Twas the day before the night before Xmas

ASX 200 down 16 points at 5628 as Reindeers baulk at 5650. Materials, telcos and banks sold off as profit taking and lack of interest prevails. Asian markets modestly weaker as oil slips. Japan down 0.09% and China down 0.48%. AUD firmer at 72.11c and US futures up 4.

CORPORATE NEWS

  • Shaver Shop (SSG) -% another dud float. Who would have guessed a shop selling just electric razors would have such problems? The company has warned that weak pre-Christmas sales will leave earnings short of the forecast included in its prospectus which was issued mid-year. It blamed weak trading recently in key gift-giving lines such as hair styling products for its woes. The IPO for $98m raised $18m for its backers.
  • Mesoblast (MSB) +% has won significant backing for its technology from major US drug group Mallinckrodt Pharmaceutical which has taken an option over two key products under development as well as snapping up a 5% stake in the Australian company. Along with the $29.6 million raised by placing shares with the US company at $1.47.61c a share if a deal is finalised this will free Mesoblast from the need for ongoing development and marketing spending on these companies, in return for an ongoing royalty from potential sales.
  • Tatts Group (TTS) -% has rejected the takeover offer from the Macquarie-led consortium and will retain its backing for Tabcorp’s bid. The Macquarie-led Pacific consortium pitched an offer for Tatts Group on December 14 worth 440c to 500c a share. Tabcorp’s November offer valued Tatts at 434c a share.
  • The listed developer and builder, Diploma Group (DGX) has collapsed today owing around $40m to creditors. Not unexpected. In November, Diploma Group reported to the market that Diploma Construction (WA) was likely to report a $32.5m loss including $20m of write-downs.
  • Happy Xmas Mr Packer. The $2bn Barangaroo casino is all but a reality after a last-ditch legal bid from a local community group was rejected on Friday. The decision means construction on 275m casino, hotel and apartment tower will soon begin

ASIAN NEWS

  • Bonds, currencies and stocks in Asian emerging markets that are less dependent on external demand, such as India and Indonesia, are the most popular picks for investors and strategists next year.
  • South Korea is seen as a market to avoid on concern U.S. President-elect Donald Trump will harm global trade after he takes office next month.
  • IG Asia favours Indonesian, Indian and Philippine equities.
  • Credit Suisse Group AG is positive on China, Korea and Indonesia on improving macroeconomic environments, balance sheets, valuations and underexposure of global funds.

EUROPE AND US

  • The Italian government has approved a bailout of Monte dei Paschi di Siena at a late night cabinet meeting in Rome, led by prime minister Paolo Gentiloni. The Italian government also announced a compensation scheme for retail investors in junior debt who would be hit under EU rules on burden sharing, saying that they would be able to receive senior debt of the equivalent value in exchange for the subordinated bonds. Lucky them. Panettone would have been better.
  • Deutsche Bank has agreed to pay the US Department of Justice U$7.2bn to settle. Nice Xmas present. Wonder where the money does go? US$3.1bn civil penalty and the balance in relief to consumers. The initial claim was for US$14bn.

 

This is the last End of Day report for 2016. Back on January 16th. In the meantime, may the force be with you. Enjoy the Xmas break and have a happy, healthy and prosperous new year.

 

Clarence

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NT Markets

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