A quiet day as we head into the business end of the Medibank Public IPO. There is a lot of money now tied up in this one as the greed factor and the FOMO(fear of missing out) is strong in this one Luke. As a result a whole swathe of punters are now sidelined and with Xmas coming it is not a good time to be a Turkey. After a tentative start we slipped away with Iron Ore stocks the horror story. BHP Billiton Limited (A$32.67, -1.5%),RIO Tinto Limited (A$57.98, -2.5%) and Fortescue Metals Group Ltd (A$2.74, -7.7%) plunged as ore hit a five year low and looks set to break through the psychological $70 level. Smoking Joe’s budget will not be the only thing in tatters when this happens. As they say in the best Darwinian fashion, ”only the strong will survive!” Small ore miners are really struggling with BC Iron Limited (A$0.575, -12.2%),Atlas Iron Limited (A$0.205, -4.7%) and Arrium Limited (A$0.26, -5.5%) looking like shot ducks(or Turkeys).Consumer stocks were also heavily smashed as Woolworths Limited (A$32.26, -2.2%) continued its fall with Wesfarmers Limited (A$42.89, -1.8%) joining in the fun as the competition for the shoppers dollar increases. It seems that the worlds’ highest margins cannot last forever with Aldi and Costco eating their lunch. In rare bright spots ,Gold shares seem to be on the up as the bullion price finds some support on the pass the parcel money printing exercise currently all the vogue for Central banks. If the US stops then it is time to pass the baton onto the Japanese and boy do they know how to spend. News of the now upcoming election vote on Abenomics was enough to tickle gold higher .Newcrest Mining Limited (A$9.93, +4.1%) ,Kingsgate Consolidated Limited (A$0.73, +8.1%),Oceanagold Corporation (A$2.50, +6.8%),Resolute Mining Limited (A$0.26, +4.0%),Northern Star Resources Ltd (A$1.235, +6.5%) and Beadell Resources Limited (A$0.24, unch) all doing well albeit off a pretty low base!
In financials we had winners and losers, Westpac Banking Corporation (A$32.79, +0.1%), slightly better on customer satisfaction ratings in today, whilst Commonwealth Bank of Australia (A$80.54, -0.5%) fell a tad along with Australia and New Zealand Banking Group Limited (A$31.77, -0.2%) and National Australia Bank Limited (A$32.13, -0.7%). Insurers fared better as did REITs with Suncorp Group Limited (A$14.58, +0.2%) and AMP Limited (A$5.70, unch) ignoring the news from Canberra on FOFA reforms. Healthcare stock sere also better as the disappointment for Medibank dragged people back to the sector ResMed Inc. (A$6.07, +2.5%),Sigma Pharmaceuticals Limited (A$0.775, +3.3%) and Ramsay Health Care Limited (A$52.59, +1.3%) the standouts.
On the ASX 200 we saw the index close near its lows for the day of 5368 down 30 points as it continues to slide. Volumes were light today with instos happy to sit on the fence and lock in their gains for the year and enjoy the upcoming silly season. Big winners were James Hardie Industries PLC (A$12.52, +4.3%),Sigma Pharmaceuticals Limited (A$0.775, +3.3%),APN News & Media Limited (A$0.71, +3.6%),Technology One Limited (A$3.37, +2.7%),#ISD#,ResMed Inc. (A$6.07, +2.5%) and #IPH# ,Lonestar Resources Limited (A$0.285, +21.3%) and Bougainville Copper Limited (A$0.285, +14.0%) in the smalls. Losses continued for Andrew Forrest today at Fortescue Metals Group Ltd (A$2.74, -7.7%),Hutchison Telecommunications (Australia) Limited (A$0.055, -8.3%),Seven Group Holdings Limited (A$5.90, -9.2%),Ainsworth Game Technology Limited (A$2.49, -8.5%),ALS Limited (A$4.60, -5.7%) and Arrium Limited (A$0.26, -5.5%) with BC Iron Limited (A$0.575, -12.2%),Brockman Mining Limited (A$0.05, unch),Buru Energy Limited (A$0.48, -8.6%) and #MCS#.
