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Markets Live: Who's next? M&A targets

Date

Patrick Commins, Jens Meyer

Shares finish flat after another day of losses in the banks was offset by gains in miners, while Woolies drops on a sales update.

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That’s it for Markets Live today.

You can read a wrap-up of the action on the markets here.

Thanks for reading and your comments.

See you all again tomorrow morning from 9.

Strong gains by index heavyweights Telstra and BHP Billiton helped the sharemarket shrug off some disappointing corporate news from the likes of Woolworths and Woodside Petroleum to edge higher on the final day of April.

The benchmark S&P/ASX 200 Index inched up 2.5 points, or just 0.05 per cent, on Wednesday to 5489.1, while the broader All Ordinaries Index added 3.9 points to 5470.8.

Over the month, the ASX 200 rose 1.8 per cent, while the broader All Ords added 1.3 per cent. Australian equities are trading just 2.5 per cent higher calendar year-to-date, compared to the end of April 2013 when stocks were already tracking 11.7 per cent higher year-to-date.

“Globally, the driver of equity market growth is shifting from a reliance on central bank support to improving corporate earnings,” UBS regional chief investment officer Asia Pacific Kelvin Tay said. He expects Australian company earnings and subsequently equities to get a boost later in the year from a falling currency.

Telstra Corporation did the most to lift the bourse on Wednesday, up 1.2 per cent at $5.22.

Other heavy lifters were resources giant BHP Billiton up 0.4 per cent to $37.75, and main rival Rio Tinto adding 0.7 per cent to $61.70. Australia’s biggest miners pushed ahead despite nervousness about credit tightening and slower growth in China leading to weaker iron ore and coal prices. The spot price for iron ore, landed in China, dipped for the third session in a row to $US108.30 a tonne.

“But fears about China are overblown,” Patersons Asset Management head of equities Jason Chesters said. “The iron ore price could rise to $US120 per tonne over the next few months before dropping back around $US100 per tonne at the end of the year, still well above the major players’ costs of production.”

The big four banks were lower after Reserve Bank of Australia data showed private sector credit grew 0.4 per cent in March, keeping pace with February’s growth. Business credit grew more slowly than the previous month while housing credit growth was steady and personal credit fell.

Read more.

The Bank of Japan kept monetary policy steady today and laid out projections underscoring its conviction that inflation will head steadily towards its 2 per cent target, suggesting no additional stimulus is on the near-term horizon.

In its closely watched twice-yearly outlook report, , which serves as a basis for future monetary policy decisions, the central bank projected that core consumer inflation will accelerate this year and stay at around 2 per cent for at least two years from the middle of 2015, signalling its confidence on meeting its price goal.

It also maintained its view that Japan's economy will continue its modest recovery despite a temporary slump in demand caused by a sales tax hike this month.

As widely expected, the BoJ maintained its pledge to increase base money, its key policy gauge, at an annual pace of 60 trillion to 70 trillion yen ($US588-$US686 billion).

The upbeat projections may reinforce a growing market consensus the BOJ will stand pat on policy until July or even longer, as it awaits more data for clues on how the economy has weathered the sales tax hike.

The BoJ reiterated in the report, however, that it will "adjust policy as needed" depending on future economic and price moves, signalling its readiness to ease policy further should risks threaten to derail the inflation target.

Industrial production rose a less-than-expected 0.3 percent in March and manufacturers expect output to slide in April, data showed on Wednesday, a sign the recovery in the world's third-largest economy remains fragile.

And here are today's winners and losers...

 

 

 

Best and worst performing stocks in the ASX 200 today.

Best and worst performing stocks in the ASX 200 today.

Smurfs at work?

Smurfs at work? Photo: Sony Pictures

Suspicious trades just before mergers are fleecing investors, Michael West writes:

On Monday, a $1.8 billion takeover bid lobbed for Goodman Fielder. In the days leading up to the announcement, Goodman Fielder shares rose sharply, as did trading volumes.

Those who sold were effectively robbed by those who bought; if those who bought had knowledge of the takeover bid, that is.

It is rare for a share price not to jump before a takeover, indeed before any commercially sensitive announcement. Still, notwithstanding this incessant circumstantial evidence, the authorities have long denied that insider trading on the Australian Securities Exchange is rife.

If insider trading is not rife, the only plausible explanation can be that all this suspicious buying before takeover bids must be the work of chipmunks, or possibly Smurfs.

While the pesky critters were cavorting about in Goodman shares just before the takeover bid was announced, they were also picking up a few shares in Horizon Oil and Gas. Horizon's share price and trading volumes rose sharply last week, just before its merger with Roc Oil was made public.

There had also been some aggressive bidding in the convertible notes, no doubt the work of those conniving chipmunks again, denuding the dumb old humans of their shares.

Read the whole article here

Shares have finished the day broadly flat after Woolworths dropped 1.9 per cent on a sales update and banks extended yesterday's losses.

The ASX 200 managed to add 3 points to 5489.1, while the All Ords gained 4 points to 5470.8.

Westpac was the worst performer of the Big Four, falling 0.8 per cent, while NAB dropped 0.6 per cent, ANZ 0.4 per cent and CBA less than 1 per cent.

QBE dropped 2 per cent and Brambles 1.3 per cent.

Telstra saved the market's bacon, gaining 1.2 per cent, as did the big miners, BHP (up 0.4 per cent) and Rio (0.7 per cent).

Healthcare stocks had a good day, up 1 per cent as a group, led by CSL (0.7 per cent), Resmed (2.7 per cent) and Ramsay Health Care (1.8 per cent).

Orica and Incitec Pivot finished 1.9 and 2.1 per cent higher, respectively.

Grant O'Brien.

Grant O'Brien. Photo: Christopher Pearce

Woolworths CEO Grant O'Brien has got the group's supermarkets sales growth in-line with Coles for the first time in almost five years in the March quarter, but Woolies is not yet firing on all cylinders.

A 3.5 per cent rise in ''same store'' Australian food and liquor sales in the March quarter took into account the fact that Easter occurred in the quarter last year and did not this year, and matched the sale result that Coles announced on Tuesday.

Including newly opened stores and ignoring the Easter timing difference, Woolies boosted Australian food & liquor sales by 4.4 per cent, and Coles lifted sales by 3.9 per cent. Coles was comparing itself against a strong profit rise in the same quarter last year, but O'Brien has closed the gap.

The 3.5 per cent adjusted quarterly sales rise for Woolies was slightly under market forecasts for a 3.8 per cent increase, however, and O'Brien is still coping with the group's ambitious hardware store rollout and lacklustre sales in its general merchandise chain, Big W.

Read more.

A new entrant has emerged in the busy listed pub market with Australian Gaming and Entertainment, AG&E, unveiling a portfolio of five properties in western Sydney, valued at about $95 million.

The group is undertaking a float through CIMB and Wilson HTM to raise about $80 million from private and institutional investors. The IPO is offering 80 million shares at $1 each, and at that price it is 12.6 times the company’s forecast 2015 net profit per share.

The hotels are the Croydon Park Hotel, the Canley Heights Hotel, the Beverly Hills Hotel, the Wentworthville Hotel, and the Wiley Park Hotel. AG&E will be an owner operator of the pubs which were bought from Lewis Hotels Group for about $95 million.

To run the business the group has appointed the long time gaming executive Heather Scheibenstock to lead the venture. Scheibenstock was previously the general manager at both Star Casino and Jupiters Casino

China's banking system can weather large increases in bad debts or a sharp economic slowdown, the central bank says, although some individual banks would fall below required liquidity ratios in a worst-case scenario.

Concern about the huge growth in Chinese corporate debt since the global financial crisis and the risk of defaults has intensified this year as growth slows and authorities allow markets to play a bigger role in deciding winners and losers.

"The results of the stress test showed that the asset quality and capital adequacy of China's commercial banks is relatively high," the People's Bank of China says in its annual financial stability report.

The central bank carried out stress tests at the end of last year for events such as a 400 per cent rise in non-performing loans (NPLs), increases in bond yields, large changes in the yuan's exchange rate, and economic growth slowing to 4 per cent.

Another worst-case scenario tested was a 15 percentage points rise in non-performing loans of local governments and industries with excess capacity.

The tests covered 17 domestic banks that are considered systemically important and account for 61 percent of assets.

Citi's top 50 "global champions".

Citi's top 50 "global champions".

Citi has released its list of 50 stocks the broker calls its “world champions”, based on a survey of all its analysts around the world. (See the table for the full list.)

The companies had to have “global scope, leading market share and enduring business models”. They needed a market cap of at least $US3 billion. From 174 candidates fewer than a third made the final list.

So which local stocks made it? Drumroll please…

  • Computershare: the number one or two provider of share registry maintenance services in Australia, US, UK, Canada and Hong Kong. Local Citi analysts have a “neutral” rating on the stock, however, based on valuation and the fact the “new CEO is unlikely to want to set the bar too high”.
  • CSL: the leading global producer of plasma-derived medicines. But the stock is rated “sell”, based on valuation and competitive threats.
  • ResMed: the global leader in sleep-disorder breathing devices, with around 42 per cent share. This one is a “buy”, say Citi analysts, based on an “attractive” valuation against its growth prospects and the companies low gearing.
  • Seek: a leader in online jobs classifieds in many markets. The broker’s analysts are neutral on the stock based on valuation after a recent rally.

