BusinessNow: Live coverage of financial markets and companies, plus analysis and opinion
The bloodletting for Crown and Star isn’t over yet, with investors sending their shares lower.
- Vodafone’s welcome news for NBN
- We’re better off eating avocado
- Crown and Star still bleeding
- China’s data dump
- ASX higher in early trade
- Henderson warns of correction
- Charter Hall REIT IPO on hold
- BHP Q1 production slides
- Tabcorp in bid for Tatts
Welcome to the BusinessNow blog for Wednesday, October 19. China GDP data is out, while Tatts and Tabcorp have struck a deal to create an $11.3bn gaming giant.
8.10pm:Super funds on the front foot
Michael Roddan
Australian superannuation funds have started the new financial year on the front foot, with the most commonly held type of super fund notching up a 3.1 per cent gain over the September quarter.
Superannuation consultancy Chant West said much of the positive performance occurred over July, with two months of “fairly flat” returns following.
“That’s mainly because investors are preoccupied about US interest rates and when the next rate hike will be,” Chant West director Warren Chant said. Read more.
7.50pm:ASIC details tracker mortgage support
Australian Securities & Investments Commission chairman Greg Medcraft has provided his most detailed endorsement yet of tracker mortgages — loans that are pegged to movements in the Reserve Bank cash rate — which have suffered criticism from most of the local banking industry despite their popularity offshore.
Appearing before a Senate estimates committee on Wednesday, Mr Medcraft tabled a briefing report on tracker mortgages that hits back at suggestions the major lenders’ funding costs were not tied to the RBA’s overnight cash rate.
“While the introduction of tracker mortgages is a decision for the lenders themselves, ASIC would encourage lenders to offer this product,” the report says.
The ASIC report argues that almost 60 per cent of funding for banks is gained through domestic deposits, which are closely linked to the cash rate. Just over 20 per cent is achieved through short-term debt and over 10 per cent through long-term debt. For banks with a more traditional retail structure, about 90 per cent of non-equity funding came from deposits. Read more.
7.21pm:Asian stocks mixed after China GDP
Asian shares were mixed on Wednesday despite the release of largely positive China economic data.
The world’s second-biggest economy expanded 6.7 per cent in the third quarter from a year earlier, matching growth in the previous quarter, official data showed. The figure was also in line with a forecast by economists polled by The Wall Street Journal.
China equities traders, however, were not impressed. The Shanghai Composite Index closed flat while the Shenzhen Composite Index fell 0.1 per cent. Hong Kong’s Hang Seng Index was down 0.5 per cent as well, retreating after Tuesday’s 1.6 per cent gain.
Meanwhile, Japan’s Nikkei Stock Average edged up 0.2 per cent, as investors there waited for more corporate earnings to assess trends.
Dow Jones
6.50pm:European stocks open steady
Europe’s main stock markets steadied in opening deals on Wednesday, with London’s benchmark FTSE 100 index down nearly 0.1 per cent to 6,995.29 points.
In the eurozone, Frankfurt’s DAX 30 was almost unchanged at 10,626.99 and in Paris the CAC 40 added just 0.1 per cent to 4,513.49 points, compared with Tuesday’s closing level. AFP
6.12pm:Booktopia shelves IPO
Bridget Carter
Online retailer Booktopia has decided to shelve its planned IPO. The retailer will now look at other growth avenues for the business including possible investment by trade buyers or private equity. Read more.
6.01pm:Aussie higher in late trade
The Australian dollar maintained its edge against the greenback in late trade, after China’s latest economic growth figures fell in line with expectations.
At 5pm (AEDT), The local unit was trading at US76.76 cents, up from US76.66c on Tuesday.
The Australian dollar hit a high of US76.91 cents in overnight trade on the back of improved risk sentiment and commodity price rises.
It fell slightly from that level in local morning trade and slipped modestly again after the release of highly anticipated economic growth data from China, which at 6.7 per cent for the September quarter was right in line with market expectations. AAP
5.44pm:How did Packer misread China so badly?
