And that's it from us - have a good and relaxing weekend.
UBS has lowered its iron ore forecasts for 2014, down 9 per cent to $US111 per tonne but maintained its "buy" ratings on BHP Billiton, Rio Tinto and Fortescue.
Today's best and worst, with plenty of iron ore miners at the bottom end. Fortescue, for the record, fell 2.6 per cent to $4.58, while BHP ended the day down 0.5 per cent at $38.08 and Rio dropped 1.4 per cent to $61.95.
The sharemaket has closed lower, led down by a sell-off in iron ore miners.
The benchmark S&P/ASX200 lost 31.8 points, or 0.6 per cent, to 5479.0, while the broader All Ords fell 31.3 points, or 0.6 per cent, to 5458.9.
Among the sectors, materials dropped 0.9 per cent and financials slid 0.6 per cent.
The ASX200 still managed to rise 0.3 per cent for the week, its second consecutive week of gains.
Financially troubled coal mogul Nathan Tinkler has made a defiant appearance at the Independent Commission Against Corruption, denying he made illegal political donations and accusing a former Labor MP of lying about him offering a bribe.
"I am starting to see why this has been going on for three weeks," Tinkler said testily about a series of questions on his donations to the National Party.
Tinkler, who started giving evidence at the ICAC around 12.30pm, was shown an expletive-laden email in which he complained that he had donated to the Nationals and they had done "f--- all" to approve his plans for a billion-dollar coal terminal in Newcastle.
"We had a bunch of deadbeats before and now we have a bunch of pricks scared to make a decision," Tinkler wrote in an email on April 20, 2011, in a reference to the former state Labor government and the newly-installed Coalition.
Tinkler said he had donated about $45,000 to the Nationals but denied he thought it was "the price" of getting approval for the coal terminal.
"Your donation to the Nationals was a way of buying their support for your project," counsel assisting the commission, Geoffrey Watson, SC, suggested.
"I think it would cost a bit more than $50,000 to build a coal loader and ensure approval," Tinkler replied.
And the latest from ICAC:
Although Tinkler couldn't wait to get out of #icac he is now holed up inside to avoid the process server who's waiting here to serve him.— Kate McClymont (@Kate_McClymont) May 16, 2014
Nathan Tinkler arrives at ICAC
RAW VISION: mining magnate Nathan Tinkler barges through the media to give evidence at the Independent Commission Against Corruption on Friday. Nine News.PT1M2S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-38enk 620 349 May 16, 2014
Queenslanders will be choking on the news that their iconic spirit, Bundaberg Rum, will soon be bottled in western Sydney.
The rum will continue to be distilled in its spiritual home of Bundaberg, Queensland, but only its premium rum products will continue to be bottled at the distillery which will lead to 10 redundancies at the plant.
‘‘Following a recent review of our manufacturing operations in Australia, we have made the decision to move the majority of our bottling from our Bundaberg Distillery to our bottling plant in Huntingwood, Western Sydney,’’ a Diageo spokeswoman says.
Diageo, the British beverage giant behind brands like Guinness and Johnnie Walker, blamed business pressures for the restructure that will see 35 job cuts across the organisation.
‘‘This decision comes in response to the continued pressure on our business from lower alcohol consumption and the punitive excise tax on spirits and RTDs (ready to drink) which has seen volumes decline significantly in recent years,’’ the company said.
The sell-off in the miners has gathered pace this afternoon, with Rio down 1.2 per cent at $62.04 and BHP dropping 0.3 per cent to $38.13.
Fortescue has been hit even harder, with the stock now down nearly 3 per cent at $4.57, after having dropped as low as $4.565, its lowest this year. Other iron ore plays such as Atlas Iron (-2.3 per cent at 75.7 cents are also under pressure). Steel and iorn ore combo Arrium has plunged 5.4 per cent to 97 cents.
