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TPG endured its worst day on record, while the broader market closed slightly higher.

TPG shares are taking a beating, while the broader market is slightly lower.

• TPG shares fall most on record
• Stocks edge into neutral ground
• ASIC probes ASX glitch
• Why TPG’s getting slammed
• Stocks slip at open
• ASIC to probe ASX outage

Welcome to the BusinessNow blog for Tuesday, September 20. The Reserve Bank’s minutes of its last meeting are out and the ABS has released house price data. TPG Telecom shares are taking a beating on concerns over its guidance.

4.33pm:TPG sheds more than $2bn

TPG Telecom has shed more than $2 billion as investors, spooked by a weaker-than-expected guidance, dragged the telco’s shares down to their biggest one day fall.

The telco’s shares plummeted as much as 23 per cent at the open and ended the session down 21.4 per cent at $9.28, capping off their worst day on record.

The drop came despite TPG posting its eighth consecutive period of revenue and profit growth, as investors opted to focus on the conservative full-year guidance provided by the telco.

The chief instigator of that conservatism is the impact off the continued rollout of the National Broadband Network (NBN) on the telco’s bottom-line in the consumer broadband market. That uncertainty, coupled with the potential fallout from TPG’s mobile ambitions in Singapore, sent investors fleeing.

TPG’s woes had a knock-on effect on its peers in the market, with Telstra shares slipping 1.2 per cent to end the session at $5.01, and Vocus Communications shares down 3.6 per cent at $6.76.

4.29pm:Stocks close slightly higher

The Australian sharemarket has eked out a higher close as strength in the materials space offset a heavy sell-off in telecommunications after TPG Telecom stunned analysts with guidance that came in well shy of expectations.

At the closing bell, the benchmark S&P/ASX 200 index added 8.8 points, or 0.17 per cent, to 5,303.6, while the broader All Ordinaries index inched up 3.6 points, or 0.07 per cent, to 5,397.3.

Markets traded in the red for much of the session, but a shift in sentiment on the banks drove a higher close after the big miners had earlier led the way.
Daniel Palmer

4.10pm:NBN boss sees bonus triple

NBN Co boss Bill Morrow pocketed $3.6 million in total remuneration in fiscal 2016, with the executive tripling his bonus from $483,000 to $1.2m and extending his lead as the highest paid public servant in Australia, writes Supratim Adhikari.

NBN CEO Bill Morrow pocketed $3.6m in FY16.

Mr Morrow added more than half a million dollars to his pay packet in fiscal 2016, netting almost $3.6m in total remuneration compared to the $3m he received for the same period last year.

The uptick was primarily driven by the threefold increase in Mr Morrow’s bonus for the period, from $483,000 in fiscal 2015 to $1.2m in fiscal 2016, according to NBN Co’s latest report.
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3.55pm:China merger to create steel giant

China is expected to announce plans to merge the country’s top steelmakers this week, according to media reports, creating the world’s second-largest manufacturer of the commodity, as markets struggle with a glut caused by Chinese overcapacity.

State-owned Baosteel Group, China’s second-largest steelmaker, will absorb Wuhan Iron and Steel Group to create the new entity, the China Business News reported late Monday.

The two firms rank fifth and 11th respectively by production capacity in the world.
AFP
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3.40pm:Stocks fight back to neutral ground

The local market has fought its way back to neutral ground, sitting at 5293.6 points with less than an hour of trade remaining.

Investors remain hesitant to jump into any big calls ahead of this week’s crucial US Federal Reserve meeting. While few expect the central bank to hike interest rates, any colourful language could send shudders through the market.

TPG is providing the fireworks today as it heads for its worst one-day fall on record following weak guidance. The savage TPG sell-off has taken the shine off Telstra today too, with the nation’s largest telco down 1.5 per cent.

On the positive side BHP Billiton has gained 2.2 per cent and Rio Tinto is up 1.2 per cent despite the price of iron ore failing to notch up a price rise for 10 sessions.

3.15pm:ASIC probes ASX outage

Corporate watchdog ASIC is probing the issues that caused yesterday’s shutdown of the local stock exchange as the ASX resumes normal service today, writes Daniel Palmer.

ASIC, which serves in the role as supervisor of market operators, tagged its analysis of yesterday’s glitch as a “priority” after unaffected trade was essentially limited to just 22 minutes.