Rowan Callick
James Packer has said: “We need to stop viewing China as a strange foreign land, which has little in common with Australia. The truth is the complete opposite.”
However, he appears to have failed to comprehend just how different China remains from Australia. However good his apparent guanxi, networks, within China, they count for little or nothing when core values of the ruling communist party are at stake.
He said in the same speech that “it often amazes me that so many senior corporate leaders, public servants and MPs have not made the trip to China and still view it as a communist state.”
It is even more extraordinary that Packer should have made the trip to China many times, and completely failed to recognise where he was: in a country whose core feature, running through almost every facet of life, is the communist party. Read more.
5.27pm:Sales warning hits The Reject Shop’s shares
Eli Greenblat
Shares in The Reject Shop slid nearly 7 per cent on Wednesday, after the company warned shareholders at its annual general meeting that sales growth had slowed in the first quarter.
Categories have misfired with shoppers and some shelves lain empty due to stock issues, and the retailer is now facing a challenge to match last year’s half-year result.
The earnings miss comes as chief executive Ross Sudano continues to push through a transformation of the discount retailer, exiting a number of underperforming categories such as kitchen appliances, manchester, rugs and cushions, and devoting more floor space to growth products such as pet care, cleaning and party needs.
However, it seems that some of the categories The Reject Shop has devoted more resources and space to within its stores have failed to capture the attention, and wallets, of shoppers. Read more.
4.32pm:Stocks post second day of gains
The Australian sharemarket has enjoyed a second straight day of solid gains, wiping out Monday’s heavy loss thanks to positive action offshore and M&A activity at home.
At the close, the benchmark S&P/ASX 200 index lifted 24.6 points, or 0.45 per cent, to 5,435.4, while the broader All Ordinaries index gained 26.4 points, or 0.48 per cent, to 5,518.4.
The focus through the session was a giant $11.3 billion merger of Tabcorp and Tatts Group, which drove strong volumes in the shares of the two wagering groups.
Tabcorp jumped 3.6 per cent on news of the cash-and-scrip acquisition, while Tatts remained 7 per cent shy of the offer price despite surging 15.8 per cent, a sign investors are not yet convinced it will receive regulatory approval.
Daniel Palmer
3.57pm:Schenkel returns to financial services roots
Telstra’s former digital guru Gerd Schenkel is returning to his financial services roots, with the former founder of UBank set to take the helm at Tyro Payments, writes Supratim Adhikari.
The appointment of Mr Schenkel as chief executive of the fintech company comes as part of a new leadership structure that will see Tyro’s current boss Jost Stollman move to a full-time executive director position.
Mr Schenkel brings a unique combination of skills to the table at Tyro, given his consultancy background with Boston Consulting Group, his role in launching Australia’s first digital deposit and mortgage bank, UBank, and his tenure as executive director at Telstra Digital. He also served a stint as Citigroup’s director strategy and business development for Australia.
3.49pm:Australia a winner in the talent war
The world’s highly-skilled immigrants are increasingly living in just four nations: Australia, the US, UK and Canada, according to new World Bank research highlighting the challenges of brain drain for non-English-speaking and developing countries.
Falling transport costs combined with growing competition for talented workers have seen the ranks of highly skilled immigrant workers living in a group of mostly advanced nations (members of the Organization for Economic Cooperation and Development) swell 130 per cent to 28 million over the two decades to 2010, with the number from non-OECD (typically poorer) countries surging 185 per cent to 17.6 million.
The rise has come despite a dramatic fall in the cost of communication, suggesting the salience of other factors such as wage and cultural differences, the demands of multinational companies or the appeal of living close to other talented workers.
Adam Creighton
3.08pm:Vodafone’s welcome news for NBN
Vodafone Australia boss Inaki Berroeta has delivered some welcome news to his predecessor Bill Morrow, the man running the show at NBN Co, with the telco set to finally offer fixed broadband services via the national broadband network (NBN).
Vodafone’s decision is largely based on the rollout and financial forecasts set out by NBN Co in its last financial report and Berroeta is confident that he can make the numbers work on Vodafone’s fixed offering despite NBN Co’s current pricing model.
