ASX 200 rallies late; QBE, Beach lead declines; Nvidia tops Microsoft on value

Helia's CBA contract update weighs. Beach hit with downgrades. Brookfield puts Aveo on market. QBE US restructuring dampens sentiment. Guzman y Gomez debuting Thursday.

Quiet but choppy trading is likely to mark the next two sessions of the ASX in line with Wall Street's mid-week trading holiday. Picture: Gaye Gerard

Welcome to the Trading Day blog for Wednesday, June 19. The ASX 200 index rallied late, closing flat, down 0.1 per cent to 7769.70 points with the energy sector the strongest. US indexes closed flat with Nvidia surpassing Microsoft's valuation.

The Aussie dollar is trading near US66.70c.

Updates

4:34 pm June 19, 2024

ASX 200 ends flat before US holiday

David Rogers

Australia's stock market was flat in quiet trading before the Juneteenth holiday in the US.

The ASSX 200 closed down 0.1 per cent at 7769.7 after trading a tight range of 7755.2-7787.5.

Relatively hawkish RBA communications on Tuesday have had no lasting impact on stocks.

Energy stood out with Woodside up 1.3 per cent after Brent crude oil rose 1.4 per cent to a seven-week high of $US85.42 a barrel on Tuesday.

Consumer staples also outperformed with Treasury Wine up 2.7 per cent.

Industrials and financials were the worst performers as Transurban lost 0.7 per cent and QBE Insurance dived 4.3 per cent on slightly disappointing guidance on key metrics even as it announced a long awaited exit from struggling North American mid-market segment.

CBA fell 0.8 per cent to $126.94 after soaring to a record high of $127.99 on Tuesday.

Helia dives 21 per cent after losing a lenders mortgage insurance contract with CBA.

Guzman y Gomez launches on the ASX Thursday along with Australia's first Bitcoin ETF.

4:23 pm June 19, 2024

New boss at People First Bank

David Ross

People First Bank has announced deputy CEO Steve Laidlaw will take on the top job at the lender effective July 1, with long time boss Peter Lock to step down.

The move cements the integration of People's Choice and Heritage Bank, which saw the two lenders combine operations last year.

Mr Laidlaw was previously CEO of People's Choice.

Mr Lock will retire from People First Bank on August 31.

3:15 pm June 19, 2024

High risk of poor economic policy: Treasury

Treasury Secretary Steven Kennedy has warned there is “heightened risk of poorly targeted policies, creating inefficient industries, propped up by taxpayer support” if government interventions aimed at building economic resilience were not subject to effective policy guardrails.

He said the use of economic and financial tools to “promote and defend national interests” meant governments were under increasing pressure to not leave key parts of the economy to the private sector and instead establish strong protections around a growing number of critical activities.

Dr Kennedy noted there was a tendency to keep increasing the height of the protective fence and the number of economic sectors being assisted through some form of government support.

He noted in September 2023 the government more than doubled the number of critical infrastructure assets deemed to be systems of national significance, adding a further 87. When the Security of Critical Infrastructure Act was introduced in 2018 it initially only covered 4 sectors — including electricity, gas, water and ports.

“I am not arguing that these decisions were unwarranted. I am only seeking to highlight the immense pressure that policy makers are under to expand the ‘yard’,” he said. “There is also an ever-present risk that these types of regulatory regimes could be used as a quasi-form of industry protection or to respond to community pressure, rather than to address genuine security risks.

“This is why our partnership with security and intelligence agencies, including as part of the foreign investment screening process, is so important.”

– Joseph Kelly

1:53 pm June 19, 2024

QBE Insurance dives 4pc on weaker guidance

David Rogers

QBE Insurance is having its worst day in seven months after announcing its decision to close its North America mid-market segment, while also trimming its guidance metrics and warning of significantly higher catastrophe claims in May.

"QBE is packaging up essentially good news – finally quitting the long standing but ultimately underperforming mid-market exercise – with less good news – slightly lower gross written premium and net insurance revenue than the market was forecasting and a significant catastrophe experience in May," says Citi analyst Nigel Pittaway.

"At this stage, we think the relief of finally ending this longstanding underperforming business should outweigh the minor negatives on numbers, although the US$100m restructuring charge, lower future premium and potential expense overruns are also factors to consider."

QBE shares are down 4 per cent at a a near three-week low of $17.63 after hitting a 13-year high f $18.67 earlier this month.

Citi is Buy rated with a $20 target.

1:46 pm June 19, 2024

Brookfield puts Aveo on the market

Bridget Carter

Almost five years on from buying Aveo, Canadian private equity firm Brookfield is placing the retirement village operator back on the market in a sale that could be worth $3bn.

DataRoom understands that investment banks have been invited to pitch in the past fortnight for a role selling what is one of the country’s largest retirement operators.

Among Aveo’s lenders are believed to be Goldman Sachs and Macquarie Capital, so they may be well placed when it comes to landing a role.

Full DataRoom report here.

1:19 pm June 19, 2024

Guzman y Gomez set to launch on ASX

Bridget Carter

Guzman y Gomez set to launch on the ASX on Thursday with shares expected to start trading at noon AEST on a conditional and deferred settlement basis.