Arrium is also the worst stock of week, down a whopping 11.5 per cent. Atlas is close behind, having lost 10.4 per cent this week, while Fortescue is down 5.4 per cent. Diversified miner Rio is up 1.7 per cent for the week, despite today's losses.
Chinese steel futures have dropped to a record low as supply outpaced fragile demand in the world's top market for the commodity where slower economic growth has hit consumption.
Prices of raw material iron ore were near their cheapest level since September 2012, also overwhelmed by brisk supply as Chinese steel mills offered some cargoes back into the market to boost cashflow.
Rebar for October delivery on the Shanghai Futures Exchange touched a low of 3104 yuan ($US500) a tonne today, the lowest for a most-active contract since the bourse launched rebar futures in March 2009. Rebar, used to reinforce concrete in buildings, was down 1.5 per cent at 3105 yuan a tonne by midday. It has lost 2.1 per cent for the week so far, on track for its third weekly fall.
"The future is not encouraging for the steel market. Demand is not as strong as many had expected yet steel production remains very high," said an iron ore trader in Shanghai.
Large steelmakers in China produced a record high 1.824 million tonnes of crude steel in the first 10 days of May, data from the China Iron and Steel Association showed. With excess annual production capacity of at least 200 million tonnes, based on industry estimates, oversupply has plagued China's steel sector for years, prompting the government to step up its campaign to shut more of the outdated plants this year.
The impact of oversupply is becoming more pronounced as China's economy grows at a slower clip, with economists saying Beijing may need to launch more stimulus measures to achieve its growth target of 7.5 per cent for 2014.
The weaker steel market is weighing on iron ore. Iron ore for September delivery on the Dalian Commodity Exchange was down 2 per cent at 724 yuan a tonne, and also on course for a third weekly drop.
Meanwhile, nickel prices have steadied, climbing 1 per cent to $US18,920 a tonne after plunging 11 per cent in the previous two days that partly eroded the metal's stellar rally this year, while copper prices eyed their biggest weekly gain in nearly two months on robust demand.
Traders say prices are set to bounce back as long as top exporter Indonesia keeps squeezing supply and stainless steel producers can absorb higher prices. Nickel is still up 36 per cent this year.
The bond market seems key for all markets right now and focus will be pinned on yields in tonight’s session, IG's Stan Shamu notes:
- While the market is expecting stimulus in June, the fact that Germany continues to outperform its counterparts on the data front makes the situation a bit tricky. In theory, this makes any action by the ECB a bit more complicated to implement and analysts are increasingly divided on what form stimulus would take.
- Regardless, the euro’s resolve is likely to continue being tested in coming weeks with potential for further downside. Data out of Europe is limited with trade balance being the most noteworthy release. Meanwhile in the US, we have Fed member James Bullard speaking, along with some housing data set to be released.
- Despite all the noise through the week, the ASX 200 has actually managed to edge higher and looks like it will finish the week off with a modest gain. Of course this is mainly thanks to the banks which continue to extend gains and defy valuations time and time again.
- A concern in coming weeks will remain the resource space, where the challenges just continue to mount. Iron ore names in particular will be key for how this market trades and any sign that China concerns are easing should encourage a recovery. The pure plays in particular have been hammered this week and at some stage, investors will have to see some value in them.
Most regional markets are down, as risk aversion grows again, but India’s shares have jumped the most in five years and the rupee strengthened on first election results.
- Japan (Nikkei): -2%
- Hong Kong: -0.65%
- Shanghai: -0.3%
- Taiwan: -0.3%
- Korea: -0.2%
- ASX200: -0.6%
- India: +5.5%
- Singapore: -0.35%
- New Zealand: -0.3%
“There’s a bit of nervousness on the part of investors even as the market has been in an uptrend,” says Donald Williams, chief investment officer at Platypus Asset Management.
Mumbai stocks have surged as early counting of results in India's general election indicate opposition leader Narendra Modi is on course for a large victory with a clear mandate.