“We will examine the cause and any effects of yesterday as a priority and as part of our close oversight of market operators,” the regulator said.

“We are concerned any time there is an incident like this on any of our securities markets, as of course are the users of those markets.”
More to come

2.45pm:Ex-banker denies insider trading

A former vice-president of Credit Suisse’s investment banking unit has fronted court on insider trading charges, delivering a not guilty plea on 11 counts brought by the corporate watchdog.

The Australian Securities and Investments Commission alleges Darren Thompson offered trading tips to close friend Michael Hull on 11 occasions between May 25, 2008 and June 3, 2011, based on insider knowledge he had due to his employment at Credit Suisse.

Advice provided by Mr Thompson allegedly related to seven ASX-listed companies, with Mr Hull reportedly profiting to the tune of $492,000.
Daniel Palmer
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2.08pm:BBY director demanded fee to resign

BBY director David Perkins demanded a $100,000 fee to resign from the board of one of the broker’s troubled investments, Firestone Energy after shareholders pushed for his removal, a court has heard.

Mr Perkins said it was “ethical’’ to demand the payment, which was equivalent to two years directors fees for Firestone, a South African coal prospector, after its largest shareholder Waterberg Coal threatened to remove him.

“My own assessment was that they would be successful in having me removed,’’ Mr Perkins, who was a non-executive director and legal counsel for BBY from 2006, told a liquidators hearing into the brokers 2015 collapse.
Andrew White
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1.50pm:Investors go easy on ASX

Investors have gone pretty easy on the ASX, which has now sheepishly apologised for yesterday’s calamitous technical glitch, tail between its legs.

Recently appointed ASX boss Dominic Stevens.

Stock in the company, which is listed on its own exchange, fell as much as 2.4 per cent during yesterday’s disrupted session but now sits just 1.5 per cent below where it was at Friday’s close.

The company has gained 12.1 per cent so far this year and has outperformed peers in the Asia Pacific, including Japan’s market operator, Hong Kong and Singapore.

Analysts are not keen on ASX Ltd, however, with Bloomberg showing only one ‘buy’ rating (from Morgan Stanley), six ‘hold’ recommendations and nine ‘sells’.

The consensus 12-month price target among those analysts is $45.67, around 4.5 per cent below the stock’s last price of $47.71.

ASIC gave the market operator a bit of a spray following the Monday madness:

“We are concerned any time there is an incident like this on any of our securities markets,” ASIC said.

“Users have legitimate expectations that Australia’s securities markets perform to the highest standards.”

Perhaps investors were more forgiving given the slip up happened during a quiet patch for the market. As IG’s Chris Weston said: “If it’s going to happen [that was] a really good day for it to happen.”

1.30pm:TPG eyes biggest one-day fall

TPG Telecom is eyeing its worst one-day fall on record as investors comb through earnings figures and don’t like what they see.

The stock slumped as much as 23 per cent at the open and at just before 1:15pm AEST was down 18.9 per cent for the day at $9.575 — its weakest level since January.

If it TPG closes more than 19.2 per cent lower it’ll mark the worst one-day fall in the company’s 15-year history as a listed company.

The broader S&P/ASX 200 is 0.2 per cent weaker for the day, weighed down by Telstra and the big banks.

Telstra is copping some collateral damage as the market shuns telcos — it’s down 1.3 per cent.

Meanwhile, the big four banks have lost between 0.2 per cent and 0.4 per cent, while Woolies and CSL push 0.4 per cent higher each.

Major miners are seeing healthy gains despite the price of iron ore racking up 10 sessions without a price gain. BHP has lifted 1.4 per cent and Rio Tinto is up 1.1 per cent.

1.10pm:Is the RBA wrong on house prices?

Australian house prices returned to strong growth in the June quarter after a lacklustre start to 2016, with valuations jumping 2 per cent across the country.

The RBA believes the housing market has cooled.

The results have pushed the total value of residential property in Australia’s capitals to a record high $6 trillion, with the average price striking $623,000.

The ABS report coincided with the release of minutes of the Reserve Bank’s latest policy meeting, in which it suggested the housing market had cooled.

“Conditions in established housing markets had generally eased over 2016,” the RBA said.

