy Farmers of America (DFA) will buy Fonterra’s 50% interest in DairiConcepts, a dairy-based ingredients provider, for $196 million at the end of the year. Fonterra and DFA have been in partnership for more than 15 years... Read more

The REINZ Dairy Farm Price Index fell 18.6% in the three months to October versus the same period of last year. The Index adjusts for differences in farm size and location to show the trend across the country, but the number of dairy farms sold and their median price per hectare were also down... Read more

Price increase to put spring in sheep and beef farmers' step... Read more

New Zealand Wool Services International Limited’s C.E.O, Mr John Dawson reports that a slightly easier New Zealand dollar and limited wool volumes combined with steadier enquiry, saw most categories well supported. Of the 5,700 bales on offer, 92 percent sold... Read more

Environment Canterbury (ECan) is investigating demand for another possible irrigation scheme in South Canterbury. An ECan spokesperson confirmed on Thursday the regional authority was jointly funding a project with the Irrigation Acceleration Fund to support "an integrated water infrastructure solution" after requests from a local zone committee... Read more

Shanghai Pengxin, the owner of New Zealand's Crafar Farms, has had its plans to buy vast swathes of Australian cattle farming land scuppered by that country's government, partly as a result of national security concerns... Read more

Turners Group, the financial services firm formerly known as Dorchester Pacific, lifted profit nearly 50 percent as the company considers further acquisition opportunities after a strong trading performance in the first half of the current financial year. Net profit rose to $7.4 million in the six months ended September 30, from $5.1 million a year earlier, the company said in a statement. Profit before tax was $10.3 million, ahead of Turners' market guidance of $9.5 million... Read more

Rakon, the high-tech components maker, turned in a first-half profit and reiterated that it expects to post flat full-year earnings. The Auckland-based company posted a profit of $1.08 million, or 0.6 cents a share, in the six months to September 30, from a loss of $3.34 million, or 1.7 cents, in the year earlier period, it said... Read more

Sanford reported a 38% drop in annual profit after New Zealand's largest listed fishing group wrote down the value of businesses and exited some struggling units. Net profit fell to $13.8 million, or 14.8c per share, in the 12 months ended September 30, from $22.4 million, or 24c a year earlier... Read more

Veritas sells Hamilton bars as it prunes acquisition... Read more

Veritas affirms annual earnings guidance, says Nosh turnaround expected next year... Read more

Kathmandu Holdings' board increased the compound annual earnings-per-share growth target for its chief executive's incentive scheme to a minumum of 17.5 percent at its annual meeting today, following unhappiness from shareholders about the scheme's initial, more generous settings. The board released its initial proposed targets for new chief executive Xavier Simonet in mid-October, with his bonus to be dependent on both total shareholder return and earnings-per-share growth. The company's shares dropped 0.6 percent to $1.57 and have shed 27 percent so far this year.... Read more

One of Martin Aircraft's jetpacks made its first maiden manned flight in Canterbury this week, Television New Zealand reports. The Christchurch company, the network reported, limited the jetpack's altitude to eight metres because it didn't have a parachute fitted... Read more

Palmerston North-based specialist drug company New Zealand Pharmaceuticals has reportedly been sold to Australian private equity firm Archer Capital. A company spokeswoman told NBR the firm was not commenting on reports of the sale, said to be for about $200 million... Read more

NZ Post says there may be no bottom to the fall in letter volumes, but if they eventually ran out the business could be highly profitable. Appearing before a select committee in Parliament on Thursday, chairman Sir Michael Cullen told MPs that while in the past the board had expected postal volumes to recover or the decline to ease, this had never occurred... Read more

Virgin Australia will boost the number of its transtasman services next year. Chief commercial officer Judith Crompton says the airline will run 10 return services between Auckland and Sydney and nine between Auckland and Melbourne each week from June 30... Read more

South Island property developer Ngai Tahu has appointed an Aucklander to manage its northern housing projects. David Kennedy has been on the board of the tribe's property group for the past six years, during which he managed a $270 million upgrade of Auckland's Eden Park... Read more

AMP Capital has appointed a new head of distribution, to fill the position left vacant when George Carter moved to Nikko Asset Management. The new head of distribution is an internal appointment, Rebekah Swan.... Read more

New Zealand's Most Powerful Lawyers Named: Justice Ministry Head Tops the List... Read more

InternetNZ announces new community grants... Read more

Air New Zealand brand ambassador Richie McCaw has confirmed he’ll continue his work with the airline re-signing as an ambassador for a further two years, following his retirement from international rugby. The airline has been a sponsor of the All Blacks for more than two decades and Richie McCaw has been an Air New Zealand brand ambassador since 2010... Read more