There is "little conviction" in the gold market at present, but ANZ commodity strategists remain of the view that price could ease further in the near term.

Gold has been trading in a range of between $US1270-1320/ounce, and the team at ANZ can't see a "strong catalyst" for it to escape that band. It last traded at $US1294.21.

There has been an increase in short positions among speculators, while interest on the long side has declined, but neither side "is significantly stretched".

Supporting the precious metal are the escalating tensions in the Ukraine, which look likely to get worse before they get better, and gold will continue to react to developments there, but the initial "safe-haven" effect looks to have waned.

Trade data released in recent weeks confirms that Chinese demand for physical gold has slowed but imports into other key Asian destinations, such as India, have improved, write the strategists.

So, all in all, a glance at the chart below shows the ANZ team is "slightly bearish" on gold. Summing up:

"Chinese gold demand has weakened and 'safe-haven' buying remains fleeting. Our indicators suggest little conviction to buy gold in the near-term."

ANZ's analysts are "slightly bearish" on gold in the near term.

ANZ's analysts are "slightly bearish" on gold in the near term.

Hastings Funds Management has won the auction for Port of Newcastle, with NSW premier Mike Baird set to announce the sale this afternoon.

Hastings, which was bidding alongside China Merchants Group, will pay $1.75 billion for the port, with proceeds to be put towards the Restart NSW infrastructure fund and to redevelop the Newcastle city centre.

Hastings was one of five bidders believed to be preparing offers ahead of this week's deadline.

Port of Newcastle is the world's largest coal terminal and forecasting $69 million earnings before interest, tax, depreciation and amortisation in the 2013-14 financial year.

The port sale comes only 12 months after Baird agreed to the $5.1 billion privatisation of NSW's two other ports at Botany and Kembla.

The Bank of Japan has kept monetary policy steady, signalling its confidence that the country is making steady progress toward meeting the bank's price target.

As expected, the central bank voted unanimously to maintain its pledge of increasing base money, its key policy gauge, at an annual pace of 60 trillion to 70 trillion yen ($587-685 billion).

Markets are focusing on the BoJ's semi-annual report due out at 4 pm AEST, which will issue long-term economic and price forecasts including, for the first time, those for fiscal year 2016/17 ending in March 2017.

BoJ Governor Haruhiko Kuroda will then hold a news conference from 4:30pm AEST.

The BoJ has stood pat since launching an intense burst of stimulus last April, when it pledged to accelerate inflation to 2 per cent in roughly two years via aggressive asset purchases in a country mired in deflation for 15 years.

The yen was steady on the announcement, with a US dollar buying 102.4 yen. 

More signs are indicating that China will introduce tough new regulations on commodity-backed finance deals some time in the next week, a move that is weighing on the price of copper and iron ore.

State-owned newspaper, the 21st Century Business Herald, says today that 31 per cent of China’s iron ore stockpile is currently being used for collateral to raise finance, citing an unnamed industry expert. At April 25, China’s stockpile stood at a record 113 million tonnes.

The country’s banking regulator is expected to raise deposit requirements on letters of credit, which have used commodities as collateral. Last week, the China Banking Regulatory Commission, reportedly asked local governments to scrutinise finance deals backed with iron ore.

There is speculation deposit requirements on these deals could double to 30 per cent. That could force some companies to unwind their positions and sell copper and iron ore back onto the market. Some banks have already started to increase their deposit requirements.

“If the deposit requirement is increased to 30 per cent, it will have a big impact on iron ore imports,” said Xu Xiangchun, chief information officer at consulting group MySteel. “This would cause a slump in the iron ore spot price.”

Capital Economics’ head of commodities research Julian Jessop in a note to clients says that “the immediate target of regulators is reportedly imports of iron ore by steel mills and traders.”

“Hard data on the extent of this particular form of 'shadow financing' is, by its very nature, sparse but it seems likely that other commodities, notably copper, are used more widely for this purpose, not least because they are easier to transport and store."

A sweeping analysis of economic inequality by Thomas Piketty called Capital in the 21st Century proves economic wonks can create a global sensation, Matt Wade writes:

His tome sits at the top of Amazon's bestseller list and local book sellers in Sydney say stocks have sold out and back orders are long. London's Financial Times labelled Piketty a "rock star economist" after the book's release and according to Salon.com writing about Capital has become "a rite of passage" for aspiring economists everywhere.

Piketty has become an intellectual superstar. When the youngish professor from the Paris School of Economics headlined a debate alongside Nobel prize-winning economists Paul Krugman and Joe Stiglitz at the City University of New York earlier this month, the event was described as the hottest ticket in town.

So what’s all the fuss about? Piketty's blockbuster begins with the claim that debate about the distribution of wealth has been marked by "an abundance of prejudice and a paucity of fact". He then delivers a mountain of data and evidence on the subject. Drawing on 15 years of research and centuries of data, Piketty demonstrates how wealth tends to become concentrated at the top in capitalist economies.

He argues that a reduction in inequality around the middle of last century was a temporary aberration that won't continue. Since the late 1970s the rich have again been getting rapidly richer in advanced capitalist economies. Piketty warns that the extreme disparities in wealth distribution seen before World War I will gradually re-emerge.

This is because the return on capital is likely to be higher than the economic growth rate, meaning  those who own capital – the rich – stand to benefit the most. Piketty says we're "not far" from the highly unequal worlds depicted by 19th century novelists Jane Austen and Honore de Balzac.

Read more

Rock star economist: Thomas Piketty

Rock star economist: Thomas Piketty Photo: Reuters

Commonwealth Bank will allow customers to withdraw cash from ATMs using their smartphones for the first time, under a new update to the bank’s mobile apps.

The cardless cash capability, which will be available in May, will mean customers can withdraw cash without using a debit or credit card at the machines.

Using the bank’s Android or iOS apps, customers can request the amount they wish to withdraw, and then input a confirmation code into an ATM to withdraw the money.

Withdrawals will be limited to a single transaction each day with a maximum value of $200 and will only be available at compatible CommBank ATMs, which are being updated to support the new function.

It comes as New South Wales Police this week warned of an increase in card skimming activity at Sydney ATMs.

Read more

U got cash? CBA customers can use mobile phones instead of cards for ATM withdrawals.

U got cash? CBA customers can use mobile phones instead of cards for ATM withdrawals.

Growth in the value of credit outstanding to the private sector has sustained the faster pace reached over the Christmas/New Year period.

Credit on the books of banks and other lenders expanded by 0.4 per cent for the third consecutive month in March, seasonally adjusted figures from the RBA show. Coming after a gain of 0.5 per cent in December, the March rise made it the strongest four-month run of credit growth since late 2008.

It lifted the annual growth rate to 4.4 per cent and the latest half year to an annualised pace of 4.9 per cent, in both cases the fastest for five years. The figures are dominated by housing credit, which notched up annual growth of 5.9 per cent.

"Money is coming out of term deposits and being channelled into the housing market,'' says CommSec chief economist Craig James.

  • But apart from taking out loans to buy investment properties, Aussie consumers and businesses remain reluctant to borrow.
  • Personal debt is still down almost 9 per cent on the peak recorded six years ago and the level of debt effectively hasn’t budged in five years.
  • Business debt is still 3 per cent down from the highs recorded five years ago.

Speaking of mergers, JPMorgan analysts have questioned whether Roc Oil and Horizon Oil’s merger is a good deal for both sets of shareholders, arguing there is more upside in Roc’s assets.

Horizon and Roc announced terms of their tie-up on Tuesday, with Horizon shareholders to receive 0.724 Roc shares for every Horizon share.

The merger of equals ratio was calculated on the respective market capitalisations of the two companies, although JPMorgan said it was yet to be convinced the deal was equal in terms of asset value.

“At the merger prices we see approximately 40 per cent upside in ROC versus ~30 per cent upside in HZN (based on a preliminary valuation),” the analysts told clients this morning.

“This suggests some 5 per cent potential dilution of ROC’s upside under the merger ratio.”

The analysts said strategic rationale for the deal was modest.

Roc Oil shares are up 7.7 per cent to 39 cents since the merger announcement, while Horizon is up 11.2 per cent to 37.25 cents (including the 10.5 per cent jump on the last trading day before the news).

As M&A hots up, these companies are potential targets, says Credit Suisse.

As M&A hots up, these companies are potential targets, says Credit Suisse.

As merger and acquisition activity picks up in Australia, investors should be looking for ways to make money off the theme, say Credit Suisse strategists.

Investment bankers’ perennial New Year predictions that “this is the year for M&A” may finally be coming true, with a rash of corporate activity overseas – led by giants in the technology and pharmaceutical industries – leading to “fledgling signs” of a recovery in the local market.