Mumbai shares are up 3.2 per cent, posting their biggest jump in five years.
The value of Indian equities has climbed by $US332 billion since the main opposition Bharatiya Janata Party named Narendra Modi as its candidate for prime minister in September, while the benchmark S&P BSE Sensex index rose 21 per cent to an all-time high.
Foreign investors poured $US14.2 billion into the nation’s shares during the period, and bullish wagers in the options market outnumber bearish bets by the widest margin in 14 months.
Modi is favoured by business leaders because of his transformation of Gujarat into one of India’s most business-friendly states, luring investors with faster approval process for developments, better roads and an uninterrupted power supply.
The victor today will need to revive an economy expanding near the slowest pace in a decade and raise living standards in a nation where more than 800 million people live on less than $US2 per day. India holds a third of the world’s poorest people, even though the country’s poverty rate is half what it was three decades ago, according to the World Bank.
Modi has promised that, if elected, he would take decisive action to unblock stalled investments in power, road and rail projects to revive economic growth. Tax and labour market reforms, backed by a gradual opening up to foreign investment, would seek to create the 10 million jobs that Asia's third-largest economy must create every year to employ young people entering the workforce.
How's that "age of entitlement" thing going for you? Michael Pascoe asks:
There's been a bit of a setback for some of the would-be entitled this week, but entitlement has always been about positioning. Turns out the place to be positioned is in a fat superannuation fund.
Just to keep you up to date, the contribution limits on superannuation are being increased in the new financial year.
While various bits of middle and lower class entitlement have had their indexing fiddled with, the good times keep rolling for those with the spare cash to whack in a tax haven.
From July 1, those over 49 will be able to contribute $35,000 at a concessional tax rate and $180,000 of after-tax money.
Using the pull-forward option, that means a couple with some spare cash could plonk more than $1 million in their super tax haven and never have to pay tax on what the money earns or what the super fund pays subsequently pays out to them.
That's a better deal than anything available from shady Swiss bankers, Jersey, the Cayman Islands or any of the usual tax haven suspects. Even Google would be impressed.
Super is about to get even more lucrative, provided you've got the cash. Photo: Louie Douvis
This just in from CBD's Colin Kruger:
While Nathan Tinkler was getting acquainted with ICAC on Thursday, two of his merry men from Aston Resources - former CEO Todd Hannigan and CFO Thomas Todd - showed up as directors at Paringa Resources, with a $1 million stake to boot.
They are renowned for their generosity.
In March 2011 Hannigan, Todd and their wives donated $19,250 to the Nationals soon after Tinkler learnt that a National MP would hold the ports portfolio after the NSW state election.
Are we on the cusp of a rebound in risk aversion? Westpac asks:
- Since peaking in late January at just over +3.5 standard deviations our risk aversion index has been steadily declining ever since. However, as the chart below highlights, we are now just below -2 standard deviations.
- From a historical standpoint we are now in the region where the risk aversion index often troughs and mean reverts. On the face of it this provides some caution around the current buoyant mood for risk appetite and the chase for yield.
Fledgling demand from China’s residential property sector has led steel producers to push supplies overseas in an attempt to try and sell record inventories.
US steel producers are beginning to feel the heat following an influx of cheaper steel imports from China.
With the price of iron ore slumping sharply this year, down 23.4 per cent, and record volumes of the raw metal flooding the market, steel prices are expected to follow.
Shanghai steel rebar futures have slumped 13.6 per cent in 2014 and is trading around CNY3152 ($US505.89) per tonne. Rebar futures hit a record low on Thursday, CNY3130 per tonne, with outlook for downstream demand remain weak, following a 25.2 per cent fall in new property construction in China during the first quarter. The rebar futures contract began in 2009.
‘‘US steel demand has been growing strongly owing to the recovery in construction and the auto sector. But US steel producers are complaining that they cannot compete with cheap Asian imports, despite the boost to their competitiveness from cheap domestic gas,’’ Capital Economics senior commodities economist Caroline Bain said.