It’s the largest quick service restaurant to list in Australia, and owners will be hoping for a better result than some floats in recent years, namely those by private equity.

When KFC operator Collins Foods listed in 2011, shares crashed to about $1.10 shortly after floating at a price of $2.50 by Pacific Equity Partners (the share price is now $9.16).

This is unlikely in the case of Mexican food chain Guzman y Gomez (to continue reading).

1:14 pm June 19, 2024 Highlight

VanEck's Bitcoin ETF set to launch on ASX

David Rogers

In a first for Australia, VanEck’s Bitcoin ETF (VBTC), is set to launch on the ASX on Thursday.

VanEck APAC CEO Arian Neiron says it will be the most cost-effective bitcoin fund exposure in Australia.

“We are pleased to bring bitcoin to the Australian market as a regulated financial product on the nation’s primary capital market destination, the ASX," Mr Neiron said.

“Notwithstanding that crypto investing is a polarising topic, we recognise bitcoin is an emerging asset class that many advisers and investors want to access.

"We have developed a robust offering that we believe provides an opportunity for bitcoin exposure using a regulated, transparent and familiar investment vehicle."

VBTC also promises to make bitcoin more accessible by managing back-end complexity.

"Understanding the technical aspects of acquiring, storing and securing digital assets is no longer necessary,” Mr Neiron added.

Recent research by VanEck found 76.2 per cent of advisers had clients enquiring about bitcoin, 33 per cent said they would add a bitcoin ETF to client portfolios if it was available on the ASX, and 22.9 per cent were undecided.

The ASX launch follows the SEC’s approval of the first bitcoin ETFs earlier this year, and the availability of bitcoin ETNs in several European stock exchanges.

1:14 pm June 19, 2024 Highlight

Zentree's ERA push 'premature'

Valerina Changarathil

The Takeovers Panel has dismissed a "premature" call for intervention by a minority shareholder of Rio Tinto-controlled uranium group Energy Resources Australia.

ERA is currently focused on the rehabilitation of the Ranger mining area, a costly exercise that at last estimate would be around $2.3bn. In March it told investors it was preparing for a material equity raise and a month later appointed Rio, its 86.3 per cent shareholder, manager of the rehabilitation program.

Shareholder Zentree Investments' May 31 application to the Takeovers Panel stated that "the costs and forecast costs of the rehab have constantly increased, to the long-term benefit of Rio, and have never been adequately disclosed to the market". "Rio has been executing a strategy for almost 10 years to achieve 100 per cent ownership of ERA without having paid a premium for control to the minority shareholders," the application said.

In response, the Panel said "the key circumstance underlying the application, being ERA's potential capital raising, had not yet commenced and there is no certainty that unacceptable circumstances will arise".

ERA on Tuesday said "work in relation to potential funding options is continuing" and it will keep shareholders updated.

12:42 pm June 19, 2024 Highlight

Win for Pacific Smiles' approved suitor

Valerina Changarathil

Shareholders in dentist chain Pacific Smiles will vote in early August on a $303m all-cash takeover by National Dental Care (NDC), which has the support of the board, but a battle is brewing with thwarted suitor Genesis who has a 19.9 per cent sway on the outcome.

Pacific told investors after market close on Tuesday that the Takeovers Panel has made a declaration of unacceptable circumstances in response to NDC's application against "deficient disclosures" by rejected suitor Genesis Capital's subsidiary Beam Investment in relation to its holding in Pacific Smiles.

In April, Pacific Smiles put an end to a months-long battle for control by accepting NDC's $1.90 per share bid – which trumped both Genesis' improved offer in March of $1.75 per share and its pre-Christmas original bid of $1.40.

That pre-Christmas offer came after Beam, on December 18 and again in January, disclosed a purely economic interest in Pacific Smiles shares through a cash settled total return swap, and including a statement that Beam and its associates have no ‘relevant interests’ in Pacific Smiles shares. Also on December 18 (and again on March 19, 2024), Genesis bid for Pacific Smiles. Beam's May 7 substantial holder notice stated (among other things) that its cash settled total return swap had been amended to “provide for physical settlement” and that it was the legal and beneficial owner of approximately 19.9 per cent of Pacific Smiles shares.

NDC says Beam's notices contained "deficient disclosures" when it did not reveal its relevant interests in Pacific or declare its short positions. The Takeovers Panel is yet to decide on orders, but NDC wants Beam to not be allowed to vote on the takeover or divest its shares and make corrective disclosures. It comes as Pacific Smiles renegotiates current contractual agreements with insurer NIB for gap-free services offerings for its members. Pacific Smiles (PSQ) shares are up 1c to $1.90 at 12.35pm AEST.

12:17 pm June 19, 2024

US group buys Adelaide tech firm

Cameron England

Adelaide software company Camms has been sold to US firm Riskonnect for a sum understood to be north of $US100m.

The company was founded by Joe Collins in 1996, and provides cloud-based software for governance, risk and compliance for more than 400 customers. The company has more than 450 staff and eight offices globally.

Camms’ customers include Adelaide Airport, Bridgestone, Worley and Tilt Renewables.

Ellerston Capital bought a 35 per cent stake in the company in 2019, valuing the company at more than $50m at the time.