Or, as the team at Credit Suisse say, in a heroic mixing of metaphors: “We can spot some green shoots in corporate animal spirits”.

“To the distress of many investment banks, activity has recently slowed to the trough levels of last cycle,” note the analysts, but the drought may be coming to an end: “we don't think it takes much for CEOs to be convinced that a deal makes sense”.

They point to the circa $5 billion worth of takeover offers this month for Australand, David Jones and Goodman Fielder.

With deal activity more likely to go up than down, now may be the moment for investors to act.

The most obvious strategy, the strategists say, is to buy those companies that help facilitate deals. Computershare and Macquarie Group are well positioned in this regard.

Corporate action currently accounts for just 8 per cent of the former’s revenues, compared to 18 per cent in FY07 and FY08, reckon the Credit Suisse analysts, and a return to M&A activity of 2008 by next year would add 15 to 20 per cent to earnings in FY15.

Similarly, M&A and advisory income was only 13 per cent of FY13 operating income for Macquarie, against a cyclical peak of 17 per cent in FY08.

Another strategy is to identify companies which could benefit from speculation they are takeover targets. Credit Suisse highlights Adelaide Brighton, Echo, Incitec Pivot and Nufarm. The table shows the complete list.

Lastly, “Aussie companies, armed with their cheap cost of equity, clean balance sheets and strong currency, could be acquirers as well,” the strategists write.

They find Aristocrat Leisure (casino), News Corp (Asian digital businesses), Ramsay Health Care (French hospital provider Generale de Sante) and Woolworths (Asian retailers) could be on the acquisition path this M&A cycle.

China is likely to overtake the US as the world’s biggest economy this year, or sooner than expected, while India has vaulted into third place, ahead of Japan, using calculations that take exchange rates into account.

China’s economy was 87 per cent of the size of that of the US in 2011, assessed according to so-called purchasing power parity, the International Comparison Program says.

The US has been the global leader since overtaking the UK in 1872. Most economists previously thought China would pull ahead in 2019.

Having compared the actual cost of living in different countries, the report also found that the four most expensive countries to live in are Switzerland, Norway, Bermuda and Australia, with the cheapest being Egypt, Pakistan, Myanmar and Ethiopia.

Purchasing power parity seeks to compare how far money goes in each country. Using market rates, US gross domestic product was $US16.2 trillion in 2012, compared with China’s $US8.2 trillion.

Full steam ... China is set to overtake the US as the world's largest economy.

Full steam ... China is set to overtake the US as the world's largest economy. Photo: Reuters

A lack of suitable housing for downsizing baby boomers is keeping them in their homes longer and constricting supply for first-time home buyers, says James Kelly, managing director of affordable housing company Lifestyle Communities.

Not enough homes of the right size, with the right fittings and location, particularly in Melbourne's middle-to outer-ring suburbs is preventing many of Australia's retiring boomers - those born between 1946 and 1964 - from moving out of the family home they have lived in for decades, Kelly says.

''Where is the opportunity to downsize? That's what isn't being provided in the marketplace. That's putting pressure on first-time home-buyers. Housing stock is not being freed up.''

Research by Lifestyle Communities among residents at its own communities paints a picture of a generation of ageing Australians far from the stereotype of cashed-up, free-spending, silver-haired retirees.

Instead it shows that nearly half of people surveyed believed they had not saved enough to sustain their lifestyle in retirement and were dependent on the sale of the family home, their largest asset, to see them through their twilight years.

Read more

Baby boomers stuck in too big houses?

Baby boomers stuck in too big houses?

The Chinese Academy of Social Sciences (CASS), one of Beijing's top government think tanks, has revised its 2014 GDP growth forecast down to 7.4 per cent, below the official 7.5 per cent target, and says that growth could slow to as low as 7 per cent, state media are reporting.

The downward revision follows signs that China's economy slowed more than expected in the first quarter.

A report in the official China Securities Journal quoted the report published on Tuesday as saying that China's economic growth would continue to be driven by investment, but warned that excess production capacity and heavy local government debt burdens would slow fixed asset investment.

Lend Lease has got the green light to construct the final, and biggest office Tower I at its $6 billion Barangaroo South project with HSBC and PwC both signing leases.

Lend Lease has been waitiing for the tenants before it could start the tower and once completed, Barangaroo will be considered a new financial district of Sydney. The new tenants will join Westpac, KPMG, law firm Gilbert + Tobin and Lend Lease at the three towers.

Lend Lease will commence the development and funding of 100 per cent of the building and intends to introduce co-investors into Tower 1 at an appropriate time in the future.

Origin Energy said the coal seam gas production part of its $24.7 billion Australia Pacific LNG project in Queensland is 67 per cent complete after it drilled 112 development wells in the March quarter.

Some 680 wells for the project had been drilled as of March 31, and LNG production is on schedule for mid-2015, Origin said this morning in a quarterly report.

The LNG processing part of the project, involving the construction of a two-train plant on Curtis Island in Gladstone harbour, was 68 per cent complete as of the end of the March quarter.

Origin reported production of 32.4 petajoules of oil and gas in the March quarter, up 10 per cent from the same period a year earlier, thanks to higher output from APLNG and its Otway venture in southeastern Australia.

Sales revenues for the quarter reached $253.4 million, up 27 per cent from the December quarter, thanks to higher average prices and increased sales of oil and gas sourced from third parties.

However, production was down 12 per cent from the December quarter as demand dropped off during the summer.

Origin shares are up 0.2 per cent to $14.90.

At the Otway venture, production was boosted by the start-up of the Gegraphe 2 well last July.

Origin also revealed it will drop its coal seam gas exploration ambitions in Botswana after reviewing the results from initial test drilling. It said the results were “not sufficiently encouraging to undertake further work” and it was preparing to relinquish its interest.

Citi has reiterated its 'sell' recommendation for Woolies after the supermarket chain posted third-quarter sales numbers this morning.

"The stock is trading at an elevated price/earnings ratio, with single digit earnings per share growth," Citi retail analyst Craig Woolford writes in a note. "While Food & Liquor remains in a strong position, the periphery businesses will be a drag – Big W and Masters."

Citi has a target price of $32.20 for the stock, or nearly 15 per cent below current levels of $37.21 (down 2.2 per cent for the day).

Some initial thoughts on today's numbers by Woolford:

  • 3Q14 sales of $15.2 billion, up 5.9% – Woolworths reported Easter adjusted sales  growth of 5.9%. This is stronger growth than Wesfarmers retail business, but like  Wesfarmers its discount department store was a weak point.
  • Food & Liquor comps up 3.5% – Food & Liquor comparable sales growth was in line with Coles. Only a slight improvement on 2Q14 despite a 0.5% tailwind from a higher tobacco excise. The reduction in petrol promotions from 8c per litre back to 4c has hurt growth and Woolworths are investing more into promotions.
  • Big W – Big W comparable store sales declined 5.9%. The discount department store category is struggling with ongoing deflation and improved competitor offerings. For Big W, the challenge is even greater as it shifts out of underperforming categories. 
  • Masters still sluggish – Masters reported sales up 40%, but the implied sales per store remains very sluggish. We await new management's plans to lift sales and reach breakeven given sales need to rise by 30% per store. 
  • FY14e outlook – Woolworths did not update its FY14e earnings outlook of 5-7% NPAT growth. However, management noted that “trading patterns and momentum for the third quarter were similar to the first half of FY14”. We forecast FY14e NPAT growth of 5.8%, from continuing operations on a 52-week basis.
Big W and Masters are expected to remain a drag on Woolies' earnings.

Big W and Masters are expected to remain a drag on Woolies' earnings. Photo: Brendan Esposito BBE

Harvey Norman has lifted its sales 4 per cent for the nine months to the end of March, thanks to favourable currency moves boosting the performance of its international stores.

The electrical and homewares retailer made sales of $4.33 billion for the nine months thanks to gains in the value of the euro, UK pound and New Zealand dollar.

Sales from the company's Australian division were up 1.5 per cent compared to the same period a year ago, though the result was weighed down by the closure of five Harvey Norman stores and one Joyce Mayne outlet.

But that was offset by a 16.5 per cent increase in sales from the company's New Zealand outlets, a 16.3 per cent rise in sales from Croatia and Slovenia, and a 23.2 per cent rise in sales in Ireland.

However, sales from Northern Ireland were down 6.3 per cent for the period.

But in constant currency terms and accounting for the store closures, Australian sales were up 3.4 per cent, while New Zealand sales were down 1 per cent and Slovenia and Croatia fell 1.9 per cent.

On the same basis, the company's Irish stores recorded sales growth of 4.1 per cent while Northern Ireland sales were up 20.3 per cent.

The stock is 1.7 per cent lower at $3.21.

Japan's Nikkei index is trading 0.6 per cent higher, as the yen held declines against the US dollar and investors weighed earnings before policy decisions from the Bank of Japan and Federal Reserve today.

Economists widely expect the Bank of Japan to keep monetary policy unchanged.

