Market Review

It’s quiet, too quiet as we kicked off the week with no major announcements and even if we did they would be swamped with the war drums from the election. Few companies in confessional this morning and some capital raisings discussed in the news section but eyes were on the rapidly disappearing US or European holiday, as the Aussie dollar came under renewed pressure as the RBA rate cut looms tomorrow. The big green blob of banks were more a shade of red today although only marginally as were #BHP#, but other resource stocks like #RIO#,#FMG# and #NCM# managed to steal some beauty and put on a few cents. Another winner today was #WPL# which is a major beneficiary of the falling dollar as its dividend is paid in US.

We saw some weakness today in the property trust sector and other financials like #QBE# and #FXL# while #MRV# , #GPT# and #DXS# eased. Big winner today in media land was #FOX#, followed by #SWM# and #NNC#. Must be an election thing!

Winners and grinners today were #BDR#,#TNE#,#EVN#,#MMS#,#SWM#,#MSB# and #CDD# whilst in the unloved desperate and dateless section were #PDN#,#FSF#,RFG#,#VAH# and #SKY#

Around the grounds Asia was mixed with China slightly better after figures at the weekend showed a stabilisation of their economy perhaps, while Japan was a tad weaker with Korea and the Philippines also in the red.

Volume was awful today with a NSW Bank Holiday not helping things but tomorrows RBA dead cert cut is the focus, that and the results season which kicks off this week in earnest. Also some players out of the game with the start of ‘Diggers and Dealers’ conference in WA or now known as ‘Cost cutters and Cancellers’.

Stocks in the News

In the battle for #ENV# today, it was announced that the independent board has decided to reject #APA# approach. We will await a response from APA.

#BDR# announced they are getting stuck into the high grade resource of Duckhead plus a debt restructuring and hinted at a dividend in 2014.One of my personal favourites in the Gold space.

#VAH# had a profit confessional session this morning as they announced their numbers had been impacted by a number of factors citing difficult conditions, the carbon tax and restructuring and transformation. They now expect a statutory loss after tax of between $895m and $110m.Not sure why anyone would buy shares in an airline. The carbon tax cost them around $50m!

#PDN# No good news here for shareholders as last week’s failure to sell the Justin Langer project or at least part of it, ensured that the capital raising was never going to be done at a great price.70 cents was the book build price and they raised nearly$90m.

#FSF# was weaker today with news that China had halted imports of its powered milk as a rare form of botulism had been found in some batches of whey protein. No whey said the company but it is in damage control now. This is likely to have a significant impact on the Kiwi economy as dairy products to them are a bit like Iron Ore to us.

In house stocks today #RIC# responded to the Fonterra news with a product recall of its own. RIC does not make any products though for human consumption, so not quite as significant for them. Also  some good work today from #BRU# which continues to improve following its quarterly report last week. Some good moves too in resource stocks that are in our sights as conference presentations helped positive sentiment in the likes of #FMG# and #EVN#.

Tomorrows News Today

RBA meeting tomorrow at 2.30pm and expect a rate cut of 25bps after which we will get overloaded with sound bites from Jim Bowen on what a good job he is doing and how record low rates are helping the economy rebalance. Jim Bowen is much funnier!

Few central bank things happening in Asia too this week with a two-day meeting of the BOJ and the South Korean bank meeting in rates on Thursday too.

And very muted response from the Markets as ‘Bungasconi’ guilty verdict upheld on Friday. Could cause some political ructions though.

Foreign buyers accounted for nearly three-quarters of new home purchases in inner London in 2012 compared with 27 percent for U.K. buyers, according to data from Knight Frank, the property group. More than half of the homes were sold to buyers from Singapore, Hong Kong, China and Malaysia.

And here’s a thought for the property bulls in Sydney etc. If things get bad in China and the economy continues to slow, those ‘Investment’ visas will get more attractive. And with the Aussie dollar now heading towards 87 cents, I suspect the Palm Beach; Eastern Suburbs and Inner West property prestige markets will continue to push ahead. Not sure if it will help the banks, these guys pay cash!

Seems that the Russian are experts in over budget projects, as the Winter Olympics looks set to be a doozy. Or maybe a Sochi So far, the bill stands at $51bn (£33bn) and many fear the only winners will be friends of the Kremlin. By contrast, the over-budget London 2012 games were £9bn.Gonna make Eddie and his mates look like rank amateurs.

That is all

 

Clarence

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