It also validates the competition promise the NBN has been designed to deliver.
Unencumbered by legacy and leveraging the strength of its mobile network, Vodafone won’t be facing the same concerns that have forced TPG Telecom to rethink its guidance.
Whether Vodafone’s entry encourages other big brands to jump on the NBN remains to be seen but it almost certainly poses another complication for the existing big broadband providers who are seeing their margins squeezed.
2.45pm:Why we’re better off eating avo
Young Aussies don’t need boomers telling them not to buy brekkie, we’re all heading for a housing affordability crisis that no amount of smashed avocado can make up for.
Watch Chris Kohler’s latest video.
2.39pm:Crown and Star are still bleeding
The bloodletting for Crown and Star Entertainment isn’t over yet, with investors pushing the gambling stocks even lower as stern warnings about the implications of Crown’s Chinese arrests filter though the market.
Crown shares have dropped 2.2 per cent today to $11.09, while Star is down 2.2 per cent as investors continue to sell following news 18 Crown employees have been arrested in China on accusations of gambling crimes.
In the three days since that news hit the press Crown shares have dropped 14.7 per cent and Star Entertainment has given up 8.5 per cent.
Deutsche bank analysts responded to the news by upgrading their rating on the stock to buy from hold, saying the downside risk being priced in as “excessive”.
“Following the detention of Crown’s VIP employees in China, we estimate that VIP turnover will decline by 20 per cent in FY17 with Chinese turnover down 30 per cent. We believe the market is now pricing in a 70 per cent reduction in VIP turnover and a 100 per cent decline in Chinese VIP turnover, which we view as excessive,” Deutsche Bank analysts, led by Mark Wilson, said.
But not all are seeing the golden opportunity Deutsche Bank is, with global ratings agency Fitch issuing a dark warning that the high-roller Chinese gaming industry could be in more trouble than we realise.
“In early 2015, China had publicly condemned casino operators in neighbouring countries targeting Chinese nationals. The comment is widely believed to exclude Macau,” Fitch senior director Alex Bumazhny said in a note.
“Fitch believes the risks related to the more recent detainment, namely reduced VIP volume, to be more applicable to Asia Pacific casino operators outside of Macau.”
Citi shaved its target price to $15.10, while Goldman Sachs left its target unchanged at $15.30 and offered “no assumptions and no view on the nature, outcome or reason for the alleged offenses”.
Spare a thought for James Packer, who will be unlikely to crack a smile for a while – Monday’s 14 per cent share price drop saw his stake fall $632 million in value.
Read: Gambling on the China market
2.25pm:Dollar dips on China data
The Australian dollar has stumbled on the release of mixed Chinese data, with weak industrial production numbers offsetting stable GDP numbers.
China’s growth rate held steady in the third quarter, official data showed -- an indication that government stimulus efforts are helping stabilise momentum in the world’s second-largest economy.
However, industrial output failed to meet market expectations, rising 6.1 per cent in September as against a year earlier.
News of the soft reading pushed the Australian dollar down US0.2c to US76.62c at 2.15pm (AEDT), with the local unit giving back all of its morning gains.
2.18pm:Mortgage distress on the rise
The proportion of mortgages in distress has struck a three-year high and will likely keep rising for the remainder of the year, according to ratings agency Moody’s.
In its latest report on the local market, Moody’s noted mortgage performance had deteriorated in all eight Australian states and territories over the year to May 31 2016.
The percentage of Australian residential mortgages more than 30 days in arrears (30+ delinquency rate) climbed from 1.34 per cent to 1.5 per cent.
Daniel Palmer
2.03pm:Salesforce target list excluded Twitter
Months before Salesforce.com considered buying Twitter, the company was looking at more than a dozen acquisition targets that didn’t include the social-media giant, according to an internal presentation for its board members.
The presentation came from a trove of thousands of former Secretary of State Colin Powell’s emails published in September by DCLeaks, a website of self-described “hacktivists” that releases documents from government officials and other prominent people. Mr Powell sits on Salesforce’s board of directors.
