ASB Securities Morning Brief for Wednesday, 18 November 2015
Wednesday, 18 November 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell along with equity markets across Asia as the terror attacks in Paris sapped risk appetite among investors, weighing on risk-sensitive assets such as technology and commodity-linked companies. New Zealand Refining and Xero declined. The S&P/NZX 50 Index slipped 27.35 points, or 0.5 percent, to 5961.68. Within the index, 30 stocks fell, 11 rose and nine were unchanged. Turnover was $93.4 million... Read more

The New Zealand dollar fell to a five-and-a-half week low as traders bet milk product prices will fall at the upcoming GlobalDairyTrade auction, which would add pressure to the Reserve Bank to cut interest rates when it reviews policy next month. The kiwi dropped to 64.58USc at 5pm in Wellington from 64.92USc at 8am and 65.27USc yesterday. The trade-weighted index declined to 70.64 from 71.27 yesterday... Read more

Final property tax proposed. New tax bill will impact on Kiwi property owners living overseas. The Government introduced a Bill containing a proposed residential land withholding tax (RLWT) into Parliament this week. It will affect people who live overseas and go on to sell the property within two years of purchase.... Read more

It is a good time to be a small business in retail and hospitality, with more firms in that industry reporting a greater increase in revenue in the past year than the national average. According to the latest MYOB Business Monitor 39 per cent of small businesses in retail and hospitality reported an increase in revenue in the past 12 months, compared to the national small business average of 31 per cent... Read more

Advanced Security sees $100m opportunity in automated drone spin-off. Advanced Security Group, which integrates electronic security systems, is planning to build a $100 million revenue company in the next five years with the launch of automated drone surveillance... Read more

Unemployment likely to be above 6 per cent until at least 2017 - survey... Read more

NZ inflation expectations drift further below 2% mid-point... Read more

Top 5 spots to look for yield in Auckland. Traditionally, Kiwi investors are driven by yields because they want to see tangible returns from their portfolio. Yet Auckland’s spectacular price growth in recent times means much of the coverage of the market is focussed on capital gains. ... Read more

The New Zealand Customs Service is dragging the chain on moves to collect goods and services tax on imports of physical goods in the same way as the sales tax will be levied on e-commerce transactions from October next year, says Booksellers NZ, the national lobby group for book stores... Read more

KiwiSaver providers operate sales, not advice model, report finds. Almost no one signing up for KiwiSaver or transferring their KiwiSaver accounts to another fund manager seeks specialist advice to help with the decisions, the Financial Markets Authority says. The Financial Markets Authority (FMA) has released its first monitoring report on practices in sales and advice within the financial services sector, which covers its investigation into KiwiSaver sales practices... Read more

Advice under FMA spotlight. FMA raises concerns about lack of advice for KiwiSaver members but says overall AFAs doing well.... Read more

World dairy prices have fallen 7.9 per cent at the GlobalDairyTrade auction on Wednesday. Prices took a hit two weeks ago, dropping 7.4 per cent after a 3.1 per decline a fortnight earlier. The average price at the latest auction slumped to US$2345 per metric tonne (FAS)... Read more

The average New Zealand cow is producing 18 per cent more milk today than what she did 10 years ago because of better genetics and feed. In 2014-15, the average cow managed 4235 litres compared to 3574 in 2004-5. In its latest statistics released today, DairyNZ said the dairy herd had risen to 5.02 million last year, up from 4.9m in 2013-14.... Read more

A2 Milk Co’s cornerstone shareholder, Freedom Foods Group, has sold its remaining 10.4 percent stake in the milk marketing company for A$64 million, taking advantage of a surge in the share price. Sydney-based Freedom Foods sold its remaining shares for 85 Australian cents apiece and will reinvest the proceeds in other investments including a buy-out of oat-based cereal and snack manufacturer Popina and construction of a new UHT processing facility... Read more

Sheep milk industry hopes rise... Read more

The number of Liquorland outlets has increased by 23 per cent following its acquisition of 20 The Mill stores. Liquorland - a subsidiary of retail grocery company Foodstuffs - bought the stores off Independent Liquor, which is owned by Japanese brewing giant Asahi. The deal was completed on Tuesday after an intent to purchase was announced in September... Read more

Kathmandu CEO incentive scheme irks NZ Shareholders Association... Read more

Pushpay first-half loss widens as revenue more than triples... Read more

Fletcher Building rejects alternate site for Mangere housing development... Read more