The US midwest domestic hot-roiled coil steel price sits around $US685 per tonne. While there are costs associated with transportation, the discrepancy between the two prices is hard to ignore.
For Malaysia Airlines, the missing Flight 370 tragedy's collateral effect has been to worsen finances that were already precarious, pressured by a wave of low-cost competition, the Wall Street Journal writes in this article well worth a read:
In its heyday, Malaysia Airlines was the toast of this steamy Southeast Asian capital.
It flew far-flung routes from Argentina to Croatia to South Africa, even though Malaysia was a developing country. Its $US3.5 billion home airport, opened in 1998, was codesigned by a Japanese architect to look like a modernist masterpiece in the jungle, with natural rain forest between terminals. Employees wore uniforms designed by an Italian couturier. The airline regularly topped rankings for cabin service.
"It was like 'Catch Me If You Can,' " said retired pilot Nik Huzlan, referring to the Leonardo DiCaprio movie that portrayed flying as glamorous in its earlier days. "Our friends thought we were so cool."
Now, following the disappearance of Flight 370, Malaysia Airlines finds itself locked in a struggle for survival.
The jet that vanished March 8 has triggered an anguished and seemingly unending wait for relatives and friends of the 239 people aboard. For the airline itself, a collateral effect has been to worsen finances that were already precarious, pressured by a wave of low-cost competition.
Malaysia Airlines had a loss of 1.17 billion ringgit, or $US359 million, last year. On Thursday, it reported a 443 million ringgit loss for this year's first quarter, a far deeper loss than the 279 million ringgit of a year earlier.
The outlook for the rest of 2014 is grim, with passengers canceling flights, weak new bookings and much of the company's advertising pulled for a time. While insured, the airline also faces uncertain costs from payouts to families and potential lawsuits. There is no indication the carrier's financial troubles played a role in the disappearance of Flight 370. Malaysia Airlines has had a strong safety record.
Banks are weighing most on the market, with Commonwealth Bank losing 0.8 per cent after touching a record high yesterday. ANZ is down 0.7 per cent and Westpac has lost 0.6 per cent.
"Given the fact most of them have already traded ex-dividend - interest might be limited in the near term, until they return to more appealing levels," says Stan Shamu, market strategist at IG.
The world’s largest short-seller, Jim Chanos, is eyeing leveraged coal and iron ore players in Australia as China’s real estate market boom shows signs of slowing.
New York-based Chanos of $4 billion Kynikos Associates has also gone long on mining giants BHP and Rio and told Australian property owners to “hit the bid” from Chinese buyers before capital flight is halted.
Chanos, one of the most prominent China bears, told Fairfax Media there was a “clear downturn” in the Chinese real estate market that would affect Australia as demand for iron ore fell.
“The problem that iron ore centric-miners are going to have is new capacity is coming on as demand is falling,” Chanos said on the sidelines of the SALT hedge fund conference in Las Vegas.
“But we are long BHP and Rio because we think they are reasonably managed. They saw this coming and pulled back a couple of years ago whereas you have companies like Fortescue and Vale that are full speed ahead.”
Chanos has long held bearish views on China and has targeted ASX-listed iron ore miner Fortescue Metals in the past.
Chanos is also bearish on coal companies. He says he has identified some Australian coalminers with high debt levels that are vulnerable to reduced global demand “but none we are talking about”:
- Even with continued demand in India and China, the writing is on the wall that everyone is trying to reduce emissions.
- Solar is starting to become economical on the margin. It’s a small part of power generation, but it’s growing and with natural gas as another alternative, coal is constantly going to get squeezed.
- You see that with thermal and met coal prices. Both have continued to drop and there are a lot of leveraged coal players that have not adjusted to that reality.