“Growth in housing prices had declined at the national level and across most capital cities over the past year, although there remained considerable variation by location.”
Daniel Palmer
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12.41pm:David Murray rejects royal commission

The head of the inquiry into the financial system, David Murray, has warned against the “politicisation” of the banking system, declaring there is no need for a royal commission into banking.

“Where is the underlying issue that calls for a royal commission? There isn’t one,” Mr Murray told a seminar in Sydney hosted by the Actuaries Institute of Australia.

“We do not have a systemic breakout of illegality in the banks that is happening all the time to a point where the regulators have lost control.

“We have not had a crisis in the banking system where there has been very substantial economy-wide distress and major loss in employment and personal wealth in the economy.”
Glenda Korporaal
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12.08pm:Don’t bank on another rate cut this year

The Reserve Bank of Australia has indicated it will keep interest rates on hold, possibly until next year, allowing two interest rate cuts since May to support growth.

RBA may keep rates on hold until next year.

Interest rate-sensitive sectors of the economy, such as housing construction, are being helped by record low interest rates, while the economy is growing strongly, the RBA said in minutes of its September 6 board meeting.

The RBA left interest rates on hold at 1.50 per cent at the meeting.

“Having eased monetary policy at its May and August meetings, the board judged that the current stance of monetary policy was consistent with sustainable growth in the Australian economy and achieving the inflation target over time,” it said.
James Glynn
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11.50am:TPG’s tumble by the numbers

• TPG Telecom’s (TPM) shares fell as much as 23 per cent at the open (currently down 17.2 per cent)
• Its shares are on track for the biggest fall since October 2008
• If it drops more than 19.2 per cent at the close it’ll be its worst day on record ( it listed in 2001)
• Its shares are currently at $9.60, their lowest level since Jan 11, 2016
• Morgan Stanley and Goldman Sachs have TPM as a ‘buy’, Credit Suisse rates it ‘underperform’
• The consensus analyst 12-month price target is $12.71, which now represents the biggest gap between the current price and the consensus on record

11.40am:House prices climb higher

Australian house prices returned to strong growth in the June quarter after a lacklustre start to 2016, with valuations jumping 2 per cent across the country.

The results have pushed the total value of residential property in Australia’s capitals to a record high $6 trillion and sees the average price strike $623,000.

Figures from the Australian Bureau of Statistics reveal house prices advanced 4.1 per cent year-on-year, with quarter-on-quarter expansion swinging from -0.2 per cent in March to +2 per cent in June.
Daniel Palmer
More to come

11.16am:Why TPG’s shares are taking a hit

The main factor weighing on TPG’s guidance is the continued rollout of the National Broadband Network, writes Supratim Adhikari.

“Our underlying EBITDA guidance for FY17 is affected by the acceleration of the NBN rollout which will create margin headwinds for the group and it also reflects the increasingly competitive market place and a level of uncertainty of outlook with regards to the CVC charges,” the telco said.

“During this period of transition to the NBN it’s the right strategy for the group to continue to compete aggressively and as a result the guidance has seen some reduction in margin but we see that as an investment in the long term good of the business.”
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10.48am:TPG shares in vicious sell-off

TPG shares have suffered a vicious sell-off in early trade on lacklustre guidance in its annual results. The telco’s shares slumped 16 per cent to $9.92 by 10.30am (AEST), writes Daniel Palmer.

The activity wipes out TPG’s gains for the year-to-date, with its current price its lowest since February.
Read more

10.25am:Stocks slip at open

The ASX has opened as normal this morning, to the relief of investors after a glitch yesterday meant the trade of all stocks on the local exchange was only available for a period of 45 minutes, as against the typical six-hour session.

At the 10.15am (AEST) official market open, the benchmark S&P/ASX 200 index edged down 5 points, or 0.09 per cent, to 5,289.8, while the broader All Ordinaries index dipped 7.2 points, or 0.13 per cent, to 5,386.5.

The gains were driven by the mining giants, while the big names in the telecommunications sector were shunned after disappointing guidance from TPG Telecom.

Earlier this morning, the ASX said yesterday’s technical issues had now been rectified.
Daniel Palmer
More to come

10.19am:New Hope losses deepen

New Hope Corporation recorded a wider annual loss because of lower coal and oil prices and impairment charges against some oil investments.

The mining company (NHC) today reported a net loss of $53.7 million for the year through to July, compared to a loss of $21.8 million a year earlier.