The boss of New Zealand's biggest construction firm says higher-density housing is on the rise, with apartments "selling like hotcakes" in Auckland. Fletcher Building tipped an increase in profits at its annual meeting on Tuesday, driven in part by strong Auckland demand... Read more

Fletcher feels the heat from all quarters at its AGM. Fletcher Building chiefs faced questions about controversial housing developments, Firth's weak concrete, corporate earnings, Christchurch asbestos issues, community engagement and asset writedowns at the company's annual meeting in Auckland yesterday... Read more

New Zealand Post, the state-owned mail and distribution service, had the outlook on its credit rating revised up to stable as the start of dividends from its Kiwibank unit and a series of asset sales shored up its balance sheet... Read more

Ebos could be more profitable if it was less reliant on regulated pharmaceutical markets, chief executive Patrick Davies says. The trans-Tasman health and petcare products distributor has bought a natural health marketer Red Seal, for $80m. Red Seal was "strongly profitable" and valuable to Ebos as a seller of branded consumer products, Melbourne-based Davies said... Read more

AFT Pharmaceuticals considers IPO, listing on NZX and ASX... Read more

Powershop, the electricity retailer which allows its users to play the electricity market, has signed a deal to introduce its technology into the UK. Today Meridian Energy, which owns Powershop, announced that it had signed a franchise agreement with RWE npower to use the service platform and brand in Britain... Read more

West Auckland business Revolution Fibres is the first nanofibre producer in the world to meet aerospace industry standards. The AS9100c certification, a quality assurance requirement for all aerospace manufacturers and suppliers, will allow Revolution Fibres to further develop nanofibre products for its aerospace clients overseas... Read more

Spark New Zealand, the country's biggest telecommunications company, may raise up to $150 million through a retail bond offer, joining a growing number corporates taking advantage of low interest rates to raise debt funding. The Auckland-based company's Spark Finance subsidiary plans to make an offer of up to $100 million unsecured, unsubordinated seven-year bonds to institutional and retail investors, with oversubscriptions of up to $50 million, it said in a statement. Spark shares fell 1.8 percent to $3.20, and have increased 4.7 percent this year.... Read more

Auckland-founded Stolen Spirits has sold a $21 million majority stake to Chicago-based Liquid Asset Brands. Stolen was started in 2010 in a one-bedroom Mt Eden flat by Jamie Duff and Roger Holmes, after Duff quit a career as a lawyer at a top investment bank in London and returned to New Zealand the previous year... Read more

Raft of changes for insurance companies. There has been so much product and pricing activity recently it has been hard to keep track of it all. In strict alphabetical order the companies that have made changes include: AIA, Accuro, AMP, Asteron Life, BNZ Life, CIGNA, and Sovereign.... Read more

MJW report deails: Cut soft commission, slash upfronts. Life insurance advisers would have their commissions slashed under recommendations included in the controversial Melville Jessup Weaver report... Read more

The insurance industry’s sounding the alarm bells, following its latest poll showing just how strapped for cash many New Zealand households will be, if their breadwinner gets sick. A poll of 2540 people, commissioned by the Financial Services Council (FSC), shows around half (47%) of employed 18-64 year-olds can’t survive for more than a month after using up their sickness and annual leave... Read more

Remuneration is not the big problem: Sovereign. Sovereign, like other members of the Financial Services Council, disagrees with parts of the controversial MJW report and says the focus for change needs to be around issues other than remuneration... Read more

EY says Auckland Council could boost revenue through offering a smorgasbord of asset naming rights & corporate sponsorship deals. Corporates could be offered a range of new sponsorship opportunities if ideas raised in an EY review of Auckland Council alternative financing sources gain traction. Citing ANZ's purchase of naming rights on Auckland's Viaduct Events Centre, said to be worth "millions," EY notes further opportunities for Auckland Council to generate revenue via naming rights and corporate sponsorships... Read more

Martin Keane has joined Camelot Groups’s Christchurch office.... Read more

Tex Edwards, founder of 2degrees, appears to be considering a tilt at the Auckland mayoralty with a lengthy prescription for fixing the city. That includes banishing the "eye-sore" Ports of Auckland to the Firth of Thames, transplanting Eden Park to the waterfront, and establishing a council office in the European Union capital of Brussels... Read more

More than 30 leaders from top New Zealand businesses have pledged to help achieve diverse and inclusive leadership at the launch of a new campaign. The Champions for Change initiative was launched on Tuesday by Deputy Prime Minister Bill English with the aim to encourage diverse leadership in New Zealand businesses and fast-track New Zealand's future success... Read more

