ASX 200 lifts; Guzman y Gomez in IPO; CSL, Rio gain; Avita, Telix soar

Guzman y Gomez to list with $2.2bn value. Telix jumps on cancer drug 'signal'. Household savings hit fresh record. Rival offer may revive BHP's Anglo bid: Morningstar. CSL to help US stockpile avian flu vax.

Another rollercoaster week is nearing an end after inflation, rates and corporate updates in focus. Picture: Gaye Gerard

Welcome to the Trading Day blog for Friday, May 31. The ASX 200 index closed 1 per cent higher at 7701.70 points, led by healthcare gains.

The Aussie dollar is trading near US66.35c.

Updates

4:33 pm May 31, 2024

ASX 200 ends up 1pc on month end flows

David Rogers

Australia's share market soared on month-end portfolio rebalancing flows and cooling bond yields after weaker than expected US GDP data.

The S&P/ASX 200 index closed up 1 per cent at 7701.7 points after adding 0.5 per cent in the final 30 minutes of trading.

The index rose 0.5 per cent for the month after falling 3 per cent last month, but fell 0.3 per cent for the week. A two week fall was the first in seven months as the index lost momentum after retesting record highs this month.

The consumer staples, energy, industrials and health care sectors led gains.

Woolworths and Woodside both rose 2 per cent, Transurban rebounded 1.4 per cent and Telix Pharm leapt 15 per cent on positive drug trial results.

Major banks rose 0.2-1.3 per cent with CBA strongest.

Goodman Group fell 1.8 per cent.

"Thursday's sell-off on Wall Street was likely due in part to some nerves ahead of tonight’s PCE inflation data, but also due to rebalancing selling into month end whereby portfolio managers sell their winners and top up their losers to get back to benchmark weightings for end-of-month reporting," said IG market analyst Tony Sycamore.

"The resilience in Asian equity markets today is possibly the buy-the-loser component, particularly when assessing the performance of the ASX200, the Kospi, and the Nikkei, relative to Wall Street's performance in May."

"Generally, when these flows occur at the end of the month, they are often reversed in the opening sessions of the new month."

4:18 pm May 31, 2024 Highlight

Westpac sues insurers over Austrac fine

David Ross

Westpac has launched legal action against a consortium of insurers, as the bank attempts to force a payout to cover its $1.3bn money laundering penalties.

The bank is set to front the NSW Supreme Court on July 26 for the first hearing against the 43 insurers, led by commercial cover heavyweights Chubb and AXA.

The matter sees Westpac seeking almost $400m from the insurers, as part of an insurance policy held by the bank which was intended to cover the bank’s costly Austrac enforcement matters.

Austrac, the financial crime enforcer, slapped Westpac with a $1.3bn penalty in 2019 after finding more than 23 million breaches of anti-money laundering laws by the bank.

The NSW Supreme Court case will see Westpac argue it was entitled to insurance cover in the wake of the scandal.

2:44 pm May 31, 2024

Silver Lake investors OK Red 5 deal

Megan Neil

Silver Lake Resources investors have given the tick of approval to its "merger of equals" with Red 5 to create a diversified mid-tier gold miner.

Red 5 is buying all the shares in Silver Lake under the scheme of arrangement. A majority of Silver Lake shareholders approved the scheme at a shareholder meeting on Friday.

Silver Lake chairman David Quinlivan told the meeting Silver Lake shareholders will own approximately 48.3 per cent of the larger, longer life and more diversified company that the scheme creates.

"Through the scheme, Silver Lake’s shareholders will gain immediate exposure to a larger, stronger, more diversified gold producer, whilst retaining significant exposure to the upside potential of Silver Lake’s operations and the benefits of its strong balance sheet," Mr Quinlivan said.

2:33 pm May 31, 2024

Rex, ASX stuck in a Q&A roundabout

Valerina Changarathil

Fly-in, fly-out services operator Regional Express seems to be stuck in a roundabout of sorts with the sharemarket operator over clarifications about private relationships involving its chairman Lim Kim Hai and disclosures made during its 2022 purchase of National Jet Express.

The ASX is interested to know why Rex's NJE purchase announcement on July 15, 2022, did not disclose that Mr Lim's brother-in-law, Thian Song Tjoa, was among the "joint venture partners" supporting the chairman in partially funding the deal. Mr Lim and the "joint venture partners" own 50 per cent of NJE and Rex the remaining 50 per cent.

Rex says "the additional information" was not necessary for investors to understand and be able to make an informed decision about the implications of the NJE transaction, "especially as Mr Tjoa is not a related party".

In his response dated May 30, released on Friday, company secretary Richard Kwan told ASX Limited that while it may have "rephrased" its questions in a letter dated May 23, that does not change the factual and legal position of Rex as summarised in its previous responses on May 10 to the ASX's May 3 letter.

Mr Kwan has reiterated to the ASX that he "mistakenly overstated" the position of Mr Tjoa by referring to him as a related party and his relevant interest in Rex in previous responses to the ASX. Mr Tjoa's only relevant interest in Rex is in the 1.2 million shares he holds (about 1 per cent). Rex "currently considers" that Mr Tjoa is not a related party of Rex either under the ASX Listing Rules or the Corporations Act.

2:03 pm May 31, 2024

Miniso stores in administration

Cameron England

More than 20 Miniso stores across four states have been placed in administration with insolvency experts Jirsch Sutherland now looking for a rescue plan for the group.