Titled M&A Target Review and marked “draft and confidential,” the 60-slide document identified 14 possible targets, from design and marketing-software maker Adobe Systems (which has a current market value of $US53.7 billion, slightly larger than Salesforce itself), to Pegasystems, a vendor of business-automation software valued at $US2.3bn.
Read the leaked presentation here.
WSJ
1.14pm:China’s Q3 growth supported by stimulus
China’s growth rate held steady in the third quarter, official data showed on Wednesday — an indication that government stimulus efforts are helping stabilise momentum in the world’s second-largest economy.
China’s gross domestic product expanded by 6.7 per cent in the third quarter from a year earlier, matching the pace of the previous quarter, the National Bureau of Statistics said. The figure was in line with a forecast by economists polled by The Wall Street Journal.
In the third quarter, China’s GDP grew 1.8 per cent from the previous quarter on a seasonally adjusted basis, the bureau added, the same as in the second quarter.
The result keeps Beijing on track to meet its growth target of at least 6.5 per cent in 2016, although the speed of growth in the last two quarters was the slowest since the first three months of 2009 at the height of the global financial crisis.
Meanwhile, China’s fiscal spending continued to accelerate in September, while revenue growth recovered modestly, official data showed Wednesday.
Overall fiscal spending rose 11.3 per cent in the month from a year earlier, faster than an increase of 10.3 per cent in August, the finance ministry said.
Fiscal revenue was up 4.9 per cent in September, compared with growth of 1.7 per cent in August, the ministry said.
Revenue from selling land-use rights to developers climbed 14 per cent during the January-September period, the same pace as in the January-August period.
Dow Jones
1.02pm:Bank capital fears a fiction
Richard Gluyas
The line from the global standard-setters in Basel is clear — the so-called Basel IV round of even higher capital requirements for banks is a fiction, with the heavy lifting on capital already done.
Basel IV, in fact, is a term that’s frowned upon in official circles because it suggests a change-weary industry should brace itself for another wave of stability-enhancing reforms.
Instead of Basel IV, the mantra from regulators is that the remaining reforms will only address “excessive variability” in capital ratios arising from the sophisticated internal models used by large banks to calculate their risk-weighted assets.
The guardians of two big-four balance sheets presented their interpretation of what this means at a recent Citi conference. Read more.
12.27pm:Parmalat CEO slams Murray Goulburn
Parmalat chief Craig Garvan has used his submission to the Senate Dairy Inquiry to launch a full scale broadside against industry leader Murray Goulburn, accusing it of basic poor management.
Garvan said the decision to cut milk prices to farmers in April was a “demonstrable case of leadership failure by a systemically important industry organisation”.
“The extraordinarily poor management and governance at Murray Goulburn resulted in the setting of a 2015/16 opening price that appeared unrealistically high to other industry participants,” he added.
Garvan noted “This has caused not only short-term distress for both its suppliers and the wider industry, but longer term it undermines our ability as an industry to grow and succeed in an increasingly global market.”
John Durie
12.09pm:Godfreys shares jump on franchise plan
Vacuum cleaner retailer Godfreys has detailed plans to shift to a majority franchise model, with the move to result in $2 million in restructuring charges, Daniel Palmer writes.
Investors have welcomed the plans despite the near-term profit hit, sending Godfreys (GFY) shares up as much as 8 per cent in early deals.
The transition to a majority franchise model is expected to see as many as 60 stores converted to franchise stores over a three-year period, including 18 in fiscal 2017.
11.30am:AUD/USD supported before China data
AUD/USD looks supported before today’s China economic data which could provide a further catalyst, according to HSBC.
“US data has once again failed to live up to expectations with last night’s CPI number proving underwhelming,” says HSBC’s head of corporate FX sales, Paul Edwards.
“Potential for a higher USD keeps getting stymied by data, politics or Fed speakers. The Australian dollar on the other hand often looks like it will get pushed lower only to find fresh demand.”
AUD/USD was last at 0.7680.
11.25am:What’s the outlook for property?
Will property be the worst investment of the next decade? Wealth Editor James Kirby will host a live Q&A today from 12.15pm to answer this question as well as any others that come in from subscribers.