Safety at Wellington airport is in dispute with the director of Civil Aviation saying it is safe and the pilots' union saying the risk of an overrun or undershoot is significant. The airport company wants to extend the length of the runway and Civil Aviation director Graeme Harris has accepted, for now at least, that a longer runway would not mean longer safety zones... Read more

Wairoa meat workers lock out deemed illegal... Read more

A former tax agent who allegedly falsified 250 GST and income tax returns in order to keep client money has been charged with 18 counts of fraud. Michael Robert McDonald, 40, appeared in the Manukau District Court today on four charges of theft by a person in a special relationship, 13 charges of dishonestly using a document, and one charge of false accounting... Read more

Monster Slide company goes into liquidation. Businesses are doubtful of recouping tens of thousands of dollars from a failed company that ran Monster Slide events in New Zealand. Trill Productions Ltd went into voluntary liquidation on November 2, making it the third company directed by Wellington entrepeneur Jamie Templeton to go under since February... Read more

Opinion - Paul Young: Five points showing Kiwi businesses want ambitious climate action... Read more

Opinion - Tom Pullar-Strecker: Netflix tax: why consumers should be breathing a sigh of relief. Few people will welcome paying GST on more purchases, but the way the Government plans to go about charging GST on digital imports is the best they could have hoped for. From October, foreign companies will have to collect GST on sales of digital services to New Zealanders, such as online television subscriptions and music and game downloads.... Read more

Australian Headlines

Australian Market Report: Australian stocks bounce back strongly. At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index rallied 114.4 points, or 2.29 per cent, to 5118.2, while the broader All Ordinaries gained 109.8 points, or 2.17 per cent, to 5174.3.... Read more

The Australian dollar is being suppressed by greenback strength and a slip in commodity prices. At 1700 AEDT on Tuesday, the currency was trading at 70.84 US cents, down from 71.14 cents on Monday.... Read more

A Reserve Bank official is confident that the worst is over for commodity prices and Australia will continue to benefit from a strong Chinese economy. Prices for iron ore, Australia's biggest export, have fallen by about two thirds in past two years after reaching highs of about $US180 a tonne at the peak of the mining boom... Read more

Australia will treat the forging of a trade agreement with Indonesia as a priority and could have it sealed within 12 months. Trade Minister Andrew Robb and his counterpart Tom Lembong have agreed to reinvigorate stalled talks on a comprehensive economic partnership agreement in the new year... Read more

Petrol prices: According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 0.4 cents per litre to 127.7 cents per litre in the week to November 15.... Read more

Brain Resource has been granted a trading halt by the ASX today, pending details of a capital raising... Read more

Monadelphous flags revenue fall... Read more

BBX Minerals receives more time to reveal drilling results... Read more

Fortescue Metals points to big miners' cash-flow issue as industry saviour. Fortescue Metals chief executive Nev Power believes the big miners' collapsing revenues and cash-flow problems may save the rest of the iron ore industry by ruling out further large expansions... Read more

Brazil dam burst: BHP Billiton, Vale to pay $366m for mudslide damage... Read more

Shareholders have railed against Arrium's executive pay and the struggling steelmaker's thoughts of selling its only profitable business. Arrium chairman Jerry Maycock said the nearly 60 per cent vote against the pay policy at the company's annual general meeting was disappointing, but he understood the context in which it was made... Read more

Fortescue Metals Group chief executive Nev Power says the Chinese Government more than any other factor will influence iron ore prices by determining demand for the steel-making product... Read more

Alara Resources shares were flying 80% higher today with shareholder interest updates following a recently closed rights issue and oversubscribed shortfall. The spike left Alara shares last trading at A$0.017, which represents a 183% increase for the stock since reaching a mid-year low of $0.006.... Read more

A proposal by oil and gas company BP to drill in the Great Australian Bight has been rejected by the nation's oil and gas regulator. The energy company had wanted to drill four deep-water exploration wells in the Bight from next year. It had to demonstrate how it would manage the risk of an oil spill and address community concerns about the environmental impact... Read more