‘‘People are expecting nothing from the BoJ policy meeting, so even if it’s just one positive thing, it’ll be used as a reason to buy,’’ said Kenichi Hirano, an analyst at Tachibana Securities Co. ‘‘Shares that had sharp falls recently will likely be bought. The yen at around the 102.60 level is also positive for the market.’’

Any easing at today’s meeting would be a ‘‘positive surprise’’, Merrill Lynch economists Masayuki Kichikawa and Setsuko Yamashita wrote in a note.

International visitors to Australia spent a record $28.9 billion last year – a 6 per cent rise from the prior year – with the strongest growth coming from the holiday and visiting friends and relative segments.

The latest International Visitor Survey found spending grew by an even stronger 9 per cent to $8.1 billion in the December quarter.

Chinese visitors, now the most lucrative market for Australia, spent a record $4.8 billion last year, up 16 per cent despite new laws from October cracking down on cut-price shopping tours.

Japan and Korea were the most noticeable weak spots in terms of spending from major markets last year. Spending by Japanese visitors fell by 15 per cent and Korean visitors by 14 per cent.

Read more

Australian logistics company Brambles has reaffirmed its full-year profit forecast after reporting a 6 per cent increase in sales revenue of $US3.965 billion for the nine months to March.

In its third quarter trading update, Brambles chief executive Tom Gorman said the growth reflected solid underlying demand for pallets, which was up by 4 per cent and improved penetration in reusable plastic crates in the company’s North American operations, up 9 per cent.

Mr Gorman said in a statement that the growth “more than offset the adverse short-term impact on pallet volumes of the severe North American winter and late timing of Easter.

“We continue to expect constant currency sales revenue growth of approximately 7 per cent in the 2014 financial year with underlying profit within our previously stated guidance range of between $US930 million and $US965 million, at 30 June 2013 foreign exchange rates.”

Investors aren't thrilled, selling down the stock 1.1 per cent to $9.45.

Owning shares in the best-performing stock among the top 200 companies in the local bourse was not reward enough for almost one in five G8 Education investors, who voted against the salaries paid to the childcare operator’s top executives in 2013.

At the company’s AGM on the Gold Coast yesterday, investors – representing about 19 per cent of votes cast – voted against the company’s remuneration report.

G8 chair Jenny Hutson dismissed the dissenting vote as institutional investors who reflexively vote against remuneration reports, saying on the whole she had never presented to a happier group. “I think it’s part of a trend to say less is better but I think on any informed basis our executives are modestly rewarded,” she said. “The mood of the meeting was very positive.”

Managing director Chris Scott had total remuneration of $444,490 in 2013, according to G8’s annual report. Ms Hutson was paid $96,838 in the year.

The executive director of proxy advisory ISS Ulysses Chioatto said the group advised its clients to vote against the remuneration report because of loans provided to executives.

“Our concern is that they have an unusual loan structure being used to pay executives on top of their fixed salary,” he said. “The loans have no performance measures.”

Dean Paatsch, a partner at proxy advisory Ownership Matters, said he was not concerned by G8’s remuneration, but said the protest vote could reflect other problems. “To me, that seems like dissatisfaction generally with other issues,” he said.

G8’s largest institutional shareholder Perpetual, which controls 5.5 per cent of the company, voted for the remuneration report.

“They’ve made a lot of people a lot of money and didn’t pay themselves much in the beginning,” fund manager Jack Collopy said. “They really are the benchmark in childcare roll-ups.”

G8 shares have gained 93 per cent in the past 12 months.

<p>

The neutral cash rate is lower than in previous cycles, says CBA economist Gareth Aird:

  • A range of estimates and theoretical arguments suggest that the neutral cash rate is now lower. We estimate the current neutral policy cash rate to be 3.5 per cent (3-4 per cent range).
  • Changes in productivity, the terms of trade, savings behaviour, fiscal policy, credit growth, lending margins and the exchange rate have all impacted on the neutral cash rate.
  • Policy is set for risks that are now less threatening.  And upside inflation risks are present. We expect the RBA to start normalising policy setting from November 14.

The neutral cash rate is the interest rate (or range of rates) consistent with full employment, trend growth and neither upward nor downward pressures applied on the price level through monetary policy, CBA adds.

Or more generally, when the setting of interest rates is such as to exert neither contractionary nor expansionary forces on the economy, policy can be said to be ‘neutral’.  The neutral cash rate is not the expected interest rate over the next year or two, but rather it is the interest rate that we would expect to have when an economy is expanding at its potential growth rate.

Rare earths producer Lynas Corporation has entered a trading halt ahead of an expected financing deal.

The group said it was poised to reveal a “proposed financing transaction” and would exit the halt by Friday.

It is understood that United States-based hedge fund Mt Kellett Capital Management has been considering ways to convert its debt into Lynas equity ($).

Mt Kellett has been involved in Lynas since January 2012, when it gave Lynas $US225 million ($241 million) to fund the first phase of its Malaysian plant.

In return, Mt Kellett received $US225 million of Lynas convertible bonds. The bonds pay 2.75 per cent a year and were initially set up to be convertible at $1.25 a share before July 2016.

But with Lynas shares near a four-year low, it is understood Mt Kellett is investigating whether it could swap the bonds for shares at a lower price using a scheme of arrangement.

Stockland, Australia's second-largest property group, said this morning it expected to achieve 6 per cent of earnings growth for the 2014 financial year, at the top of its guidance range, supported by strong residential business.

The positive outlook in its quarterly update came a week after Stockland's all-script bid for smaller peer Australand Property Group was rejected, and may add pressure on the target company.

"If price expectations are too high we are quite prepared to sell down our holding and realise a profit," Stockland managing director and chief executive Mark Steinert said in a statement.

The stock is down 0.4 per cent to $3.88.

Shares have enjoyed a positive start to the day as big miners and banks bounce back from yesterday's losses, while Woolies drops 2.1 per cent on its quarterly sales update.

The ASX 200 is trading 16 points, or 0.3 per cent, higher at 5502.4, while the All Ords is 17 points up to 5483.4.

Of the top 200 names, 141 are in the black.

Brambles joins Woolies in being sold down on an earnings update, losing 1.5 per cent in early trading.

BHP is 0.7 higher, and Rio is up 0.8 per cent. Fortescue has added 1.4 per cent.

CBA, ANZ, and NAB are all between 0.4 and 0.5 per cent higher, while Westpac is up 0.2 per cent.

Gaming outfit Tabcorp has lifted its third quarter revenue, buoyed by strong growth from its wagering and international businesses.

Tabcorp’s revenues were up by 2.5 per cent to $492.3 million between January and March compared to the previous corresponding period. The group’s total revenues for its financial year to date were up by 1.5 per cent at $1.5 billion.

Softness in Tabcorp’s retail gaming business, which includes Keno, was offset by growth at its wagering and media and international businesses.

Wagering revenue for the quarter rose by 2.7 per cent to $377.2 million, driven by its fixed odds and digital divisions. The media and international arm lifted its revenues by 4.2 per cent to $54.3 million.

And in more corporate news this morning, Elders chairman Mark Allison will make the jump from the boardroom to the executive suite after being named the new chief executive of the agribusiness group.

Allison replaces Malcolm Jackson, who resigned in late November 2013. Allison has been chairing the company’s executive committee since Jackson announced his departure. Hutch Ranck will become chairman of the group.

Allison has previously held executive positions at Wesfarmers and Crop Care Australia.

Aspiring Sydney-based social network Spring.Me is set to list on the ASX through a reverse take-over of resources firm GRP Corporation.

In the latest of a recent spate of back-door listings for technology companies, GRP Corporation will acquire Spring.Me’s parent company Helpa Services, and rebrand as Spring Networks, as the company seeks to raise $4.5 million from existing and new investors on the sharemarket.

“Lately there’s been some good successes with the Freelancers of the world, iBuy and Bulletproof Networks, going onto the stock market whether through [IPOs] or reverse takeovers,” said Helpa co-founder Colin Fabig, who sold his last company, group buying website JumpOnIt to US-based LivingSocial in 2012.

“It looks like Aussie speculative investors aren’t going to just jump into mining or biotech but are also going to support Australian tech.”

The company will publicly float a third of its shares on the ASX in hopes of raising $3 million from new investors. Helpa has raised $3.5 million from venture capital investors so far, as it attempts to build new features into the Spring.Me network.

Former Vodafone and Samsung executive Keith O’Brien will become chief executive of the combined company.

The social network, which combines elements of Facebook, Twitter and question-and-answer network Quora, attracts some four million unique visitors a month.

Spring.Me is aiming to reach 100 million users over the next five years, but is not raising revenue, as it plans to hold off on advertising to users of the network until it hits critical mass.

Read more ($).

Twitter reported lackluster user and usage growth for the second consecutive quarter last night, deepening investor concerns about its struggle to gain a mass following.

Twitter's stock fell more than 10 per cent after hours to $38.05, below its post-initial public offering low of $38.80 on Nov. 25.

Perhaps most worrying, the San Francisco-based company said its 255 million monthly users, on average, appeared to check the service less frequently than a year ago.