NZ's export education reputation at risk from Indian student exploitation... Read more

How the Christmas credit card bill is becoming less shocking... Read more

Commerce Minister Paul Goldsmith wants to know whether there are problems in the building sector where companies are wound up to dodge unpaid debts and whether better ways exist to claw back funds lost in Ponzi schemes, tasking a group of insolvency experts to test the current law. The working group will look at whether there are problems with the voluntary liquidation of companies, including the use of phoenix firms where assets are transferred to a near-identical entity to dodge liabilities, and whether that's confined to the building sector or is a broader problem, according to the review's terms of reference... Read more

Liquidators of Ross Asset Management (RAM) are appealing a High Court decision in a bid to help them claw back $43 million from more than 200 investors. On Thursday, Wellington lawyer Hamish McIntosh took his bid to the appeal court to overturn a decision made in June that he should give back $454,000 in profit from RAM, New Zealand's largest ever Ponzi scheme... Read more

McIntosh's behaviour showed he wasn't aware of RAM problems, Appeal Court told... Read more

Opinion/Analysis - Jamie Gray: The Big Read: Fonterra power play. Dissidents want to trim the dairy giant's board -- is it just a bid to lift performance, or a sign of deeper political tensions? Jamie Gray looks at the issues... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has closed higher despite a poor start as investors found reason to buy into the major banks. The local bourse opened sharply lower after a bomb threat in Germany rattled investors and prompted a market reversal on Wall Street... Read more

The Australian dollar is higher after the US dollar weakened on the prospect of gradual interest rate hikes. At 5.00pm (AEDT) on Thursday, the currency was trading at US71.69c, up from US71.01c on Wednesday.... Read more

An urgent Senate inquiry could be held into the lease of Darwin's port to a Chinese-owned company. It would examine consultations between the Northern Territory and federal governments and Defence, as well as the strategic importance of the port... Read more

The Turnbull Government has vetoed the sale of Australia’s largest private land holding to Chinese bidders amid fears it could have compromised security at a weapons training range... Read more

The non-resources-related sectors of Australia's economy are picking up, says labour higher and maintenance group, Programmed Maintenance. Programmed on Thursday reported an $18.7 million loss for the six months to September 30, compared to a profit of $9.8 million a year earlier... Read more

Prime Minister Malcolm Turnbull has vouched for Indonesia and the Philippines to be included in a 12-nation Pacific trade pact in a bold pitch for an even bigger global deal. The Prime Minister formally backed the campaign of the two nations eager to be part of the Trans-Pacific Partnership agreement in a meeting with 20 other regional leaders in Manila on Thursday... Read more

Australian businesses are finding it more difficult to pay their taxes, according to a new report. The Paying Taxes 2016 report by PricewaterhouseCoopers and World Bank Group comes at a time when the Turnbull government is trying to make the tax system more efficient... Read more

Housing investors have suddenly become a bunch of nervous Nellies. A survey, completed this month by banking research and consulting firm Digital Financial Analytics, shows only 58 per cent of one-property investors expect higher prices in the coming 12 months, down from 83 per cent in the September survey... Read more

Paladin Energy chairman Rick Crabb has fronted shareholders at the company’s annual general meeting in Perth today for the first time without long serving chief executive John Borshoff, who resigned in August after 21 years with the uranium miner. Paladin shares closed up one cent, or 4.17 per cent, at 25 cents.... Read more

Reward Minerals has been granted a trading halt this morning pending the release of a Resource for the LD Sulfate of Potash Project... Read more

BHP Billiton insists it learnt lessons from its last environmental disaster at the Ok Tedi copper and gold mine in Papua New Guinea 20 years ago... Read more

Progressive dividend sets BHP Billiton apart, says Jac Nasser. BHP Billiton chairman Jac Nasser has refused to guarantee the progressive dividend will survive the company's revenue collapse, but has heavily hinted that it will remain after declaring that it is an important distinguishing factor between the company and its rivals... Read more

BHP Billiton has reiterated its commitment to a progressive dividend policy as it opened its annual meeting in Perth this morning, overshadowed by the Samarco disaster... Read more

Northern Territory focussed KGL Resources has appointed Denis Wood as acting chairman, and Chris Bain has stepped aside... Read more

ACCC clears Shell's $98b takeover of BG Group.... Read more

The competition watchdog has given an unconditional green light to Royal Dutch Shell’s “mega buyout” of BG Group, despite concerns about the deal from manufacturers. The Australian Competition and Consumer Commission on Thursday said it was now comfortable with Shell’s $US70 billion ($97.8 billion) takeover of oil and gas heavyweight BG Group... Read more