The retail group operates stores in outlets such as DFO South Wharf in Melbourne and Highpoint, as well as Pacific Fair in Queensland, Top Ryde City in NSW and Westfield Carousel in Western Australia.

It is the second time the chain has been placed in administration, with it also undergoing a restructuring in 2020.

Andrew Spring from Jirsch Sutherland said the stores were continuing to trade while a rescue plan was hatched, with expressions of interest for the chain being sought at the moment.

Another option would be to have a deed of company arrangement struck with the company’s creditors.

1:29 pm May 31, 2024 Highlight

Politis tips in $1m more into Eagers

Valerina Changarathil

Billionaire Nick Politis has bought another $1m shares in Eagers Automotive – his fourth purchase of 100,000 units since the automotive dealership group's profit warning on May 22.

The on-market transaction was undertaken on Wednesday, May 29, at $10.11 per share, a change of director's notice on Friday shows.

The rapid Politis buy-in – 400,000 shares for $4.2m so far – has come after Eagers flagged a 15 per cent drop in underlying profit for the first half on May 22, citing cost of living pressures on consumer spending and inflationary strain on business costs.

Mr Politis is the biggest shareholder in Eagers Automotive via his WFM Motors Pty Ltd and NGP Investments businesses with 72.9 million shares. At 1.25pm, shares are 0.7 per cent higher at $10.21.

1:01 pm May 31, 2024

Aussie household savings hit fresh high

Valerina Changarathil

There's $200bn more in household deposits since the start of rate hikes in 2022, an analysis of latest APRA statistics by financial comparison website RateCity shows.

Australians squirrelled away $4.69bn in the month of April, pushing the total amount saved in the bank from households to $1.47 trillion – a new record high.

"Money in the bank hit yet another record high in the month of April, despite the fact the full force of the RBA’s 13 rate hikes is now weighing down on those with a mortgage, alongside every other cost-of-living pressure," says Sally Tindall, RateCity.com.au's research director. "Since the start of the hikes in May 2022, the total value of household deposits has taken just one backwards step, recorded in June 2023. Every other month it has climbed in stark defiance to the rate hikes,” she says.

The increase in savings comes as the total value of housing loans to households – which includes both owner-occupied and investor loans – increased by $9.38bn in the month of April, with all four big banks, led by Westpac, recording growth in their loan books.

12:48 pm May 31, 2024

Tesla slams Glass Lewis advice on Musk

Tesla has issued a scathing rebuttal to proxy-advisory firm Glass Lewis over its advice to shareholders to vote against chief executive Elon Musk’s multibillion-dollar pay package.

In a letter that the electric vehicle maker titled “What Glass Lewis Got Wrong About Tesla,” the company said the proxy firm “omits key considerations, uses faulty logic, and relies on speculation and hypotheticals.” Tesla reiterated that shareholders should vote next month for Musk’s compensation package and approve the company’s plan to incorporate in Texas at the June 13 annual meeting. "A deal is a deal. That is the fair and ethical thing to do," the company said.

Musk’s pay package, recently valued at $US46bn is the key vote at the meeting. It was originally approved by Tesla shareholders in 2018, but was struck down by a US court in January because of concerns about the approval process. In the ruling, the judge cited Musk’s “extensive ties” with board members and agreed to rescind the package.

Glass Lewis, in a 71-page report issued over the weekend, told shareholders that Musk’s proposed compensation could dilute their existing holdings in Tesla. The firm said the pay package was excessive and noted it would concentrate Musk’s ownership, making him the largest shareholder “by a healthy margin.”

– The Wall Street Journal

12:40 pm May 31, 2024 Highlight

Rival offer may revive BHP's Anglo bid

Valerina Changarathil

A rival offer – possibly from Rio Tinto, Vale or Glencore – may revive BHP's pursuit of Anglo American, Morningstar analyst Jon Mills says.

But for now, he is backing the Aussie mining giant's decision to walk away from the business rather than push its bid beyond $74bn and risk further overpayment.

BHP has abandoned the deal over disagreements related to the risks of BHP's condition that Anglo demerge its 78.6 per cent interest in Anglo American Platinum and 69.7 per cent interest in Kumba Iron Ore – both in South Africa.

"Under the applicable takeover regulations, BHP is obliged to walk away for six months unless, among other things, a rival offer emerges," Mr Mills says in his note. "While this remains a possibility, alternative suitors with the size and balance sheet to make an offer remain limited, but potentially include no-moat Rio Tinto, Vale, and Glencore." Anglo meanwhile plans to proceed with its own restructure plans that include spinning off some businesses.

The developments have led Morningstar to revert to its unchanged stand-alone fair value estimates of $40.50 for BHP and £20.76 (GBX 2080) for Anglo, from its probability-weighted valuations of $39.50 and £22.96 (GBX 2300) per share, respectively. BHP shares are near $43.98 at 12.40pm AEST.

11:42 am May 31, 2024

Beston Global Food loses two directors

Cameron England

Beston Global Food Company, which has been struggling to pay milk suppliers and is labouring under a huge debt load, has lost two board members.

The resignations of deputy chairman Kevin Reid and non-executive director Cheryl Hayman leaves the company with just three board members – founding directors Roger Sexton and Stephen Gerlach, as well as Neil Longtsaff.

In a short release to the ASX late on Thursday the South Australian dairy products company said Mr Reid had resigned for health reasons and Ms Hayman had resigned to pursue other opportunities.