The results revealed slowing momentum at a company that exuberant investors just six months ago had argued could one day match Facebook's scale. At its peak in December, Twitter enjoyed a $46 billion market capitalization on just $665 million of revenue in 2013, making it one of the world's priciest stocks.

But cracks began to show in February, when Twitter disclosed that user growth had fallen to its lowest rate in years, prompting chief executive Dick Costolo to promise tweaks to Twitter's design.

Expectations of Twitter growing into a communications utility that Facebook has become are "unrealistic and divorced from reality," said Brian Wieser, an analyst at Pivotal Research. "Twitter is and will remain a niche medium, and a very powerful one."

On a conference call Tuesday, Costolo repeatedly told Wall Street analysts that tweets from the Academy Awards show in March have been viewed more than 3 billion times online and mentioned countless times more on radio and television shows.

"Twitter - the platform - we believe is already incredibly mainstream," Costolo said. The challenge, he added, was to convince the world to see the "value of the logged-in experience."

Although overshadowed by the usage figures, Twitter posted better-than-expected revenues of $250 million. Excluding certain items, Twitter broke even against Wall Street expectations of a 3 cent per share loss. But the company said its net loss in absolute terms widened nearly fivefold to $132 million from $27 million a year ago.

Making a splash: Shares jumped as high as 92 per cent on its opening day.

Making a splash: Shares jumped as high as 92 per cent on its opening day. Photo: AP

Woolworths has reported a 5.9 per cent gain in sales for the March quarter to $15.19 billion exceeding retail sales growth at arch rival Wesfarmers - as solid gains in food and liquor in Australia and New Zealand offset weaker sales at discount chain BIG W.

Same-store sales in Woolworths’s Australian food and liquor stores rose 3.5 per cent in the three months ended April 6, adjusted for Easter, matching the growth at Coles, but falling slightly short of analysts forecasts of around 3.8 per cent.

Analysts had expected Woolworths’s same-store sales to exceed those at Coles for the first time in almost five years.

BT Investment Management has reported a 243 per cent lift in interim net profits to $78.3 million, with revenue jumping 92 per cent to $261.7 million, driven by a sharp increase in fee revenue from the asset manager’s UK business.

The 2014 interim dividend was twice that of its predecessor at 16 cents per shares, but franking dropped to 35 per cent from 100 per cent.

Cash profits for the six months to March 31 were reported at $83.1 million, a 143 per cent lift.

The increase on the prior year was predominantly driven by higher funds under management and significantly increased performance fee revenue from UK-based J O Hambro Capital Management, a business bought late 2011.

Profits from BTIM’s UK operations more than tripled to $194.7 million, while NPAT from the local business increased to $9.2 million from $1.3 million a year prior.

Rail operator Aurizon expects to achieve its full-year haulage guidance after lifting coal volumes 11 per cent during the March quarter.

Aurizon hauled 48.6 million tonnes of coal during the three months to March 31, up from 43.6 million tonnes for the same period a year ago.

The company says it remains on track to achieve its full year guidance of between 207 and 212 million tonnes for 2013/14, despite the impact of tropical cyclone Ita on its operations.

The increase in coal volumes offset a 3 per cent decline in freight volumes during the quarter, with nickel volumes down six per cent linked to supply issues for one customer due to the Indonesian government's embargo on the commodity's export.

Read more.

The Australian dollar has drifted higher following a rally on global share markets and expectations that the greenback will trade within a narrow range.

The local currency is trading at 92.66 US cents, up from 92.39 cents on Tuesday.

European and US stocks rallied overnight, giving the Australian dollar a boost.

The local currency is also being boosted by expectations that US economic data and the US Federal Reserve monetary policy decision this week will be in line with market expectations, BK Asset Management managing director Kathy Lien said.

"The reason why the Australian dollar has started the Asian session well is because we had a nice little recovery in US stocks," Ms Lien said.

"If the Federal Reserve and gross domestic product reports are boring and don't have any surprises, that will leave the narrow trading range in the US dollar in tact.

"The US dollar is not expected to see a significant widening of its trading range, and as a result, we're seeing the Aussie dollar supported because some people are unwinding their US dollar trades."

The Fed will make its monetary policy announcement on Thursday morning, Australian time, following the release of US first-quarter GDP figures.

Read more.

Local stocks are poised to open higher after global equities rallied overnight.

  • SPI futures up 19 points to 5496
  • On Wall St, S&P500 +0.5%, Dow Jones +0.5%, Nasdaq +0.7%
  • In Europe, Euro Stoxx 50 +1.4%, FTSE100 +1%, CAC +0.8%, DAX +1.5%
  • Spot gold flat at $US1296.29 an ounce
  • LME three-month copper down 0.3% to $US6745.50 a tonne
  • Brent oil adds 0.7% to $US108.83 per barrel
  • Iron ore drops 0.3% to $US108.30 per metric tonne

 

What's on today:

  • Private sector credit figures from RBA at 11:30am AEST
  • Japanese monetary policy statement - timing tentative
  • US: Fed meeting day two ahead of statement at 4am AEST Thursday morning, ADP employment change for April, released 10:15pm AEST.

 

Stocks to watch:

  • Woodside AGM
  • Origin Energy Q3 report
  • Woolworths Q3 sales
  • Westpac cut to underperform at BoA/ML
  • Deutsche Bank retains a “sell” recommendation on Coca-Cola Amatil with a $9-a-share, 12-month target price.
  • Alacer raised to hold at Deutsche Bank with price target of $2.30
  • Brambles and Crown are among Asia-Pacific stocks which are expensive with negative earnings outlooks
  • Drillsearch Q3 output
  • Medusa Mining March qtr gold output was 16,200 ounces; production was less than forecast from flooding in January.
  • OceanaGold posts record Q1 revenue, maintains FY14 targets
  • Panoramic Resources cut to underperform t Credit Suisse
  • Select Harvests raised to buy v hold at Cannacord Genuity
  • Stockland Q3 investor update

 

Read more.

Good morning and welcome to the Markets Live blog for Wednesday.

Your editors today are Jens Meyer and Patrick Commins.

This blog is not intended as investment advice.

BusinessDay with wires.

 

Quotes Search

Sort comments by:
  • Interesting list @ 3:19pm. Computershare being on there is a major surprise to me, anyone who has studied their financial reports would see a possible sub-investment grade entity due to the sizeable debt, I guess if they out perform they might be a good stock, but a world champion? Also surprised that Syngenta isn't on that list, love that company!

    Commenter
    DR
    Location
    Syd
    Date and time
    April 30, 2014, 4:12PM
  • Isn't it delicious. Each day the ICAC enquiry in NSW, that started out looking at corruption amongst Labor politicians, is now exposing one Liberal politician after the other as corrupt and naming their partners in the business community who fostered that corruption. I wonder what penalties will be meted out (if any). Given what is happening in NSW, Tony Abbott must be wondering if it's not too late to close down his Royal Commission into union corruption. Who amongst his political and business mates will be the collateral damage. After all, a tango of one is impossible. Relevance to markets you ask, well what leading lights in the business community and politics will be exposed and what projects brought undone. We have already have one of Tony Abbott's own rolled and coal mines stopped.

    Commenter
    mitch of ACT
    Location
    Date and time
    April 30, 2014, 4:10PM
    • We only have 8 and a half years of this to go lol

      Commenter
      Captor
      Location
      Date and time
      April 30, 2014, 4:44PM
  • Living dangerously...
    grabbed EHL @ 25.5c
    COE @ 50c
    and ACR for 1.035c
    just a dabble to start in case

    Commenter
    BearshapedBull
    Location
    Mugpunters Lounge
    Date and time
    April 30, 2014, 3:52PM
  • Seems like ANZ holders aren't too worried about "Sell on fact" tomorrow. Good luck ;)

    Commenter
    GS
    Location
    Date and time
    April 30, 2014, 3:47PM
  • Buy CWN @16.00

    Commenter
    Wwwish Lion
    Location
    Melbourne
    Date and time
    April 30, 2014, 3:10PM
  • Are we going to get the end of month window dressing shenanigans at the close of trade today?

    Commenter
    Grizzly Adams
    Location
    Date and time
    April 30, 2014, 2:29PM
    • There has been a sharp uptick at the close of trade auction for the last few days so there probably will be a bigger one today. It will all be unwound tomorrow. Australia takes "sell in May & go away" a lot more seriously than the US. Over the last 3 years the Dow has dropped by 3% from its highest point in April to June at 30th June. Australia has dropped by a consistent 8% over the last 3 years and we are about to repeat. My bet is the AllOrds at a little above 5040 at 30th June, based on what has happened for each of the last 3 years, and where we are now.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 2:52PM
    • Not sure anyone would fall for that one on the last day in April @Grizz but I hope so

      Commenter
      james hopes
      Location
      Date and time
      April 30, 2014, 2:54PM
    • And because we always side with the US, for better or worse, China will stop buying raw materials from us.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 3:47PM
    • not today

      Commenter
      josephine
      Location
      Date and time
      April 30, 2014, 3:59PM
  • "China to overtake US as the world's biggest economy". Easy fixed if the US stops buying goods manufactured in China. That could be a consequence of problems between China & its neighbours with the islands in the China Sea.