Cardinal Resources appoints Mark Connelly non-executive chairman... Read more

Bluescope Steel expects a sharp lift in first-half earnings but has warned of increased margin pressures in the second half of the year. Chief executive Paul O'Malley said the company is benefiting from growth in domestic demand, on the back of the housing construction boom and a weaker Australian dollar. Bluescope shares closed 22 cents, or 5.3 per cent higher on Thursday, at $4.37 each.... Read more

Mineral Resources stock has risen sharply after the company said it would buy back $30 million of its shares. The contractor and iron ore miner also forecast earnings of $250 million to $290 million for this financial year, based on an average iron price of $US50 per tonne... Read more

Woolworths will outline its plans for the beleaguered Masters Home Improvement business within months, which could include offloading a larger stake of the loss-making operation to its US joint venture partner Lowe's. With losses from Masters headed towards $200 million for the nine months to October, analysts suggest Woolworths will reveal its plans for its home improvement operation by early in the new year... Read more

Saudi Arabia is growing less wheat, so can Australia fill the need for imports? With Saudi Arabian demand for foreign wheat growing each year, Australian grain traders say its presenting new opportunities for Australian wheat exports. Until recently, the desert Gulf nation produced so much wheat that it was able to export to other Middle Eastern and North African markets.... Read more

OnCard International's are in pre-open this morning, following the ASX granting the company a trading halt.... Read more

David Jones sales jump 12pc under new ownership... Read more

Rural veterinary chain Apiam is preparing for a pre-Christmas stock market debut to help it carve out a bigger share of the healthcare market for livestock. The Bendigo-based company plans to raise $40 million by offering shares at $1.00 each ahead of its ASX listing on December 17.... Read more

Investors have piled into OzForex shares after global financial giant Western Union lobbed a premium takeover bid for the online foreign exchange company. Western Union has made a preliminary and non-binding offer of between $3.50 and $3.70 a share, valuing OzForex up to $888 million. OzForex's share price closed up 30 per cent, or 78 cents, at $3.38... Read more

Speculation on Disneyland Australia. A Chinese developer trying to cut a deal with the Queensland government has fuelled speculation a new Disneyland might wash up on the Gold Coast. The Gold Coast Bulletin reported Wang Jianlin's Chinese conglomerate, the Wanda Group, was negotiating with the state Government to get land at Coomera to build a "multi-billion-dollar" theme park.... Read more

Patties Foods is still feeling the impact of its mass recall of frozen berries amid a hepatitis A scare earlier this year... Read more

Internet back after cable repairs... Read more

Macquarie Group has ended an almost year-long global search for a chief information officer by luring the APAC CIO of Barclays Bank's investment business into the position. Sources told iTnews Justin Raoul Moffitt will join the financial services group as its top technology executive in February next year, working from Sydney. The group confirmed the appointment... Read more

A Queensland MP wants part of his far north electorate to become the state's cannabis capital.... Read more

Law firm Maurice Blackburn has launched a class action lawsuit on Thursday on behalf of Australian owners of scam-tainted Volkswagen seeking total damages "well north" of $100 million... Read more

James Hardie downgrades FY profit guidance... Read more

James Hardie has cut its annual contribution to a compensation fund set up for asbestos victims by nearly a third following a drop in its free cash flow. The building products supplier fulfilled its previously flagged commitment to pay 35 per cent of its free cash flow to the Asbestos Injuries Compensation Fund (AICF), but a drop in that cash flow meant the 2014-15 payment was $81.1 million compared to $119.9 million a year earlier. James Hardie said it has now paid a total $799.2 million to the fund since its inception in 2007.... Read more

Opinion/Analysis - Michael Pascoe: How property developers make windfall millions... Read more

International Headlines

U.S. Market Report: U.S. indexes wobbled on Thursday as healthcare stocks snapped a three-day rally after UnitedHealth cut its profit forecast, offsetting gains in technology and consumer stocks... Read more

North/South Americas Market Report: North and South American markets are mixed today. The Bovespa is up 0.81% while the IPC gains 0.25%. The S&P 500 is off 0.09%... Read more

European Market Report: European markets finished broadly higher today with shares in Germany leading the region. The DAX is up 1.14% while London's FTSE 100 is up 0.81% and France's CAC 40 is up 0.17%... Read more

Asian Market Report: Asian markets closed sharply higher today with shares in Hong Kong leading the region. The Hang Seng is up 1.41% while China's Shanghai Composite is up 1.36% and Japan's Nikkei 225 is up 1.07%... Read more

Brent oil erased most of its early losses to trade steady on Thursday on support from a weak dollar and higher gasoline prices, while U.S. crude slipped on pressure from large inventory builds. Brent futures LCOc1 were flat at $44.14 a barrel by 11:52 a.m. EST (1652 GMT), after hitting a session low of $43.70. U.S. crude's benchmark West Texas Intermediate (WTI) futures CLc1 fell 40 cents to $40.35, after hitting an intraday low of $41.05... Read more