Short seller Jim Chanos sees problems for iron ore-centric miners. Photo: Bloomberg
Here's chart showing the full extent of the (US) bond market's outperformance over equities.. And here it finally is (sorry for delay):
Nickel prices have steadied, finding their feet after a dramatic fall over the past two days partly eroded this year's stellar rally, while copper prices eyed their biggest weekly gain in nearly two months on improving demand.
Nickel prices on the London Metal Exchange (LME) traded little changed at $18,770 a tonne on Friday, having slumped more than 6 per cent on Thursday and nearly 5 per cent on Wednesday, erasing much of May's spectacular gains. Nickel is still up 35 per cent this year.
LME copper also traded flat at $US6889 a tonne, from the previous session, but a stone's throw from Wednesday's two month peaks of $US6940 a tonne. LME copper was on track for a weekly gain of around 2 per cent, its biggest weekly advance in seven weeks.
The most-traded August copper contract on the Shanghai Futures Exchange was flat at 48,510 yuan ($US7800) a tonne but not far from two-month highs touched the previous session at 48,750 yuan a tonne.
GPT Group has secured a half share of $400 million Freshwater Place tower in Melbourne from Australand.
The GPT Wholesale Office Fund bought the asset as part of the deal with DEXUS and the Canada Pension Plan Investment Board’s to purchase three former Commonwealth Property Office Fund (CPA) assets for $548.4 million, which is a discount to book value.
GWOF will purchase the half stake in 2 Southbank Boulevard for $196.7 million. It follows the Fund last month exercising its option to acquire 750 Collins Street, Melbourne for $249.5 million and 655 Collins Street, Melbourne for $102.2 million.
The total price of $548.4 million represents a discount of 0.5 per cent to CPA’s 31 December 2013 book value for the three assets.
Shares in SFG Australia have jumped as much as 15 per cent after agreeing to a takeover by larger financial services rival IOOF Holdings for about $670 million.
The SFG board has unanimously recommended the deal to shareholders. SFG shares are at a record high at 84 cents.
Under the terms of the merger proposal, SFG investors will be offered 90 cents for their shares and will control 22 per cent of the enlarged IOOF. The price has been struck at a premium of 24.6 per cent to SFG’s volume weighted average price (VWAP) to May 15.
IOOF is also offering a maximum cash consideration of $100 million, which will be funded from existing bank facilities.
But SFG investors can decide to receive less cash and more shares. The cash component will be priced on the VWAP of IOOF shares in the 10 days prior to the scheme meeting.
One of the world’s most revered investors, Howard Marks, has challenged Australia’s superannuation industry to rethink its love affair with shares and warned that a “day of reckoning” for stocks is inevitable.
Marks, the chairman of Oaktree Capital, which manages $US86 billion, acknowledged Australia’s heavy allocation to equities has been lucrative given the resilient economy and sharemarket.
But it “may not work forever”, he warned. “The mere fact an aggressive strategy wins in a winning period doesn’t prove it is the right strategy for all periods,” he said.
“That’s something you have to think about,” Marks said in an interview during a visit to Sydney to meet clients, including Cbus, Telstra Super and Unisuper.
Oaktree Capital rose to prominence by investing in high-yield bonds and distressed-debt, including Nine Entertainment Co.
This week’s federal budget revealed a growing paranoia about the costs of supporting an ageing population, and the financial system inquiry led by David Murray, the former head of the Future Fund – another client of Oaktree – is examining if more superannuation savings should be directed to corporate bonds or infrastructure projects.
According to the OECD, around 50 per cent of Australian super fund assets are invested in shares, Around 10 per cent is in fixed income, including bonds. Most other countries have much higher allocations to bonds, which are less risky, allowing more capital to be preserved in times of market upheaval.
Marks said the rise of shares “can’t go on forever, and some day there is a day of reckoning. That’s why we have crises – they serve to remind people that risk awareness and risk limitation are important virtues.
“If the tide hasn’t gone out for many years, people may not understand the need for risk control and may engage in risky behaviour – which will bite them when a correction occurs.”
