Australia | Dec 10 2013
By Henry Jennings, Private Client Advisor, BBY Ltd
A pretty quiet and dismal day as it ended down 1 point having shown so much promise early on. We peaked at 5185 before copping it sweet and closing at 5144 Yesterday’s falls were eaten by the financials pushing ahead strongly but apathy ,further falls in QBE Insurance Group Limited (A$10.82, -9.8%) and general malaise brought us back to earth with a thud. Financials were better today but well off their highs.
• In industrials Brambles Limited (A$8.86, -4.5%) fell heavily as the first day of trading of their document business #REC# started today. Media stocks eased as APN News & Media Limited (A$0.47, -1.1%),Fairfax Media Limited (A$0.63, -3.1%),NEC fell although Seven West Media Limited (A$2.15, +0.9%) rose slightly. Retailers were mixed at ebst down at worse with David Jones Limited (A$2.74, +0.4%),Myer Holdings Limited (A$2.65, -0.7%) going in opposite directions as JB Hi-Fi Limited (A$19.19, +0.2%) and #DSH# did the same.
• Energy stocks suffered with the exception of Woodside Petroleum Limited (A$37.57, +0.5%) and Energy Resources of Australia Limited (A$1.005, -11.5%) had a shocker as news from the North was not good. Regulators are not impressed with the latest leak from the tanks at Ranger in the NT. The pariahs of the market ,mining services were mixed as Boart Longyear Limited (A$0.28, +3.7%) rose ,Coffey International Limited (A$0.245, -14.0%) was stirred, Macmahon Holdings Limited (A$0.105, -4.5%) continued their falls, and Bradken Limited (A$5.36, +0.8%) tried to move higher.
• Winners and grinners today included #NOX#, Mesoblast Limited (A$5.90, +3.9%),REA Group Ltd (A$40.62, +4.3%),Magellan Financial Group Limited (A$10.30, +3.6%),Regis Resources Limited (A$2.84, +2.9%),#XRO#,Southern Cross Media Group Limited (A$1.54, +3.4%),Platinum Asset Management Limited (A$6.11, +2.3%) and James Hardie Industries PLC (A$11.83, +2.2%) whilst looking horrible, unloved and pushed away under the bed were Energy Resources of Australia Limited (A$1.005, -11.5%),Independence Group NL (A$2.85, -6.3%),QBE Insurance Group Limited (A$10.82, -9.8%),Brambles Limited (A$8.86, -4.5%) although they went Ex #REC# today, Amcom Telecommunications Limited (A$2.05, -3.3%),#VED#,Ardent Leisure Group (A$1.92, -2.5%),Qantas Airways Limited (A$0.965, -3.0%) and Goodman Fielder Limited (A$0.63, -3.1%). The dogs sure are barking!
• Volume was again on the better side with QBE taking out the biggest value trading today. We hit over $4bn today despite the Xmas period slow down. Asian markets were quietly mixed as the Aussie dollar hovered around 91.5 and Bitcons traded around $1000.
Stocks and Stories
• Congratulations to our banking and finance team who have called QBE Insurance Group Limited (A$10.82, -9.8%) superbly. Whilst other high profile commentators ,you know who you are Charlie, have had to go back to school after the 4th downgrade in a row for their long suffering shareholders, the team here has consistently hated this stock. Seems they were right to hate .Another 10% off today after yesterday’s 20 % fall. Nasty! Lesson is do not have a stock code starting with ‘Q’!
• Woodside Petroleum Limited (A$37.57, +0.5%) issued a rare upgrade to their production numbers. Any upgrade these days seems rare indeed. New Standard Energy Limited (A$0.135, -3.6%) also got a whacked after farm in agreements were announced with #AQO#.
• Qantas Airways Limited (A$0.965, -3.0%) sunk to its lowest level since listing in 1995 before a touch of throttle levelled them out at a cent above the low. Terrain! Terrain! Pull Up! Pull up !
• Caltex Australia Limited (A$18.01, -2.8%) dropped after a refiner margin update whilst BHP Billiton Limited (A$36.82, +0.1%) held an investor briefing day and RIO Tinto Limited (A$66.17, -0.5%) announced some senior management changes.
• GI Joe Hockey will hand down his first mini budget on December the 17th.It will be awful I expect .Lots of finger pointing at the last lot in the hot seat no doubt and austerity measures to come. Think it may be a bleak Xmas for Canberra Civil servants.
• Blackrock, the World’s biggest fund manager has warned that stocks are a little stretched and there could be trouble ahead. Everyone is long and hoping they can get out in time. Rarely happens that way. Unless you are lucky or a liar!
• For the first time in two and a half years the yield on the 10-year government bond has been higher than the dividend yield of the sharemarket, the yield on the Australian 10-year government bond rose to 4.43 per cent on Friday, before coming back slightly early this week to 4.39 per cent.
• Air New Zealand has forecast a 20 per cent rise in pre-tax earnings for the first half as solid bookings in the lead up to the busy Christmas-New Year holiday period give it confidence to update investors. It can be done Alan!
• The number of home loans approved in October rose 1.0 per cent, matching expectations. There were 52,305 approvals in the month, compared to 51,792 approvals in September. Total housing finance by value rose 4.1 per cent in October, seasonally adjusted, to $26.486 billion, the Australian Bureau of Statistics said.
Tomorrows News Today
• Mandela memorial today. Chinese Premier and Israeli PM decide to stay away.
• The Chinese have increased the cash for clunkers scheme for their shipbuilding sector by 50% to $247 per gross ton for obsolete shipping.
• Beijing has drafted regulations to restrict interbank loans after financial institutions used them to circumvent government-imposed credit controls. The restrictions are directed at domestic banks that have aggressively increased their interbank business in recent years
• Meet the Volckers. Tomorrow the US authorities are expected to sign off on the legislation to prohibit proprietary trading .After three years of bargaining by the US investment banks they got some serious concessions. They can still trade but traders pay cannot be linked to their P/L ! Always a way round the rules.
• US has sold its entire stake in GM and copped a 410bn loss on the investment in the process.
• Britain’s economy needs sustained low interest rates to spur growth and repair the stricken banking sector, the Bank of England governor Mark Carney has warned, in a strong rebuttal of critics calling for a rapid rate hike in response to a galloping housing market.
• European aerospace group EADS is planning to cut thousands of jobs and sell its Paris headquarters as part of a large-scale restructuring programme.The Airbus owner is expected to announce later on Monday that between 5,000 and 6,000 jobs will go to cut costs, according to reports in the French newspaper Le Figaro.
Henry Jennings
Private Client Advisor
BBY Limited
Participant of the Australian Securities Exchange
Authorised and Regulated by the Financial Services Authority
Level 17, 60 Margaret St
Sydney NSW 2000
D +61 2 9226 0067
M +61 414 345 137
E hcj@bby.com.au
W www.bby.com.au
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