The company cut its final dividend to 2 cents a share. A year ago it paid a final dividend of 2.5 cents a share and a special dividend of 3.5 cents.
Dow Jones
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10.10am:Spending lifts in August

August was home to the largest growth in spending for the year so far, a signal interest rate cuts are starting to filter through to the economy.

In a report released this morning, the Commonwealth Bank said its Business Sales Indicator had risen 0.6 per cent, the fastest acceleration in nine months.

“Economy-wide spending has strengthened off the back of improving business and consumer confidence, low unemployment and ongoing low interest rates,” CommSec chief economist Craig James said.

“The pre-conditions remain in place for firmer spending in the lead-up to Christmas.”
Daniel Palmer

9.56am:Risks in Port of Melbourne, Ausgrid

From Robert Gottliebsen’s column today:

The consortium that bought a 50-year lease on the Port of Melbourne for almost $10 billion has taken considerable risks.

But the global hunger for yield is so great that it is forcing both institutional groups and individual investors to take greater risks.

And when the New South Wales electricity grid (Ausgrid) is put up for tender, if the top bidder again pays a peak price then that “winner” will be taking even greater risks than the Port of Melbourne “winner”.
Read more

9.30am:ASIC to probe ASX outage

Securities watchdog ASIC is expected to launch a probe into an unprecedented ASX outage that saw a technical glitch bring down the stock exchange for most of the trading day, freezing out billions of dollars worth of transactions.

Newly appointed ASX Limited chief Dominic Stevens will take charge of an internal investigation into the technology failure that disabled the exchange operator twice in a single session.

Investors had just a two-and-a half window to trade stocks on the exchange, with brokers uncertain as to whether the market would open as normal this morning.
Daniel Palmer
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9.18am:TPG FY profit surges

TPG Telecom has booked a 69 per cent jump in earnings for the full year, thanks in part due to the inclusion of iiNet into its operations.

For the year to July 31, the telecommunications giant said net profit after tax surged to $379.6 million, which included a $73.1m lift in the valuation of its previously held stake in iiNet prior to the takeover.

The company’s underlying earnings jumped 46 per cent to $361m, outstripping analyst estimates for a reading of $346.1m.

Daniel Palmer
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9.12am:Telstra warns on network regulation

Telstra chief executive Andrew Penn has warned that any move by the Australian Competition and Consumer Commission (ACCC) to regulate access on mobile networks will lead to poorer outcomes for customers in regional and rural Australia.

19/05/2016: Telstra CEO Andrew Penn warns against increased regulation of access to mobile networks

Speaking to investors in a shareholding meeting on Monday, Mr Penn said that the prospect of opening up its mobile network to competitors would force Telstra to rethink continued investment in the areas.

“There is a significant recent issue that may impact on our ability to invest,” Mr Penn warned investors.
Supratim Adhikari

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8.58am:Stocks to edge lower as traders wait

After a ‘quiet’ trading day yesterday, to say the least, the local market looks set to open slightly lower this morning as investors continue to sit on the sidelines ahead of the Fed’s meeting this week.

Traders around the world are waiting anxiously to hear the latest guidance from the Fed.

The SPI200 is pointing to a 0.1 per cent slide at the open, while fair value suggests a 0.2 per cent drop would be more likely.

The price of iron ore lost 0.5 per cent last night and has now gone 10 days without notching up a price rise. The steelmaking commodity last traded at $US55.68, according to the Metal Bulletin.

Meanwhile the price of WTI crude oil edged 0.3 per cent lower this morning to $US43.18.

BHP is looking to gain 0.6 per cent this morning, according to its ADRs, compared with a modest 0.25 per cent rise in yesterday’s disrupted session.

“If the ASX 200 does open today, which seems highly likely, one suspects that there will be an air of relief and many will be pleased that the technical glitch happened on a day where corporate news flow was limited and the leads from Wall Street were as flat as you will ever see.,” IG’s Chris Weston said in a note this morning.

“That subdued volatility, however, may change this week with the BoJ and FOMC meeting dictating that the exchange simply needs to be open, which I am sure it will as these issues happen, but as long as we know it won’t happen again then confidence is not materially lost.”

8.33am:ASX left red-faced after Mad Monday

The ASX has sheepishly apologised for yesterday’s outages that left the market at a standstill and cost traders billions in potential trades.