Don’t miss out! Submit your questions here before the Q&A starts and head over at 12.15pm to see what James has to say.
11.09am:Tatts, Tabcorp shares lift
Tatts shares surged to a 10-month high of $4.24, while Tabcorp inched up to a two-day high of $5.03, as trade resumed after the merger announcement.
“While such a transaction would be subject to regulatory approvals, we believe the regulatory risks can be overcome by way of providing undertakings to the respective state governments and racing bodies, and we do not believe the ACCC would block such a transaction given the significant changes to the industry since 2006,” Deutsche Bank analyst Mark Wilson says.
He notes that a previous merger attempt was blocked on the grounds of competition for wagering licences and pooling partners.
Tatts (TTS) shares were last up 16 per cent at $4.15, while Tabcorp (TAH) was up 2 per cent at $5.00.
11.05am:AUD, shares buoyant ahead of China data
AUD/USD and the local sharemarket have hit respective two-day highs at 0.7690 and 5432.1 before China economic data, due at 1.00pm AEDT.
September quarter GDP will be the key focus, with economists expecting GDP to remain at 1.8 per cent quarter-on-quarter and 6.7 per cent year-on-year.
September industrial production, retail sales and fixed assets investment data are also due.
AUD/USD is well above the weekly downtrend line from 2013, currently located at 0.7600.
A weekly close above the line could generate a test of the April peak at 0.7835 on a technical view.
However much will depend on China’s economic data and the US dollar.
The S&P/ASX 200 looks capped at the 50 daily moving average and former pivot at 5430/35.
It may dip to the 200 DMA near 5233 if it breaks the 100 DMA at 5393.
But fundamentally that could require weak China data or a renewed rise in bond yields.
10.42am:Gold miners shine bright
Gold miners have shot out in front today following a healthy rise in the price of the yellow metal this week.
The ASX 200 gained 0.3 per cent to 5425 points at the open but gold stocks blasted significantly higher.
Saint Barbara was the best performer on the index at the open with a 4.3 per cent rise, while Northern Star gained 3.1 per cent, Resolute lifted 2.9 per cent, Evolution rose 2.8 per cent and Regis Resources rose 2.6 per cent.
Since Monday’s close Saint Barbara, Evolution, Newcrest and Regis are all between 4.4 per cent and 7 per cent higher.
10.39am:Woolies’ fuel makes sense for Caltex, not BP
Credit Suisse says that while 22 per cent of Caltex’s fuel volumes are at risk if BP were to buy Woolworths’ petrol stations, it can’t see any rational economic way BP can outbid Caltex.
“We really struggle to see how a rational business like BP will economically be able to outbid Caltex — indeed we viewed them as sellers in Australia, not buyers, historically,” Credit Suisse analyst Mark Samter says.
“The Woolworths assets make sense for Caltex, and lost earnings is never good, but we applaud their capital discipline if they don’t chase it.”
“Caltex is keeping their heads — we still struggle to believe all around are losing theirs, but if they are, Caltex shareholders would not be well rewarded by joining the folly.”
Mr Samter keeps an Outperform rating and $40 share price target on Caltex. CTX shares were last up 0.6 per cent at $33.06.
10.24am:ASX moves higher in early trade
The Australian sharemarket has moved higher in early deals, aided by M&A activity and a positive lead from Wall Street.
At the 10.15am (AEDT) official market open, the benchmark S&P/ASX 200 index lifted 14.2 points, or 0.26 per cent, to 5,425, while the broader All Ordinaries index gained 15.9 points, or 0.29 per cent, to 5,507.9.
The gains followed a steady bid on US stocks as earnings reports impressed, although attention through the local session is expected to quickly shift to Chinese data.
Markets are expecting robust growth and retail sales numbers, with any disappointments likely to be punished.
10.08am:The creation of a national gaming giant
The proposed $11 billion tie-up of Tatts and Tabcorp promises to dominate the wagering landscape outside of Western Australia and has the potential to deliver a national betting pool for the first time, should the competition regulator wave it through.