    Commenter
    mitch of ACT
    Location
    Date and time
    April 30, 2014, 2:25PM
    • China can just as easily stop buying goods made in the US. There are other industrialised countries that will happily provide China with the chemical, industrial, agricultural, etc. goods that the US sells to China. The only sector that might hurt China in the short term would be if the US stopped selling software and IT goods, but that would just allow China to build up its own IT sector.

      But don't every think that the economy will prevent a war. Politics and culture trumps economics. Always.

      Commenter
      Dr No
      Location
      Sydney
      Date and time
      April 30, 2014, 2:51PM
  • Tony Abbott on ch24 at the moment rabbotting on about "Budget Emergency" but as the recent decision to purchase the JSF at a total cost of $24bn+ shows that no matter how bad the state of the Budget, money can always be found by the Libs for war. It's no accident that Australia's involvement in wars that were nothing to do with us, ie Vietnam, Afghanistan & Iraq 1 & 2 all occurred under the stewardship of the Liberals when they volunteered our forces to toady up to the US. And what benefit did we get, but hordes of boat people each time every time. That's the blowback you get when you go interfering in someone else's war. Now there are several potential conflicts developing, ie between China and it's China Sea neighbours and Ukraine, both of which the US has made commitments to get involved. I have no doubt that if worse comes to worse, the Libs will find the cash to send our forces off to war alongside Uncle Sam.

    Commenter
    mitch of ACT
    Location
    Date and time
    April 30, 2014, 1:54PM
    • With all due respect mitch, but it's sensible to spend money on defence rather than entitlements in these trying times.

      I have the American wars as much as you do mitch, but the real problem is that both Liberal and Labor are pushing it, leaving no options for the voters. Rudd was one of the first leaders in the whole world (!) who started calling for bomb raids against a stable and West-friendly Libya, with the result that Libya is today a terrorist haven with local bands of rebels terrorising the population. Rudd, Obama, Cameron, Sarkozy/Hollande all got what they wanted.

      Neither the left-liberals nor the right-liberals will stop the wars. We need a pure conservative nationalist government!

      Commenter
      Dr No
      Location
      Sydney
      Date and time
      April 30, 2014, 2:14PM
  • some companies i invest in or have invested in.computershare,iress,westpac,qbe,csl,sims,cochlear,resmed.
    i know wow and wes aren't the only ones that do whatever it takes to make as much profit as possible but being an ex farmer i can imagine assuming the position when it comes to negotiating with them

    Commenter
    gregorio
    Location
    Date and time
    April 30, 2014, 1:52PM
  • So where will the market be Friday after austerity joe has his 15 mins of fame, the O/S markets surely can't keep current pace and the sell in May train is pulling into the platform. If business and consumers react badly to joe & sirpos, this could be a jittery few weeks (months)? Please discuss.

    Commenter
    everyone keep peddling
    Location
    til you're 70
    Date and time
    April 30, 2014, 1:52PM
    • Cutting and slashing your way to prosperity is the way to go............to the poorhouse. But no use telling that to this bunch of economic dunces.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 3:58PM
    • Mitch - you're quite a comedian! Are you saying that aiming for balanced budgets is leading to the poorhouse?

      Is that how you run your personal economy as well?!? I.e. running up a balance on your credit card is fine, but starting to pay back leads to the poorhouse ....

      It is exactly this kind of crazy logic that has put large parts of Europe and the US close to bankruptcy. The Germans and the Scandinavians can only shake their head at this kind of voodoo economics.

      Commenter
      Dr No
      Location
      Sydney
      Date and time
      April 30, 2014, 4:21PM
  • How is it with $135M in bank and no debt ABY has a market cap of $60m?
    Even with temporary halt to production this is sheer lunacy. This is a GIFT (Allan's vocab not mine!).

    Commenter
    OX
    Location
    Kensi Pk
    Date and time
    April 30, 2014, 1:17PM
    • b/c they don't earn a single cent and probably never will.

      so, no dividends, no earning power...why buy it?

      Commenter
      no banks .. no party!
      Location
      Date and time
      April 30, 2014, 1:59PM
    • Buy the whole thing and shut it down ;) extra special div

      Commenter
      Wwwish Lion
      Location
      Melbourne
      Date and time
      April 30, 2014, 2:21PM
  • "# new comments"

    ^^^^ Is that comments feature gone now? Haven't noticed it at all today. Just keeps refreshing with no indication of new comments unless you notice them up the top.

    Commenter
    GS
    Location
    Date and time
    April 30, 2014, 1:12PM
    • Have you logged in?

      Commenter
      Wally
      Location
      Flynn
      Date and time
      April 30, 2014, 3:08PM
    • Yep, had to log in this morning for the first time in a long time! Normally just remembers me.

      That's why I thought they had some new update and not showing the number of new posts is a new feature. Only see new comments when the page refreshes.

      I like to know how many new comments so I can stop scrolling down to see if there are any new ones. If I see "3 new comments" and see them up the top, I can stop scrolling right there.

      Maybe it's just my pc :(

      Commenter
      GS
      Location
      Date and time
      April 30, 2014, 3:40PM
  • Bears winning. Again.

    Commenter
    Herman
    Location
    Date and time
    April 30, 2014, 1:04PM
    • Yeah, wow....killing it today eh.

      Commenter
      heybert
      Location
      Sesame Street
      Date and time
      April 30, 2014, 1:49PM
  • comment @ 12.43pm - have to pure speculation surely. These expert strategists rarely hit the jackpot with any consistency.

    If they can do it so can I. With Maule's Creek coming on line, WHC is cherry ripe to be picked up by the Chinese. Hope so anyway I bought them for $1.50 based on that possibility and the fact they have had the crap beaten out of their SP.

    Commenter
    craig
    Location
    Date and time
    April 30, 2014, 12:52PM
  • Woolies Dumped?? Down a whole 2.39% right now. Hardly a dumping and more like a minor adjustment. Compared to some of the recent 30% drops in certain shares, it is just alarmist to use headlines like this. Even the volume traded is not that significant.

    Commenter
    confused
    Location
    Date and time
    April 30, 2014, 12:40PM
  • China is likely to overtake the US as the world’s biggest economy' - is it a race?

    Still no chance of me ever wanting to emigrate there to its polluted over populated cities... development no doubt coming at at a cost!

    Elysium here I come !!!

    Commenter
    greeny
    Location
    sydney
    Date and time
    April 30, 2014, 12:28PM
    • But China's growth is slowing.How can it be getting bigger? China bears...Allan....heeelp.

      Commenter
      Chumlee
      Location
      Date and time
      April 30, 2014, 1:10PM
    • You might not be interested in emigrating to China my friend, but once they've implemented Pax Sinica across the Asia-Pacific, they might decide that they are very much interested in emigrating here to find some lebensraum.

      Commenter
      Dr No
      Location
      Sydney
      Date and time
      April 30, 2014, 1:15PM
  • Cannot believe how insipid our market is. The last 2 days only confirm this assessment.

    Commenter
    craig
    Location
    Date and time
    April 30, 2014, 12:24PM
  • i bought wow in 2003 for $11.19.they were going to be one off the cornerstones of my portfolio i sold them last year for $29.60,i couldn't live with myself owning shares in a company that shafts farmers and suppliers and bleeds money from people with their poker machines.

    Commenter
    gregorio
    Location
    Date and time
    April 30, 2014, 12:07PM
    • Gregorio, I respect your level of ethics and admit I'm not in your league. But if ethics is your thing, then I guess banks and miners are also unsavoury in your view. I can't think of any particularly ethical companies that I can also rely on for a steady return. Biotech is too unstable for me. What in the world do you invest in that satisfies your sensibilities? Telstra is probably OK?

      Commenter
      Gareth
      Location
      Sydney
      Date and time
      April 30, 2014, 12:36PM
    • You'll sleep well with the profits though ..

      Commenter
      Barry Wonder
      Location
      Date and time
      April 30, 2014, 12:38PM
    • Great topic Gregorio! What shares do you invest in? I like the idea of only investing in companies that you approve of ethically, but where do you even get the information about all a companies activities to make a judgement? Some businesses are obvious, such as cigarette producers, but what about biotechs that use animals for research? Or construction companies that pay bribes? Often the unethical behaviour is well hidden and how would you ever know until it is too late..... I'm not sure that there is enough information in the public domain to make truly informed decisions.

      Commenter
      confused
      Location
      Date and time
      April 30, 2014, 12:49PM
    • Graeth: Telstra, are you kidding us?

      Commenter
      DR
      Location
      syd
      Date and time
      April 30, 2014, 1:32PM
    • It took you ten years to come to that decision!? sorry don't buy it.