James Packer has missed out on the chance of returning to the US casino market after property giant Blackstone emerged as the new owner of The Cosmopolitan of Las Vegas.
Fairfax Media revealed in late April that Mr Packer’s Crown Resorts was preparing to lodge a bid for The Cosmopolitan, one of the most expensive hotel and casinos ever built on the famous Las Vegas strip.
It is understood Crown submitted a bid on what one source described as “conservative terms”. “It was a bid that made financial sense for Crown but – as a result – could be uncompetitive,” the source said.
This turned out to be the case with The Cosmopolitan’s owner, Deutsche Bank, announcing on Thursday the property had been sold to Blackstone Real Estate Partners for $US1.7 billion.
Germany’s largest bank was an unwilling owner of the complex located next door to MGM Resorts International’s Bellagio. Deutsche inherited the property in January 2008 when it foreclosed on its previous owner, developer Ian Bruce Eichner.
No Cosmopolitan for James Packer. Photo: Rob Homer
Here's a quick snapshot of the biggest winners and losers on the ASX200 so far today. The top ten losers is littered with miners, following a dive in nickel and a small slide in iron ore.
Melbourne Airport has emerged as the big winner in the fight for passengers between the nation’s two largest airports in April.
The southern airport achieved 16 per cent growth in international passengers in April, which was well above the 6.6 per cent growth reported by Sydney Airport, albeit from a larger base.
Melbourne Airport also won the domestic passenger stakes, reporting 3.2 per cent growth at a time when Sydney Airport’s domestic traffic grew at a slim 0.3 per cent.
Melbourne Airport chief executive Chris Woodruff said passenger growth had been strong across all regions in April.
Continuing the bond theme, one of the world's top bond fund managers, Doubleline Capital founder Jeff Gundlach, reckons we could be seeing one of the biggest short scrambles of all time – which means rates will fall further and further undermine the US dollar.
Long-term bond rates may have peaked already, and if rates continue to fall, a “melt up” in the bond market could be in the offing, Gundlach told the Altegris strategic investment conference in San Diego.
“If we go down [more] on Treasury yields, we will see one of the biggest short-covering scrambles of all time,” Gundlach said.
“Speculation in the market on shorting Treasuries was very high,” said Gundlach, who was named the 'King of Bonds' by Barron's on 2011. “If for some reason someone has to cover these shorts, you could actually see the low yields of 2012 get taken out.
Benchmark US Treasuries yields fell to six-month lows overnight in heavy volume after Greek government bonds weakened and sparked safety buying of US debt, even though US economic data pointed overall to a firming economy.
The size of the rally provoked head scratching by many analysts trying to pinpoint the exact impetus for the move, with a large amount of short-covering seen exacerbating the fall in yields.
"There has been a little bit of a breakdown in European peripheral debt that seemed to set off a little bit of a 'risk-off' trade ... despite the fact that we got a firm set of data this morning," said Dan Mulholland, managing director in Treasuries trading at BNY Mellon in New York.
New applications for US unemployment benefits hit a seven-year low last week while consumer prices recorded their largest increase in 10 months in April. Factory activity in New York state expanded at its quickest pace in nearly four years in May, but another report showed a surprise slump in industrial output last month.
Greek government debt yields, meanwhile, rose to a two-month high with traders citing a document detailing a retroactive tax on non-resident holders of Greek bonds, which Greece's government then denied.
Treasuries have rallied even as many investors see yields as likely to rise as the economy gains momentum. Some of the gains are due to the expectation that central banks globally will continue to provide loose monetary conditions, with the European Central Bank expected to cut interest rates next month.
But a record number of speculators betting on bond yield increases is also increasingly seen as behind the bond rally, throwing the market off balance and sending yields lower regardless of what the US economic data shows.
"The short positioning in the street has been really quite severe," said Aaron Kohli, an interest rate strategist at BNP Paribas in New York. "Too many people got short early and now there is no one left to follow them into the trade and they are covering themselves."