The high-profile merger was confirmed by both parties today with a resultant pledge to extend the their combined yearly commitments to the racing industry further beyond $1 billion coming as the Spring Carnival kicks into full swing.
Assuming the deal proceeds, it would pool Tabcorp’s NSW, Victorian and ACT totalisators, alongside Tatts’ Queensland, South Australian, Northern Territory and Tasmanian totes, which combine under the TattsBet brand.
Daniel Palmer
10.05am:Henderson warns of sharemarket correction
Henderson Group has warned of a potential sharemarket correction in Europe, amid concerns over the efficacy of ECB stimulus measures. Any such pullback could potentially spill over onto global markets.
Henderson’s European fund manager, Tim Stevenson, said he bought bearish options in July to protect his Henderson EuroTrust Plc against a further 6.5 per cent decline in the euro Stoxx 50 Index by year end, Bloomberg reports.
For his larger Pan European Equity Fund, he increased cash holdings toward 5 per cent.
“I would not be surprised to see a 10 per cent fall,” Stevenson said. “The market needs to see a correction.”
Concern over the efficacy of ECB stimulus leaves the euro Stoxx 50 heading for its first annual decline since the height of the sovereign-debt crisis in 2011 and its valuation remains above the five-year average, Bloomberg notes.
The newswire notes that global fund managers are echoing such concerns, boosting cash holdings to 5.8 per cent in October, which is as high as after Britain voted to leave the European Union and after the Sept. 11, 2001 terrorist attacks, according to a BofA fund-manager survey.
While Stevenson is expecting more stock losses, he increased the Henderson EuroTrust’s weighting in financial companies, which could be viewed as a hedge against higher bond yields.
Of course the big question here is whether a significant pullback can happen if the market has already positioned for it.
9.34am:Broker rating changes
Sydney Airport raised to Neutral vs. Underperform — Credit Suisse
MYOB initiated at Underperform, $3.20 price target — Credit Suisse
Challenger cut to Hold vs. Add — Morgans
9.29am:Stocks set to follow Wall St higher
Australian stocks could continue yesterday’s form at the open after solid earnings results boosted Wall Street to its best session this month overnight.
Netflix, which shot up 235 per cent in the two years to mid-2015, has been trading flat in 2016 and seemed to have been stripped of its market darling status. But the stock rocketed 19 per cent after the company posted a surge in new subscribers.
All this positivity looks set to see the Aussie market add to yesterday’s 0.4 per cent rise, with the SPI 200 pointing to a 0.2 per cent gain and fair value suggesting a slightly stronger 0.3 per cent gain is in order.
BHP’s ADRs have the stock heading for a 0.5 per cent fall, which would follow yesterday’s 1.1 per cent gain to $22.64. The miner this morning reported Q1 production numbers and warned on output at its giant Olympic Dam project after South Australia’s statewide power outage.
Gold stocks pushed higher yesterday following a 0.9 per cent rise in the US dollar gold spot price over the last three days — Newcrest, Resolute and Saint Barbara all added more than 3 per cent.
9.20am:Charter Hall abandons IPO
Charter Hall Group’s securities were down 3 per cent in early trade after the group put the $1.25 billion listing of its Long WALE REIT on hold.
Charter Hall (CHC) said that despite receiving significant retail demand for the $1.12 billion initial public offering for the trust, the institutional offer of about $350 million, conducted yesterday, had not won sufficient quality of support appropriate to create an orderly market.
Charter Hall said it had elected not to proceed with the IPO of Long WALE REIT as scheduled, which may leave the way open for a repricing or a recutting of the 66 asset portfolio it has assembled.
The group said it “will consider alternative options for the assets” slated for the proposed fund.
Ben Wilmot
9.13am:CIMIC appoints new CEO
Adolfo Valderas will be the new chief executive of CIMIC Group, which has lifted third-quarter profit 11.4 per cent to $148.5 million.
Mr Valderas, the construction contracting company’s deputy CEO, will immediately take over the position from Marcelino Fernandez Verdes, who will continue in his other role as executive chairman.
