Todays Highlights

• ASX 200 up 56 to 5655 as Santa revs up sleigh.
• High 5666 Low 5585. Support holds again.
• MYEFO in focus. Buyers step in at lunch as volume builds.
• Big miners rally on BHP buyback result. More cash coming in.
• Miners at 4-week high.
• Bank dividend cheques getting reinvested.
• Banks under pressure on RBNZ Capital requirements. CBA rises though.
• Healthcare in the pink., Defensives rally.
• AUD slips slightly to 71.73c
• Bitcoin slips to $3202
• Aussie Gold steady at $1724
• US futures up 57
• Asian markets mixed with Japan up 0.67% and China down 0.28%

STOCKS IN FOCUS

• MIN +10.56% penny drops on Wodinga lithium project sale.
• DHG +3.88% acquisition of Commercialview.com.au
• FNP +4.06% thin volume.
• JMS +1.89% stronger metal prices.
• API -7.52% brokers reassess SIG proposal.
• SIG -1.72% ACCC concerns.
• FMS +42.86% letter to unmarketable parcel shareholders.
• TCL +0.59% SYD +1.88% defensives buying.
• TLS +1.05% bargain hunting with VOC +5.35%.
• NAB +0.59% Andrew Thorburn to take a long holiday.
• Speculative stock of the day: Nothing on any significant volume.
• Biggest Risers – MIN, EHL, VOC, RSG, GXY and SAR
• Biggest Fallers – API, MCY, APL, PPT, AX1, PNI and AAC

TODAY

• Speedcast (SDA) +1.15% Complete the acquisition of Globecomm Systems Inc. for a cash consideration of $134m. The transaction is set to be completed in December 2018.
• BHP Group (BHP) +3.49% Complete their $7.3bn (US$5.2bn) off-market buy-back with a final price set at $27.64 per share (14% discount to market price), a special dividend of US$1.02 per share and a 58.7% scaleback.
• Sigma Pharmaceuticals (SIG) -1.72% Establishes new A$500m Receivables Purchase Agreement with Westpac, providing the Company with additional funding headroom and flexibility to meet its major infrastructure investment in distribution centres and information systems, as well as ongoing working capital requirements.
• Bubs Australia (BUB) +2.17% CEO provides update; trading fundamentals for domestic and export remain strong into CY19. Company has been encouraged in recent weeks with sales growth into the Chinese market on both the major sales days. December is expected to largest monthly revenue for the company on record, with Half Year gross revenue to close in excess of A$20m.
• Reserve Bank of New Zealand – Last Friday released a consultation paper proposing to raise the level of capital for New Zealand banks by increasing the Tier 1 minimum capital ratio to 16% from 8.5%, with a requirement to fund the capital base by CET1. The paper seeks to limit the extent to which capital requirements differ between approaches used by the Internal Ratings Based (IRB) banks and the standardised banks in New Zealand. The big four (ANZ, CBA, NAB and WBC) have all come under pressure this morning, as the response from analysts has been negative. The proposal is seen as adding uncertainty and at best putting a cap on any potential for outperformance from the sector. At the proposed levels analysts see a need for banks to raise significant capital, with the total to be in the $18bn range for all four. The response from the big four, to this point, is as follows;
  • ANZ states that the changes imply a potential capital increase in New Zealand of NZ$6bn to NZ$8bn, however it remains too early to determine the extent to which this could impact the capital levels.
  • WBC has responded that any change in the capital held by WNZL has no impact on the group’s reported regulatory capital ratios on a level 2 basis, which is the primary metric on which capital ratios are reported.
  • CBA notes the release and is reviewing the paper
  • NAB states that it is currently reviewing the consultation paper and will participate in the consultation process with RBNZ.

ECONOMIC NEWS

MYEFO announced:

• Reflecting a strong economy and the Government’s responsible budget management, the underlying cash balance is expected to improve from a deficit of $5.2 billion (0.3% of GDP) in 2018-19 to a surplus of $4.1bn (0.2% of GDP) in 2019-20.
• Real GDP is forecast to expand by 2.75% in 2018-19, a little slower than expected at Budget but in line with the economy’s estimated potential growth rate.
• Growth is expected to strengthen to 3% in 2019-20, supporting solid growth in employment and keeping the unemployment rate close to recent lows.

ABS releases visitor numbers

• Highest percentage increases were recorded for India (13.1%), followed by Japan (11.6%) and Singapore (8.4%). China slowing.

BOND MARKETS

• 2-Year bonds down 2bps to yield 1.97%
• 5-Year yields down 3bps to yield 2.04%
• 10-Year yields down 2bps to yield 2.44%

ASIAN MARKETS

• China confirmed that it was removing retaliatory tariffs ion cars. Plus buying 3m tons of corn. Jinping backed corn and he does care. China is heading for its forst annual vehicle sales decline in 28 years.
• China 2025 now looking like 2030.
• Tomorrow celebrations kick off for the 40th Anniversary of economic reforms. Plenty of speeches to come.
• China’s top leaders are expected to meet next week to decide economic policies for 2019.

EUROPEAN AND US HEADLINES

• Anyone for a second Brexit referendum? Talk building. 102 days to go til the Hard Brexit crash out.

• BIS has warned of financial seizure poossible in the worlds clearing systems. Cherry seasonal cheer.

And finally…………

A recent study found the average golfer walks about 900 miles a year.

Another study found golfers drink, on average, 22 gallons of alcohol a year. That means the average golfer gets about 41 miles to the gallon.

That kind of makes you proud, doesn’t it? Almost makes you feel like a hybrid.

 

How will Christmas dinner be different after Brexit. No Brussels!

 

Why was Theresa May sacked as nativity manager. She couldn’t run a stable government.

 

Which TV special is going to be filmed in Brussels this Xmas….Deal or no deal.

 

I bought some shoes from a drug dealer. I don’t know what he laced them with, but I was tripping all day!

Clarence

XXX