Famous hedge fund manager Paul Tudor Jones recently said that macro trading conditions are the toughest he’s seen in his entire career. Then overnight we had another well-known hedge fund manager come out with bearish, fear driven comments.
With the amount of bearish comments/views and deteriorating fundamentals, there is good reason to be cautious in the current market, Rivkin global investment manager Tim Radford says, adding there is a growing well known list of why equities could go lower over the next six to twelve months. He sums it up in five:
- Market is overvalued, particularly tech stocks
- No economic growth, risk of deflation
- End to Fed stimulus
- Highly levered market
- China slowdown
Combining all the other reasons thrown out there at the moment, investors are seemingly in trouble, Radford says:
- At the moment, there isn’t much to be positive about. And nobody is asking about what could go right.
- The biggest near-term concern is the fact US equity markets haven’t had a large scale correction in over two years, with stocks losing momentum fast.
- This market will crack at some point. There will be solid correction of +10%. And it could come sooner rather than later. Everyone is long, investors are scared, and for no real reason we could see a panic selloff eventuate, seeing investors all head for the door at once. But who knows when this will exactly happen.
Following leads fromt Wall Street, the Australian market has started off down sharply, with the benchmark S&P/ASX200 falling 25.2 points, or 0.5 per cent to 5485.6. The broader All Ords has slipped 25.9 points, or 0.5 per cent, to 5464.3.
Commonwealth Bank of Australia could face a class action brought by thousands of disgruntled investors who lost millions following bad financial planning advice and systemic manipulation.
If an action is brought, the bank could face a damages claim of up to $200 million following an investigation by plaintiff law firm Shine Lawyers.
The allegations were revealed earlier this month in a joint Fairfax and Four Corners investigation which laid bare the conduct of banned financial planner Rollo Sheriff, and the millions lost by his clients.
Following the press coverage Shine was approached by a number of investors who had lost money through the financial planning arm of the bank due to "bad financial advice", according to Shine partner Sasha Ivantsoff.
First Pacific and Wilmar International has revealed it has conditional agreements to purchase part of the stakes of Goodman Fielder's two largest shareholders, Ellerston Capital and Perpetual Investments, as it moves closer to a takeover of the iconic food group.
Goodman was placed in a trading halt late on Thursday after Singapore oils trader Wilmar International and Hong Kong investment company First Pacific lifted their 65¢-a-share takeover offer for Goodman Fielder to 70¢ a share.
First Pacific and Wilmar have given the board of Goodman Fielder until 8pm on Friday night to unanimously support its increased bid for the company, and open up its books to due diligence.
The share purchase agreements with Ellertson and Perpetual, which would see the companies sell a stake of 4.8 per cent of Wilmar and First Pacific, plus the rights to a further 5 per cent, are conditional on the board agreeing to the deal.
IOOF, one Australia’s biggest financial services groups, has announced a $600 million merger with Shadforth Financial Group on Friday morning, according to The Australian Financial Review's Street Talk column.
The deal will be via a scheme of arrangement and follows the collapse of merger talks between SFG and accounting firm WHK in May last year. That deal would have created a $1 billion company.
It is understood that following the termination of those talks, SFG’s Tony Fenning appointed Bank of America/Merrill Lunch to explore a sales process.
Moving into the final trading day of the week here is what you need2know:
- SPI futures down 30 points to 5495
- AUD at 93.54 US cents, 95.02 Japanese yen, 68.23 Euro cents and 55.71 British pence.
- On Wall St, S&P500 -0.9%, Dow Jones -1%, Nasdaq -0.8%
- In Europe, Euro Stoxx 50 -1.5%, FTSE100 -0.6%, CAC -1.3%, DAX -1%
- Spot gold fell 0.8% to $US1295.91 an ounce
- Brent oil rose $110.44 per barrel
- Iron ore slips 0.7% to $US102.80 per metric tonne