Asian markets were mixed as Tokyo rose on the snap election and deferred sales tax news up 0.4%,whilst Honkers fell 0.3% and Shankers were little changed after the exchange link up hype.
Stocks and Stories
Looks like the Instos are going to be paying top dollar for Medibank at around $2.30 as the frenzy continues with more bids than a Mosman house auction.
Orica Limited (A$18.47, -4.1%) will axe around 700 employees as part of a cost-cutting drive and said it may return capital to shareholders after it agreed to sell its non-mining chemicals division to private equity giant Blackstone for $750 million.
Woodside Petroleum Limited (A$38.41, -1.1%) has confirmed plans to develop its large Browse gas fields off the Kimberley coast using up to three huge floating LNG vessels in a project that would have a life span of up to 50 years.
Ainsworth Game Technology Limited (A$2.49, -8.5%) copped a string of lemons today as the CEO announced falling local sales would lead to a drop in profit in the first half of 2014-15.At one point they were off 12% before some bargain hunting emerged on hopes for increased US sales later in the year.
Sign of the times CEO Michael Russel from Mortgage Choice Limited (A$2.62, +1.9%) has announced his retirement .Not quite as big a deal as Gail but significant none the less.
Good sales in James Hardie Industries PLC (A$12.52, +4.3%) core markets of the US and Zombieland have helped them report net operating profit of $US127.2 million ($145.8 million) for the three months ended Sept. 30, up from $US51.9 million a year ago.
Global mergers and acquisitions have burst through the $US3 trillion threshold for the first time since before the financial crisis, fuelled by low borrowing costs and high stock prices.
News today too that Netflix will be entering the Aussie market next year just made Seven West Media Limited (A$1.70, unch),Ten Network Holdings Limited (A$0.27, +1.9%) and #NEC# all that harder to be in. More private equity players looking at TEN but nothing concrete as yet. This could be a game changer for local players. Not happy Jan! They will all be squealing now and sucking up to King Malcolm for media reforms before they get trashed.
The future of the government reforms or FOFA seem to be under a serious cloud following a Senate revolt. More fall out to come on this one but he advice and banking industry will not be quite so happy with Tone and his team after this.
Tomorrow’s News Today
Keystone cops it as pipeline deal gets blocked in Congress!
The much hyped exchange link between HK and Shanghai looks a little uninspiring as volumes have slowed to a trickle!
Greece is shaping up as a problem child again for Europe as the Troika in charge of the purse are withholding money until the government play ball! Auditors in charge of Greece’s economic recovery programme are saying openly that negotiations with Athens have hit a wall. Fun times ahead .Just so retro.
And former finance minister Yiannos Papantoniou has been given a four-year prison term for declaring false revenue claims. Few more should be in that basket!
Oil giant Royal Dutch Shell has won a long-running court battle against Indian authorities over a tax dispute involving billions of dollars. The Bombay High Court ruled in favour of Shell’s Indian unit, which was accused of under-pricing shares transferred to its parent firm by $2.5bn (£1.6bn) in February 2013
The ultimate outsourcing of health care seems to be Thailand these days as medical tourists pumped as much as $4.7 billion into the Thai economy, according to government statistics.
Meanwhile in Bali schoolies just got more expensive for our little people as the government has removed a huge subsidy off fuel prices causing prices to rise 30% overnight.
UK inflation is now a problem courtesy of the rise in the cost of video games! Official figures showed inflation ticked up to 1.3% in October, from 1.2% in September, on the consumer prices index (CPI) measure. Still it’s hard to base sound economic policy on Grand Theft Auto sales! Or is it?
And whilst we are in the UK, grocery sales have gone into decline for the first time in at least 20 years as a raging price war and the falling cost of food commodities hit Britain’s supermarkets. Good for consumers ,not so good news on the horizon for our giants here perhaps.
This is scary given the eruptions over Greek debt ,but the elephant in the room, no actually the Wooly Mammoth is Japanese Government debt that Abe is trying to address through the sales tax increase. Even they expect it to rise to 264 percent of gross domestic product by 2030 from 227 percent in 2013.Let’s pretend shall we!
That is all