      Commenter
      please!!!!!!!!,
      Location
      Date and time
      April 30, 2014, 1:41PM
    • Ethically you've gotta be outta the market.Otherwise you'd only be into the chicken rescue and dolphin massaging stocks, and when did any of those every turn a dollar.

      Commenter
      BearshapedBull
      Location
      Mugpunters Lounge
      Date and time
      April 30, 2014, 3:49PM
  • Only one company people should be talking about...little aussie bio OBJ. Can't believe not one article from the major papers.

    Commenter
    bindaree43
    Location
    Date and time
    April 30, 2014, 11:39AM
    • finally a win for the battered AU biotech sector.well done to those holding on. some good news for MSB seems to have got forgotten and lets not talk about ACR...just yet.

      Commenter
      BearshapedBull
      Location
      Mugpunters Lounge
      Date and time
      April 30, 2014, 12:35PM
  • party over? i hope so.
    the yanks worry me, they continue to party way to hard imho.

    Commenter
    no banks .. no party!
    Location
    Date and time
    April 30, 2014, 11:37AM
  • Tony Abbott is facing his Jimmy Carter moment. In the early 1980s Jimmy told voters that they had to live within their means and spend responsibly. He was voted out. To maintain the AAA credit rating TA needs to be seen to be reducing the debt. There are no votes in taking away people's cash.

    Commenter
    Wally
    Location
    Flynn
    Date and time
    April 30, 2014, 11:19AM
    • “The American Republic will endure, until politicians realize they can bribe the people with their own money.”
      ― Alexis de Tocqueville, Democracy in America

      I hope Abbott can reverse Labor's populist debt policies. Australia needs to spend less and pay back its debt. Bitter medicine, and only a tough politician can give the public the bad news.

      Commenter
      Dr No
      Location
      Sydney
      Date and time
      April 30, 2014, 11:46AM
  • There's been some mention today of SLX. Solar and uranium enrichment technologies. Good progress announced today but the SP drift lower continues. I'm interested but how does one value these sort of companies?

    Commenter
    YIn or yang
    Location
    Date and time
    April 30, 2014, 11:10AM
    • cash burn / $ in the bank + hot air + hype - capital raising to fund = roundabouts
      it was in jest.

      Commenter
      BearshapedBull
      Location
      Mugpunters Lounge
      Date and time
      April 30, 2014, 3:46PM
  • I wonder if the Commission of Audit recommendations have been handed to Treasury yet. If so I hope that the Treasury officials are pointing out to Hockey & co as gentl as they can that for every $1 the gov't cuts from benefits and pensions to the lower income earners the gov't loses $1+ in tax from wages, profits & the GST due to the multiplier effect. The gov't may think it's on track to make big savings but all it will do is increase the deficit.

    Commenter
    mitch of ACT
    Location
    Date and time
    April 30, 2014, 11:05AM
    • Mitch, I think your thinking is alittle off on this cause you are over looking a lot of factors:
      1. Not all items have GST on them. Even then GST is only 10%, so that is 10c for every $1.
      2. How much of the profits, wages and etc are going straight overseas? Remeber very little is manufactured in Australia anymore.
      3. How much of this is saved by the pensioner and hidden under the bed? Hence no benefit to the economy and no taxes recovered.
      4. Also last time I checked illegal purchases (including drugs and stimulants) are not taxed either.

      Commenter
      DJBB
      Location
      The Shire
      Date and time
      April 30, 2014, 12:10PM
    • @DJBB, the models used by Treasury factor in all of the tax leakage items you described., The revenue effect depends more on the number of times that $1 of benefits/pensions is turned over in the economy than the leakage elements. The cash spent on non-GST or illegal items eventually finds its way back into the economy. Yes some cash is used to pay for products sourced from o/seas but the cost component of those items is only about 20%, depending on the value of the $A at the time. Lower income earners and benefits/pension recipients spend their cash a lot quicker on consumption than higher income earners so the multiplier is greater.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 12:58PM
  • Difficult to get excited about the Australian market. As if the world economic and geopolitical issues aren't scary enough, we have Federal and State politicians who vacillate from sound bite to sound bite with no firm leadership or plan for the future

    Commenter
    Non cognosco
    Location
    SEQ
    Date and time
    April 30, 2014, 10:53AM
    • Not sure i agree with you. Abbott has a clear plan based on infrastructure. Infrastructure programs usually have positive effects on the economy

      Commenter
      Captor
      Location
      Date and time
      April 30, 2014, 11:05AM
    • Provided the companies contracted to build that infrastructure aren't permitted to employ hordes of workers on 457s.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 11:32AM
    • the NBN would be a great start on the infrastucture front !

      Commenter
      j
      Location
      syd
      Date and time
      April 30, 2014, 11:57AM
    • Not all infrastructure is good. Look up these four toll roads that between them have gone bust and have sent billions up in smoke:

      Airportlink and Clem7 in Brisbane, Cross City and Lane Cove in Sydney. No doubt there are others.

      Handpicking of big projects by politicians without proper cost-benefit analysis is very dangerous and Tony is as prone to this as any other politician as evidenced by his backing of the secretive 15 billion dollar East-West in Melbourne..

      Commenter
      Jim
      Location
      Date and time
      April 30, 2014, 1:12PM
  • Wow SBM has crawled back up to 22.5c well I'll be a monkeys uncle, the old bull trap maybe?

    Commenter
    Bear
    Location
    Shooter
    Date and time
    April 30, 2014, 10:52AM
    • SBM will be ok, but it will be a lengthy wait!

      Commenter
      herman
      Location
      Date and time
      April 30, 2014, 12:21PM
    • try telling that to the punters who paid $2.40 eighteen months ago!

      Commenter
      craig
      Location
      Date and time
      April 30, 2014, 12:43PM
  • The whole market is in a state of flux as I see it.Todays chart sort f vindicates that to me. We are maxed out for value of the high yield stocks and I doubt many really want to sell as there doesn't seem any reason to except for the "sell in may" syndrome. Records are made to be broken so I am tipping we might just go a bit higher yet, although with increasing trepidation and rising heart palpitations.

    Commenter
    Captor
    Location
    Date and time
    April 30, 2014, 10:50AM
  • "Bank of America gets QBE mid-market US sale mandate."
    Looks like one aspect of the US issues should be sorted sooner rather than later.

    Commenter
    QBE desperado
    Location
    Date and time
    April 30, 2014, 10:46AM
  • there she goes, 2 weeks of holding massive drawdowns, wondering why the market keeps going up, no sleep ... stress ... etc etc ... u all know the story!

    Commenter
    j
    Location
    syd
    Date and time
    April 30, 2014, 10:34AM
  • I suspect the banks will have a bit of a false start today and will probably all close lower by the end of the day.

    Commenter
    Gareth
    Location
    Sydney
    Date and time
    April 30, 2014, 10:31AM
    • Further to this, I expect ANZ and WBC have exhausted their run up to the early / mid May ex-div dates and will either stabilise or drop from here. NAB is harder to call but will probably follow ANZ / WBC for 2 weeks and then have a run in the latter part of May as it approaches its ex-div date as the cash from ANZ / WBC shares dumped on ex-div will be redirected to NAB.

      Commenter
      Gareth
      Location
      Sydney
      Date and time
      April 30, 2014, 10:47AM
  • The Solar (partial) eclipse and the Blood Moons are clear signs of the times ahead...much pain is on the way. The "Correction" is coming, and it will finish many...Sell, get out and stay out.

    Commenter
    Prophet
    Location
    Sydney
    Date and time
    April 30, 2014, 10:26AM
    • I dunno, I consulted my haruspex and he said this would be a good year on the markets.

      Commenter
      Rege
      Location
      Date and time
      April 30, 2014, 10:49AM
    • I cut open a chicken last week and it said the ASX would be 5550 by the end of April but then i cut open a rooster and it said...get a sharper knife.

      Commenter
      BearshapedBull
      Location
      Mugpunters Lounge
      Date and time
      April 30, 2014, 11:39AM
    • Zeus does not bring all man's plans to
      fulfillment.

      Commenter
      Prometheus
      Location
      Date and time
      April 30, 2014, 3:59PM
  • So yesterdays prices triggered the big end of town to take profits and sell down the banks...who's buying back in?

    Commenter
    BearshapedBull
    Location
    Mugpunters Lounge
    Date and time
    April 30, 2014, 10:24AM
    • Perhaps the same people who sold them yesterday??

      Commenter
      mirage
      Location
      Date and time
      April 30, 2014, 10:32AM
    • It wasn't us....we just sit back, patiently awaiting the amateurs to trade and scalp...

      Commenter
      The last of the HFT Mohican
      Location
      Sydney
      Date and time
      April 30, 2014, 11:04AM
    • According to the comments section of this blog, only robots sell shares and humans buy them.

      Commenter
      DR
      Location
      syd
      Date and time
      April 30, 2014, 11:05AM
  • WOW with growth of 3.5% valued at over pe 20 is not a growth story and should be valued as mature stock at around pe 13-14 together with international peers.