AAP
9.09am:Sydney Airport raised to Neutral: CS
Sydney Airport has been raised to ‘neutral’ vs. ‘underperform’ due to share price weakness, higher international airline capacity growth expectations for 1H17 and higher retail revenue.
“Previously, we expected international capacity growth to slow significantly after the 10 per cent growth of the past year, but recent international airline capacity plans point to capacity growth of 6.3 per cent in 1H17,” the broker says.
The target price is now $6.60 vs. $6.40 previously. SYD last traded at $6.38.
8.55am:BHP Q1 production slides
BHP Billiton has retained its full-year production and unit cost guidance as it released weaker first quarter numbers and spruiked a “rebalancing” of commodity markets, writes Daniel Palmer.
The mining behemoth did warn, however, the statewide power outage in South Australia that crimped production at its giant Olympic Dam project has forced a review of guidance provided around that mine’s output.
In the three months to September 30, BHP’s oil output slid 15 per cent compared to the prior corresponding quarter, while copper production weakened 6 per cent, iron ore output was flat, metallurgical coal rose 1 per cent and energy coal dipped 4 per cent.
8.51am:Junior miners in dash for cash
Junior mining and exploration companies are still capital-constrained despite the boost to commodity prices since mid-January, writes Barry Fitzgerald.
And because more than half expect they will need to raise funds within the next six months, competition for investor capital is expected to remain “very tight”, according to the latest annual survey of the sector (Jumex) by Grant Thornton.
Extrapolating that survey finding, based on 80 respondents across the 666 ASX-listed juniors, suggests about 350 will be seeking capital before the end of the calendar year.
For many it will be out of absolute necessity, with the Jumex survey, released in Perth today, finding one in four of the juniors, those with a market value of less than $500 million, are holding less than $500,000 cash — just enough to keep the doors open for a year or so.
8.45am:Tabcorp in bid for Tatts
Tabcorp is offering a 20 per cent premium to secure a deal with rival Tatts to create an $11.3 billion gaming giant.
The two companies announced a long-awaited deal today, which will be via a scheme of arrangement.
It sees Tatts shareholders get 0.80 Tabcorp shares plus 42.5 cents cash for each Tatts share held.
The directors of Tabcorp (TAH) and Tatts (TTS) are backing the bid, saying it is in the best interests of shareholders.
John Durie, Sarah-Jane Tasker
7.15am:Australian market set to open higher
The Australian market looks set for a positive start after Wall Street gained, thanks to a host of solid earnings reports that put corporate profits on track to snap a four-quarter streak of declines.
At 6.45am (AEDT), the share price index was up 11 points at 5,402.
Locally, in economic news, the Westpac-Melbourne Institute Leading Index of Economic Activity is due out.
In equities news, BHP Billiton is slated to release its first quarter operational review.
Origin Energy, Ansell, and The Reject Shop have annual general meetings scheduled.
In Australia, the market yesterday closed higher as resource stocks, in particular BHP Billiton, extended gains on the back of better commodity prices.
The benchmark S & P/ASX200 index rose 22.1 points, or 0.41 per cent, to 5,410.8 points.
The broader All Ordinaries index gained 21.1 points, or 0.39 per cent, to close at 5,492 points.
AAP
7.00am:Iron ore lifts as BHP vents
The iron ore price has continued to bounce, defiantly pushing back within sight of the $US60 a tonne level and offering a boost to Australia’s major miners, Elizabeth Redman writes.
The gains came after BHP chief executive Andrew Mackenzie said at a function in London that the “continual questioning of our economic and social contribution” in Australia was “chilling” compared to the reception the miner receives in socialist Chile, Fairfax Media reported.
6.50am:Dollar steady
The Australian dollar has remained steady against the US dollar, is up against the euro but has fallen against the yen.
At 6.35AM (AEDT), the local unit was trading at US76.66 cents, unchanged from yesterday.
AAP
6.40am:Wall St lifts after earnings
US stocks and commodities rebounded overnight following another batch of better-than-expected corporate results.
European equities also rallied, boosted by the energy and mining sectors.
Dow Jones
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