ASIC will probe the reasons behind yesterday’s extremely disrupted trading day.

It was the worst hiccup the index has seen since 2011 and left new ASX chief executive Dominic Stevens red faced and scrambling for answers.

“What happened today does not meet the high standards of operations and system reliability that we set ourselves, and that our customers should rightly expect of us,” Mr Stevens said.

The CEO said he “will be speaking to customers to apologise, and to discuss what learnings we can draw to ensure this doesn’t happen again.”

A delayed start saw most securities open at around 11:30am, but those with names starting between N and R took a lot longer — some saw less than an hour of trade in total — with the index going down again at 3:35pm and failing to reopen.

ASIC is looking into the “technical glitch”.

All in all it was a pretty good day for someone to spill their coffee on the computer (until further information comes out that what I’m assuming happened), because the market is relatively slow moving at the moment and there wasn’t much news about.

“If it’s going to happen, today’s a really good day for it to happen,” Chris Weston, chief strategist at IG told BusinessNow.

“All the various asset classes opened this morning on a flat note. If you wanted to get out of a stock it really didn’t matter to you if it was 10am or 11am because markets are not moving very quickly and if they did you’d have to use other markets to hedge your positions.”

Read more about yesterday’s disruption

8.00am:ASX to open ‘as normal’

The Australian Securities Exchange says the ASX equities market will “open as normal” today, following yesterday’s outage that forced the suspension of trading.

Securities watchdog ASIC is expected to launch a probe into the unprecedented ASX outage that saw a technical glitch bring down the stock exchange for most of the trading day, freezing out billions of dollars worth of transactions.

7.10am:Australian market set to dip at open

The local sharemarket looks set to open slightly lower or flat after US indexes closed steady.

Today’s expected open follows a troublesome day on the exchange yesterday, with technical hitches forcing a suspension of trading.

At 6.45am (AEST), the share price index was down three points at 5,266.

Yesterday the Australian share market lost ground during a day plagued by technical glitches that delayed the market open and eventually forced a premature end to equities trading.

ASX chief executive Dominic Stevens apologised for a chaotic day on the exchange, saying a hardware failure sparked a chain of problems that interrupted and ultimately ended trading prematurely.

“What happened today does not meet the high standards of operations and systems reliability that we set ourselves and that our customers should rightly expect of us,” Mr Stevens said in a statement last night.

In economic news today, the Reserve Bank of Australia releases the minutes of its September board and rate setting meeting. Meanwhile, the Commonwealth Bank’s business sales indicator for August is due out.

In equities news, TPG Telecom and New Hope Group are expected to release full- year results.

In Australia, the market was flat when it closed prematurely yesterday. The benchmark S & P/ASX200 index was down 1.9 points, or 0.04 per cent, at 5,294.8 points, while the broader All Ordinaries index was down 3.0 points, or 0.06 per cent, at 5,393.7 points.
AAP

7.00am:Dollar steady

The Australian dollar has hardly changed against its US counterpart as the greenback falls against a basket of currencies.

At 6.35am (AEST), the local unit was trading at US75.32 cents, down fractionally from US75.34 cents yesterday.

The US dollar fell yesterday from Friday’s more than two-week high on expectations that any Bank of Japan action this week would not weaken the yen and that the Federal Reserve would refrain from raising its key interest rate.

AAP

6.50am:Iron ore at 2-month low

The iron ore price has slipped to a two-month low, hovering precariously above the federal government forecasts.

Iron ore lost 0.4 per cent to $US55.30 a tonne overnight, from $US55.50 the previous day. It is

now trading at its lowest point since July 20, when it settled at $US55.10.

Australia’s diversified mining giants shook off the falls in London trade, buoyed by rising oil prices. Rio Tinto rose 3.5 per cent, while BHP Billiton added 3.7 per cent, gains that could give the miners a boost when the ASX opens.

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6.40am:Wall St steady as oil lifts

US stock indexes swung between slight gains and losses overnight, as shares of banks and energy companies climbed and telecommunications stocks fell.

Indexes pared early gains. The Dow Jones Industrial Average was broadly steady at 18120. The S & P 500 was flat while the Nasdaq Composite slipped 0.2 per cent.

The Australian market is set for a slightly lower open, with ASX futures down six points at 6.30am (AEST).

Dow Jones

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