The Australian steel industry has issued a warning about the safety standards of steel products being imported from overseas. An oversupply of Chinese steel is plaguing the industry worldwide and Australian steelmakers are struggling to survive, as cheap raw and fabricated Chinese product floods the market... Read more

zipMoney Limited to divulge material funding arrangement... Read more

The a2 Milk Company has nearly doubled its full-year earnings guidance today off the back of “exponential” growth in infant formula sales into the $US30 billion Chinese market. The dual Australian and New Zealand-listed dairy producer is being forced to significantly reorient its business towards the lucrative infant formula market, which attracts much higher margins than fresh milk... Read more

Profits are on the rise at the wine maker behind the McGuigan and Tempus Two labels thanks to stronger sales both within Australia and overseas. Australian Vintage is forecasting net profit this financial year to come in about 10 per cent above the $7.1 million, before one off items, it made in 2013/14.... Read more

Pharmaceutical manufacturing company IDT Australia is heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare.... Read more

Asian conglomerate Jemena wins tender to build NEGI gas pipeline from Northern Territory to Queensland... Read more

Qantas has finally shed its junk credit rating from Standard & Poor's. The ratings agency slashed the airline's credit rating to junk status in December 2013 after Qantas warned of hefty financial losses and mass job cuts... Read more

Generous airline loyalty and credit card reward programs are likely to get stingy under new rules to be announced soon. The rewards programs and the fees that go with them are likely to be further capped as a result of the Reserve Bank's review of the payments system... Read more

Bone Medical has been granted a trading halt by the ASX pending details in relation to the proposed acquisition of Takor Group Pty Ltd.... Read more

WA Energy Minister Mike Nahan has moved to allay concerns he will pick winners and losers under a shake-up to remove excess capacity from the South West electricity system. The concerns were raised after Dr Nahan signalled last week that multimillion-dollar payments made to big electricity users to disconnect from the grid during periods of peak demand were in the cross-hairs of the State Government... Read more

Former Olympic rower Rob Scott has wasted no time stamping his authority on Wesfarmers’ enlarged industrials division with a sweeping restructure that has wiped out 300 jobs.... Read more

Appointment completes IT leadership overhaul. ME Bank has hired former ANZ head of enterprise information architecture Annie South as its general manager of data, filling the last of five new IT leadership positions created through a recent restructure... Read more

The State Government has cited the potential to grow commercial crops of genetically modified cotton in WA’s far north as a factor in its moves to repeal laws restricting use of the technology. “GM cotton could be the future of the Ord (River irrigation scheme),” Agriculture Minister Ken Baston said today... Read more

The Commonwealth Bank says it will take at least another year to compensate victims of bad financial advice, but the man who blew the whistle on financial planning scandals at the bank says the CBA is dragging its heels. The bank told shareholders at its annual general meeting in Sydney on Tuesday 23,000 customers had expressed interest in having their financial advice reviewed... Read more

Ikea Canberra store’s grand opening hacked with fake price tags... Read more

Jetstar and Virgin engaged in “misleading and deceptive conduct” by lying about the price of particular advertised airfares and booking fees, the Federal Court has found. In a judgement out today after an investigation by Australian Competition and Consumer Commission, the court found both airlines contravened Australian consumer law with false prices, commonly known as “drip pricing”... Read more

Lawyers working on a class action against the Federal Government over the 2011 live export suspension say they are set to reveal strong evidence to support their case. The Northern Territory Cattlemen's Association said it had nearly completed gathering evidence for its live export class action, which is calling for millions of dollars in compensation for pastoralists and industry members... Read more

International Headlines

U.S. Market Report: US stocks have opened slightly higher following better-than-expected earnings from retail giants Wal-Mart and Home Depot. Five minutes into trade on Tuesday the Dow Jones Industrial Average was at 17,499.72, up 16.71 points (0.10 per cent). The broad-based S&P 500 added 0.14 (0.01 per cent) at 2,053.33, while the tech-rich Nasdaq Composite Index advanced 2.44 (0.05 per cent) to 4,987.06.... Read more

North/South Americas Market Report: North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 1.64% while Mexico's IPC is up 1.07% and U.S.'s S&P 500 is up 0.23%... Read more

European Market Report: European markets closed sharply higher today with shares in France leading the region. The CAC 40 is up 2.77% while Germany's DAX is up 2.41% and London's FTSE 100 is up 1.99%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 1.22% and the Hang Seng rose 1.15%. The Shanghai Composite lost 0.06%... Read more

Hedge funds have turned more pessimistic on oil as prices flirted with $40 a barrel for the first time since August. “The speculators keep trying to pick the bottom and keep getting burned,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone... Read more

