Australian Market, Monday 21 Dec 09
Monday, December 21 – The Australian share market finished a touch weaker in sleepy pre-Christmas trading after testing the upper end of its short-term range on the back of slightly positive leads from Wall Street.
The All Ordinaries fell 11.6 points (0.25%) to 4,660.3 while the S&P/ASX 200 weakened 12.8 points (0.28%) to 4,637.7.
| BHP (BHP)
Tropical Cyclone Laurence forced the closure of a major iron ore export port in the Pilbara region of Western Australia as BHP warned of possible interruptions to its mining operations in the region due to the storm. “We expect that there may be some production interruption at some operations due to heavy rainfall but otherwise we are mainly keeping watch on the cyclone’s path at this stage,” a BHP spokeswoman said. BHP gained 35 cents (0.86%) to $40.95. |
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Qantas (QAN)
Qantas said for the first time that it expects to return to profitability this reporting period after on-year improvements in passenger numbers and average ticket prices. Qantas said it expects profit before tax of between $50m and $150m for the six months ended 31 December. QAN rose 14 cents (5.11%) to $2.88.
Asciano (AIO)
Asciano said it has completed a major $2.9bn debt repayment and entered into three new facilities totalling another $1.14bn, and confirmed it would not pay an interim distribution this fiscal year. The new facilities include an undrawn $500m revolving credit facility and $140m working capital facility that both mature in December 2013, and a $500m term loan maturing in December 2014. AIO fell 5 cents (2.83%) to $1.72.
Lend Lease (LLC)
Lend Lease said it will pay the New South Wales state government “several hundred” million Australian dollars for the right to develop the $6bn Barangaroo project on Sydney’s waterfront. Under a conditional contract, Lend Lease said it will make a series of payments totalling several hundred million dollars over eight years, including about $100m in the first 18 months. Lend Lease said construction on the 7.5 hectare site is expected to begin in late 2010 and the project will take 10-15 years to complete.
In other news, Lend Lease said that the company has closed its new wholesale fund, Lend Lease Real Estate Partners 3, after receiving $218m in commitments from investors. The fund will have capacity to invest more than $350m, with targeted gearing of between 30% and 50%, Lend Lease said. It also is expected to participate in the Lend Lease-led consortium as the preferred bidder for the $1.4bn ING Retail Property Fund, the company said. LLC rose 12 cents (1.29%) to $9.42.
Alumina (AWC)
Alumina said it will contribute about US$120m toward the development of a US$10.8bn aluminium project in Saudi Arabia. The deal will see Alcoa and Alumina provide alumina for the first stage of the project, due to come on line in 2013, with a bauxite mine and alumina refinery to be developed in the second phase. Alumina said it will consider a variety of debt funding options for its equity contribution, which will be contributed progressively between 2010 and 2014. AWC strengthened 1.5 cents (0.88%) to $1.715.
Arrow (AOE)
Arrow said that it has acquired a 35% stake in a Chinese coal seam gas block from Fortune Oil for US$13.3m and has an option to increase its holding to 75%. Arrow said the acquisition price includes US$6m of funds for a 2010 work program including the drilling of horizontal pilot wells. The block has proven, probable and possible reserves of 89 petajoules, Arrow said. AOE remained unchanged at $3.95.
UGL (UGL)
UGL said it has been awarded a contract worth $225m to build and maintain a communications network for the New South Wales state rail network. UGL said the project with RailCorp included the design, supply, installation and maintenance of a digital train radio system to cover 1,455km of rail track and 70km of tunnels across the Sydney metropolitan network, including the fit out of 675 train cabs with new radio equipment. UGL fell 7 cents (0.49%) to $14.16.
Economic News
APRA
The Australian Prudential Regulation Authority (APRA) issued proposed changes to prudential standards of banks to enhance the Basel II framework in Australia. APRA Chairman John Lake said the proposed changes aren’t expected to have a significant impact. Among the proposed changes to prudential standards, APRA wants higher capital requirements to capture the credit risk of complex trading activities. It also called for higher risk weights for so-called resecuritisation exposures to better reflect risk inherent in the products. The proposals also include increased credit conversion factors for short-term liquidity facilities provided to off-balance sheet conduits. The consultation package is a response to measures released in July 2009 by the Basel Committee on Banking Supervision to enhance the framework, APRA said.
The NZSX50 dropped 4.42 points (0.14%) to 3,149.81 while the Nikkei rose 41.42 points (0.41%) to be last quoted at 10,183.47 and the Hang Seng shed 135.69 points (0.64%) to 21,040.19.
The Australian dollar was last quoted at US$0.8843.