Australia | Sep 22 2014
By Henry Jennings, Private Client Advisor, BBY Ltd
Last one out please turn off the lights! Be careful what you wish for as the pullback gathered some momentum today with the financials copping it badly. The ASX200 had a rubbish day also wiping out the whole 2014 gains in one foul swoop. In the end after a negative start ,we slipped crashing and tangled ,in a bloody mess, to a close around 5363, down 70 points for the day.
Late rally saving some blushes! Big four now not so big as the mortgage wars heat up and growth is a dish best served cold it appears. Concern about the Murray enquiry and foreign johnnies leaving this overcrowded space have ensured a trickle has turned into a flood. My rudimentary bank index peaked around 188 and is now 173! (just add the share prices of big four) 2-2.5% falls across the board in the high street banks whilst insurers also took it badly with AMP Limited (A$5.54, -0.9%),Insurance Australia Group Limited (A$6.08, -0.7%),QBE Insurance Group Limited (A$11.92, -0.7%) and Suncorp Group Limited (A$14.21, -0.5%) all hit.
IOOF Holdings Limited (A$8.58, -5.1%) had a shocker as ex div combined with general falls to knock the gloss off. The Millionaire’s factory Macquarie Group Limited (A$57.90, -0.9%) has regained its mantle too as their three top execs were paid a small fortune to go to meetings and nod. Expect more shareholder cynicism in this one. Property stocks were mixed as M&A activity continues with #MIX# entering an SIA with a Goldman Sucks group company at around 21 cents a share. To the good were Dexus Property Group (A$1.145, +1.3%),#GDI#,Abacus Property Group (A$2.55, +2.4%) and Stockland (A$4.02, +1.3%) whilst in the kennel club were #SCG#,Lend Lease Group (A$14.25, -0.8%) and Challenger Limited (A$7.25, -1.2%).
Industrials also whacked led to out of favour Telstra Corporation Limited (A$5.35, -1.1%) together with Wesfarmers Limited (A$42.65, -0.7%) and Woolworths Limited (A$34.80, -0.8%). In mining services ALS Limited (A$5.77, -17.2%) took a downgrade really badly and crashed today. #VED# and Mermaid Marine Australia Limited (A$2.02, -1.9%) also not having much fun in the sun.
Over in resource land, weak Iron Ore, weak gold and just weak everything was enough to rattle the cages. RIO Tinto Limited (A$60.05, -2.5%),BHP Billiton Limited (A$34.86, -1.7%).Fortescue Metals Group Ltd (A$3.58, -4.8%) and Oz Minerals Limited (A$4.05, -2.6%) all feeling unloved as were Newcrest Mining Limited (A$9.95, -0.8%) which is trying really, really hard to stay above $10.00.Other resource stocks also copped it with Alumina Limited (A$1.70, -2.9%),Sims Metal Management Limited (A$11.44, -2.1%),Bluescope Steel Limited (A$5.55, -0.9%),Oz Minerals Limited (A$4.05, -2.6%) and Sandfire Resources NL (A$5.74, -4.3%) down heavily as were golds generally, Beadell Resources Limited (A$0.435, -8.4%) reversing Friday’s gains, Kingsgate Consolidated Limited (A$0.75, -3.2%),Silver Lake Resources Limited (A$0.405, -2.4%) and St Barbara Limited (A$0.145, -6.5%) to name a few casualties.
Hitting the podium today which was no mean feat were Mighty River Power Limited (A$2.37, +9.2%),Australian Agricultural Company Limited (A$1.33, +4.7%),Chorus Limited (A$1.625, +4.5%),Arrium Limited (A$0.39, +4.0%)(good bounce),Fairfax Media Limited (A$0.80, +3.2%),Domino’s Pizza Enterprises Limited (A$26.60, +3.2%) and #UBN#,Intrepid Mines Limited (A$0.28, +7.7%) and #RUL# in the smalls. Spinning out on the first corner were ALS Limited (A$5.77, -17.2%)(nasty),Oceanagold Corporation (A$2.35, -11.0%),TFS Corporation Limited (A$1.77, -8.5%),Evolution Mining Limited (A$0.71, -6.6%),Mesoblast Limited (A$4.42, -6.0%),Fortescue Metals Group Ltd (A$3.58, -4.8%) and IOOF Holdings Limited (A$8.58, -5.1%) together with Iron Road Limited (A$0.15, -16.7%) and Poseidon Nickel Limited (A$0.21, -8.7%) in the formula threes.
Volume was pretty good for a Monday as panic reined, over $4bn in the end with the dollar at 89.30,tulips at $453 and golden eyes at 1214.Asian stocks also joined in the rout with Japan down 0.8%,HK down 1.3% and Shanghai down 1.75%
Stocks and Stories
ALS Limited (A$5.77, -17.2%) another downgrade with tight market conditions especially hitting the minerals division hard with a 25% fall in first half profits. Focus on cost management to be expected. The services company slashed its first-half profit forecasts to $64 million versus the $74 million guidance provided in July. That would be 36 per cent below the previous year’s half.
#UBN# debuted today with news of good contract wins in the Middle East and Malaysia for their SaaS cloud based building management business.
Buru Energy Limited (A$0.77, +0.7%) announced a successful capital raising at 75 cents ,not that successful really given they were over 3 bucks not so long ago! But at least they have a new cornerstone investor in multinational player Coogee Chemicals. SPP etc to follow but trying valiantly to hold above the issue price. Judging by recent placements if they fold the pace of selling will accelerate!
Nouriel ‘Dr Doom’ Roubini, a famous bear is predicting 2% growth for Australia and lower rates and 20% off the dollar. Not helping today.
National Australia Bank Limited (A$33.10, -2.4%) will today start giving borrowers $1000 in an unapologetic marketing tactic aimed at increasing its share of Australia’s $1.3 trillion mortgage market without cutting interest rates, which are at historic lows.
Bank of Queensland Limited (A$12.06, -0.5%) will pay $17 million in compensation to customers caught up in the Storm Financial scandal. Bless!
Tomorrow’s News Today
Alibaba should prove interesting tonight and expect to see some profit taking. No bubble here folks.
Find this hard to believe but the G20 finance ministers who are meeting in Perth have vowed to come up with more measures to boost the global economy. They have 1000 policies so far so one more won’t make too much of a difference. Either way! Would be nice to get some of the intergalactic net stars to pay some tax!
Supermarket sales have fallen again for the fifth straight month in Japan. Albeit at a slower rate. Abenomics working well it seems!
Good to see Christopher Pyne taking his wife on a $30,000 European jolly. Crisis what crisis.
Global growth expectations are being wound back. Early-year hope is rapidly turning to late-year disappointment. October could get interesting.
That is all
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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