    Commenter
    Viking
    Location
    Sydney
    Date and time
    April 30, 2014, 9:54AM
    • You know that is for a 3 month period right?
      I would consider WOW a growth stock, with more Masters stores opening, food and liquor sales growth is still very good for a mature segment of their business, their petrol stations also performed very well, they are buying more hotels (pubs).
      All looks pretty good to me.
      BTW I am a long term holder of this stock.

      Commenter
      DJBB
      Location
      The Shire
      Date and time
      April 30, 2014, 10:08AM
    • Woolworths had collector cards again in the March quarter, so anyone with kids was constantly nagged to shop at Woolworths.
      Back to Coles now.

      Commenter
      Household shopper
      Location
      Date and time
      April 30, 2014, 10:11AM
    • Inflation is presently running at the same rate which means that real growth in WOW is ZERO.

      Commenter
      Svennie
      Location
      Sydney
      Date and time
      April 30, 2014, 10:23AM
    • Neither WOW nor COLES are showing real growth, so the question is who is growing? It seems it is ALDI which a lot of customers are switching to.

      Commenter
      Svennie
      Location
      Sydney
      Date and time
      April 30, 2014, 10:33AM
    • DJBB the international benchmark for a growth stock is 20% annual growth. WOW is overvalued with at least 30%. Masters is not delivering a profit and the business model looks shaky to me.

      Commenter
      Viking
      Location
      Sydney
      Date and time
      April 30, 2014, 10:37AM
    • Inflation is presently running at the same rate which means that real growth in WOW is ZERO.

      Commenter Svennie Location Sydney Date and time April 30, 2014, 10:23AM

      Really? Inflation is 15% per year?

      DJBB the international benchmark for a growth stock is 20% annual growth. WOW is overvalued with at least 30%. Masters is not delivering a profit and the business model looks shaky to me.

      Commenter Viking Location Sydney Date and time April 30, 2014, 10:37AM

      Never new there was an international bench mark for growth stocks. Usually a growth stock is considered as a stock which grows faster than the market. Well if you think it is over valued put your dollars where your mouth is and short the stock.
      Masters may not be delivering a profit yet, but it is starting to turn the corner with excellent growth in sales.

      Commenter
      DJBB
      Location
      The Shire
      Date and time
      April 30, 2014, 11:01AM
  • Spot the odd one out. This week:

    1. GE announces it will invest at least $1 billion in renewable energy each year.

    2. A new solar plant completed in Arizona, signs a deal with California to power the equivalent of San Francisco for the next 25 years.

    3. Abbott appoints a coal lobbying firm to do the modelling for its review of renewable energy targets, a review already headed by a sceptic of science.

    Australia is falling behind, the coal merchants think coal will be the future, at a time when Forbes magazine says the EXPONENTIAL advances in solar energy are transforming energy production in America.

    The ostriches will be getting a rude shock when nobody needs their coal anymore!

    Commenter
    Fred
    Location
    Date and time
    April 30, 2014, 9:37AM
    • I agree fred, thats why we need to see as much coal now while it still has any value

      Commenter
      Wwwish Lion
      Location
      Melbourne
      Date and time
      April 30, 2014, 10:04AM
    • Sure solar can be used in the desert state of Arizona. That doesn't necessarily mean that it's viable in Australian population centres. Arizona's got a 4 million city right in the middle of the desert.

      We must be very careful not to repeat the disaster that is happening in Germany, which in time might come to threaten the very existence of its industrial might. Chancellor Merkel decided on a policy of "energiewende", i.e. closing existing viable nuclear plants in favour of renewables. This proved unworkable and Germany is now relying on imported Russian gas. If Putin cuts that gas - or the Americans force Germany to stop buying from Russia - Germany will have to fall back on coal incl very dirty Polish brown coal. They're already paying three times more for energy than the US. A total disaster!

      Commenter
      Dr No
      Location
      Sydney
      Date and time
      April 30, 2014, 10:14AM
    • And don't forget today's announcement by SLX of the completion of a 1MW solar facility in Saudi Arabia.
      http://www.asx.com.au/asxpdf/20140430/pdf/42p8xvqbgqb8c8.pdf
      My own investment in solar panels was the best investment I ever made. 17%pa provided the sun comes up each day.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 10:17AM
    • Fred, I don't want to doubt you, but I am curious about your sources. I just did a bit of research and it appears that San Francisco uses 18,000 megawatt hours of electricity each day. The plant you are talking about produces 290 megawatts peak, and obviously would produce little or none at night. That's a far cry from the 18,000Mwh San Francisco needs?

      Commenter
      Gareth
      Location
      Sydney
      Date and time
      April 30, 2014, 10:23AM
    • The problem with the Libs is that they think that every idea and policy that Labor brought in was bad and to differentiate themselves from Labor they have to do the exact opposite and undo everything that Labor achieved. I'm surprised that NDIS is going ahead altho I expect it will need it's own disability support scheme by the time the Libs have had their wicked way with it.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 10:36AM
    • Dr No: Paying more for energy isn't a disaster if your policy change is to renewable energy, that is to be expected. Nobody in Germany said renewables would be cheaper than a nuclear/coal option. To your other point, Australia has a lot of land, a lot of it unusable for agriculture due to it being barren and burnt to a crisp, it can't all be dug up for minerals, so why not dump a bunch of solar panels on it? It might not be cheap, but it is a start.

      Commenter
      DR
      Location
      syd
      Date and time
      April 30, 2014, 10:38AM
    • Oh the conundrum of being a greenie. Just read this in a Forbe's article "because giant (solar) projects rely on so much land and create big impact on wildlife, water or other resources. They have become magnets for lawsuits from environmental and community groups". You want solar, yet you kick up a stink when you realise how much land is required to make it viable? You must live such tormented lives.

      Commenter
      Gareth
      Location
      Sydney
      Date and time
      April 30, 2014, 11:01AM
    • Also checked and those numbers don't stack up at all. A few zeroes missing, but made good anti-LNP reading anyway for mitch to chime in with his thrice daily Labor advert, Noice lead -in.

      Anyone up for discussing the RGRS DebtTax impact on the market?

      Commenter
      ALittleToTheRight
      Location
      Date and time
      April 30, 2014, 11:27AM
    • @Gareth, that's why that huge area of brown that is shown on TV every weather report is ideal for massive solar or wind farms. There's nothing there, little or no wildlife and no-one to complain about their view or social amenity being spoiled.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 11:36AM
    • @alittle, how is the proposed deficit tax/levy consistent with "no country has ever taxed its way to prosperity". And how is the PPL consistent with "no country has ever subsidised its way to prosperity". Words of your great leader. Now I don't mind the levy because a) I won't pay it and b) because the levy is on higher income earners it won't do much to hurt consumption nor revenues from consumption and will add just a little to gov't revenue. It will also rankle those who most likely voted Abbott in. Just deserts.

      Commenter
      mitch of ACT
      Location
      Date and time
      April 30, 2014, 12:00PM
    • Fair enough, Mitch. I'll take your word for it that our local greenies won't kick up a stink. Though I do think using land for solar is a bit wasteful because that's the only energy source we can all produce from our own houses at least. It would make more sense to encourage personal solar take-up, and use that land for wind instead (if you must). Though I'm a bit of a nuclear advocate. Small footprint, very clean, very powerful, and in Australia reasonably safe from earthquakes, tsunamis, etc. I am aware of the risks, but I think a modern design on Australian soil managed with Australian competence essentially zeroes the risk.

      Commenter
      Gareth
      Location
      Sydney
      Date and time
      April 30, 2014, 12:22PM
    • @Gareth i agree, we should be looking at liquid fluoride thorium reactors.....

      Commenter
      Wwwish Lion
      Location
      Melbourne
      Date and time
      April 30, 2014, 1:37PM
  • There are some sensible central bankers out there. Reserve Bank Of India Governor Raghuram Rajan in a speech at the Brooking Institute made clear his views on the rest of the world's central bankers as he concluded:

    "the first step to prescribing the right medicine is to recognize the cause of the illness. And, when it comes to what is ailing the global economy, extreme monetary easing has been more cause than cure. The sooner we recognize that, the stronger and more sustainable the global economic recovery will be."

    Indeed. The US private bank the Federal Reserve has become the greatest threat to Western civilisation. We must deal with the bank accordingly.

    Commenter
    Dr No
    Location
    Sydney
    Date and time
    April 30, 2014, 9:31AM
    • Yes, the automatic stabilisers will star kicking in soon, ie...War.

      Commenter
      Dr Yes
      Location
      Sydney
      Date and time
      April 30, 2014, 10:01AM
    • The biggest owner of the Federal Reseve, the Rothschilds banking family, has always profited from war. Starting with the Napolean wars in the early 19th century, where they lent money to both sides, they've been involved in lending money to war efforts throughout Europe and the US.

      The Rothschilds-owned The Economist magazine is always talking up the next war for Britain to get involved in, be it Iraq, Syria or Ukraine. Britain would of course have to borrow large amounts of money to afford another war.

      Commenter
      Dr No
      Location
      Sydney
      Date and time
      April 30, 2014, 10:30AM

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