Daily Market Reports | Jun 12 2008
By Rudi Filapek-Vandyck
Hercule Poirot. Tin Tin. Eddy Merckx. Justine Henin (former Henin-Hardenne). Plastic Bertrand. And Kim Clijsters, of course. Mention “Belgium” wherever you are across the globe and this is probably about the maximum in references you might reap, no matter how large the audience. Some of the smarter ones will know that it was in Belgium that Napoleon fought his last battle (remember Waterloo) and another one might add it was there that the first world war was mostly fought (including the first deployment of nerve gas).
And beer. Belgians do not only think their beer is by far the best ever brewed, many foreign connoisseur of the liquid can only nod his head in full agreement (especially when he’s had more than a few). Very uncharacteristically to this small country, equal in size to the Blue Mountains in Australia, it just so happens to be that the largest owner of Belgian beer brands is also the largest beer seller in the world.
Unfortunately, this was not achieved through organic growth (ten million people cannot drink that much). And so it is that the world’s largest beer brewer is known as InBev these days. Very unsexy, they’re probably very aware of this themselves. Yesterday InBev launched a bid for America’s proud beer giant Anheuser-Bush. The offer, if successful, will make InBev the largest in the galaxy (sort of), but that’s assuming the Anheuser-Bush board, led by an ex-JP Morgan executive, will fall on its knees and bow to the superior quality that stands in front of the gates. This is unlikely to happen.
But the inofficial offer (it’s more like a suggestion at this stage) of US$65 per share, valuing America’s largest beer brewer at circa US$46bn, had investors excited last night and Anheuser-Bush shares went on a steep rise after the market’s close. Early expert comments range from the board will have to take the approach seriously to the board is likely to turn hostile against the Belgo-Brazilian suitor.
It was one of few positive events that happened on US share markets overnight. An industry association for semi-conductor producers (that’s chips to you and me) lowered what everyone thought was a long overdue growth prognosis. Financial stocks had another one of those very bad sell-offs. Oil rose back to US$136 per barrel. And investors mainly had one theme on their minds: higher inflation will cause higher interest rates and that cannot be a good thing for company profits.
Shares went down, in case you still wondered.
The Standard & Poor’s 500 Index lost 22.95, or 1.7%, to 1,335.49. The Dow Jones Industrial Average declined 205.99, or 1.7%, to 12,083.77. The Nasdaq Composite Index decreased 54.93, or 2.2%, to 2,394.01. More than six stocks slipped for each that gained on the New York Stock Exchange.
Some of the US share indices are now at their lowest level in two months. No prices for guessing the direction of the Australian share market today.
Greg Peel is attending a conference today. He will be back on Friday morning.