The world's big listed oil companies have taken another nasty hit, writing down the value of their assets by $US38 billion in the September quarter. The US Energy Information Administration (EIA) said the oil price driven write-downs were the largest since 2008 at the depth of the global financial crisis... Read more

U.S. 30-Year Bond Stages Longest Rally Since August on Fed Pace... Read more

U.S. gender pay gap is getting worse. Ladies, mark your calendars. In the year 2133, your earnings will finally match those of your male colleagues. It will take 118 years for the economic gap between men and women to close, the World Economic Forum said in its latest Global Gender Gap report.... Read more

US jobless claims decline to 271,000... Read more

Fairly upbeat U.S. data highlight economy's resilience... Read more

The U.S.’s biggest health insurer is considering pulling out of Obamacare, a month after saying it would expand its presence in the program. UnitedHealth Group Inc. is scaling back marketing efforts for plans it’s selling this year under the Affordable Care Act, and may quit the business entirely in 2017 because it has proven to be more costly than expected. It’s an abrupt shift from October, when the health insurer said it was planning to sell coverage in 11 new markets next year, bringing its total to 34. The company also cut its 2015 earnings forecast... Read more

Call it a moral victory for the unicorns. Shares of Square were up 45% in midday trading Thursday. But it's still a sign of weakness for Silicon Valley's ballyhooed startups... Read more

Dorsey's Square jumps in market debut, offering hope to startups.... Read more

After an awkward start, Tinder owner Match Group officially began its relationship with Wall Street on Thursday. The online dating company is raising nearly $400 million by selling shares to the public for the first time. Match started trading on the Nasdaq under the ticker symbol "MTCH" at $13.50, a small bounce from its IPO price of $12... Read more

Activist investor Starboard Value LP asked Yahoo Inc to drop plans to sell its stake in Alibaba Group Holdings Ltd due to tax concerns, and instead urged the company to sell its core search and display advertising businesses... Read more

What better way to add luster to your mining shares than to unearth the world's second biggest diamond? Shares in Lucara soared 32% after it unveiled a stone of 1,111 carats -- which it says is the biggest gem quality diamond found in more than 100 years. The stock market move added about $150 million to the value of the company.... Read more

Pfizer Inc is negotiating a break-up fee in the range of 2 to 3 percent of the value of its roughly $150 billion potential acquisition of Allergan Plc, proportionally in line with other deals, people familiar with the matter said... Read more

Bombardier Gets $1.5 Billion Caisse Deal, Drops Rail IPO... Read more

Retail chain Best Buy Co Inc on Thursday forecast a revenue decline for the crucial holiday quarter and reported lower-than-expected quarterly comparable sales, citing slower consumer demand for mobile phones and tablets. Shares of the No. 1 U.S. consumer electronics chain fell nearly 5 percent.... Read more

Royal Bank of Scotland has said it is scrapping sales bonuses for staff working at its retail banks. To compensate, the roughly 20,000 staff selling products such mortgages, credit cards and loans to individuals and businesses will get an average 5% pay rise... Read more

VW to cut capex as emissions scandal weakens unions... Read more

HBOS report: 10 executives could face ban... Read more

Petrobras's Dangerous Debt Math: $24 Billion Owed in 24 Months... Read more

South African Reserve Bank Governor Lesetja Kganyago took the tough decision to inflict short-term pain on the economy by staying ahead of the U.S. Federal Reserve and avoiding a potential rout in the currency. The Monetary Policy Committee raised the benchmark interest rate by 25 basis points to 6.25 percent on Thursday in a move that had divided economists, traders and even policy makers. While the MPC lowered its inflation and growth forecasts for this year, it warned of the risk of price pressures spreading because of a weakening rand... Read more

Talk about some deep pockets! China's consumers are projected to spend more than up to $6.4 trillion a year by 2025, according to a new report. That's about a 70% increase from the $3.7 trillion that consumers in China spent last year, according to a study by think tank Demand Institute... Read more

Chinese police have busted the country's biggest underground banking cases involving transactions totaling 410 billion yuan ($64.24 billion), the official Xinhua news agency said on Thursday, part of a drive to combat money laundering. Police from China's eastern Zhejiang province have detained about 100 suspects from eight gangs since they launched an investigation in September last year, Xinhua said... Read more

Analysis - George Lei Simon Ballard: Safe Haven Assets Are Starting to Look a Little Different Investors seeking a port in a market or geopolitical storm are looking to some nontraditional assets... Read more

Analysis - Kahmal Ahmed: Banking and the failure of policing... Read more

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