Gold prices fell on Tuesday as investors turned their focus back to looking for signs of a possible US interest rate rise, after a bout of haven buying Monday following the attacks in Paris that had given a lift to gold. Spot gold was down 0.31 per cent at $US1,080.20 a troy ounce in morning European trading, erasing buying on Monday that pushed gold to close slightly higher at $US1,083.60 an ounce. ... Read more

U.S. consumer prices increased in October after two straight months of declines as the cost of healthcare and other services rose, evidence of firming inflation that further supports views that the Federal Reserve will raise interest rates next month... Read more

US industrial production falls 0.2% in October... Read more

Finally! Good news from a retailer getting ready for the holidays. Walmart reported earnings on Tuesday that topped Wall Street's forecasts. Walmart is bucking a trend. Several prominent retailers have reported lackluster results recently -- including Macy's, Gap and Nordstrom... Read more

Wal-Mart Stores gave upbeat earnings guidance, as sales at existing US stores rose for the fifth straight quarter amid improved traffic. Overall, though, profit and revenue edged lower in its latest quarter on weaker international sales and the stronger US dollar. Still, earnings came in at the high-end of the company's guidance. Shares of Wal-Mart, down 31 per cent over the past year and trading around four-year lows, rose 2.8 per cent to $US59.49 in premarket trading. ... Read more

Activist investor Carl Icahn shed his stake in online marketplace eBay, opting to put his money instead into recently spun-off PayPal, according to a regulatory filing made public on Monday... Read more

4 years after Occupy Wall Street, big banks are hurting... Read more

Home Depot Inc on Tuesday reported a better-than-expected rise in quarterly sales at stores open at least a year and said full-year profit and same-store sales would be at the top end of its forecast. Shares of the world's biggest home improvement retailer rose 3.4 percent to $125.07.... Read more

Department store operator Kohl's Corp appointed Walgreens Boots Alliance Inc Chief Marketing Officer Sona Chawla to the newly created position of chief operating officer. Chawla is a potential candidate to succeed Chief Executive Kevin Mansell, Kohl's said on Tuesday... Read more

TJX Cos Inc, the owner of off-price chains TJ Maxx and Marshalls, reported a bigger-than-expected rise in quarterly comparable store sales as more bargain-hungry shoppers visited its stores for apparel, accessories and home goods... Read more

Bill Ackman's Pershing Square added a big chunk of Mondelez International Inc. to its portfolio and left the rest of its positions unchanged, according to a filing with the Securites and Exchange Commission late Monday... Read more

Lyft executive says on track to hit $1 billion in gross annual revenue... Read more

Ukraine's President Petro Poroshenko says the EU has confirmed that an EU-Ukrainian free trade zone will be launched on 1 January. The deal was supposed to take effect this January but Russia objected... Read more

Greece and its international creditors reached a tentative deal on Tuesday on economic and financial overhauls Athens must deliver in exchange for its next slice of €2 billion ($US2.1 billion) financial aid. The agreement, struck between the two sides in the early hours, will also pave the way for a key disbursement of €10 billion in fresh loans that Athens can use to recapitalise its troubled banks... Read more

Easyjet's chief executive does not expect any lasting impact on trading following the recent terror attacks in France and Egypt. Carolyn McCall said heightened airport security measures and worries about air travel would understandably lead to a "cooling off" among passengers... Read more

UK house prices up 6.1%, says ONS... Read more

Redcar owner loses £530m on steel plant liquidation... Read more

UK inflation rate remains negative in October... Read more

Google to contest Russia's antitrust ruling on Android... Read more

Rothschilds Tap Chinese Thirst With First Vintage Champagne... Read more

The South Korean man who founded two drug companies that are among Asia’s best-performing stocks for the past year is seeing his fortune climb after vaulting into the region’s billionaire’s club. Hanmi Science Co. has surged 971 percent while its subsidiary Hanmi Pharmaceutical Co. has gained 805 percent through yesterday over the last 12 months after a string of licensing deals with global drugmakers.... Read more

Standard Chartered Plc said it hired Zarin Daruwala, ICICI Bank Ltd.’s head of corporate banking, to run its operations in India. Daruwala, 50, will replace Sunil Kaushal, who vacated the role to become the regional chief executive for Africa and Middle East starting Oct. 1, the U.K.-based lender said in a statement on Tuesday. She will report to Ajay Kanwal, regional CEO for ASEAN and South Asia and her appointment is subject to regulatory approvals, according to the statement... Read more

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