ASX rises with US futures then trims gain at close; Afterpay soars
The S&P/ASX 200 rose 0.3% after the closing match trimmed gains fuelled by US optimism. Afterpay shares jumped nearly 9 per cent on news of a new partnership with eBay.
- NAB’s MLC sale cleared
- Altium sells Tasking business
- CIMIC unveils further buyback
- Crown hit by class action
Good evening and welcome to Trading Day. Australia’s sharemarket rose along with US futures but substantially trimmed its gain at the final bell to be up 0.3% for the day. Afterpay closed at a record high while Westpac’s Bill Evans tipped the RBA would continue its QE program.
8.31pm: Britain mulls new nuclear plant
Britain said Monday it will hold talks with French energy giant EDF concerning the construction of a nuclear power plant on England’s east coast, in a project reportedly worth £20 billion ($26.4 billion, 22 billion euros).
EDF had submitted an application in May to build the 3.2-gigawatt Sizewell C nuclear plant, which is situated in Suffolk, but it ran into criticism from environmental campaigners -- while plans were delayed by the pandemic.
“The government has... confirmed that it is to enter negotiations with EDF in relation to the Sizewell C project in Suffolk as it considers options to enable investment in at least one nuclear power station by the end of this parliament” in 2024, it said in a statement.
“If the project proceeds, it could create thousands of new jobs during construction and operation.
The statement said the negotiations will strive to reach conditions that would ensure value for any money invested and that all relevent approvals would be secured before any final decision is taken on whether to proceed.
“The successful conclusion of these negotiations will be subject to thorough scrutiny and needs to satisfy the government’s robust legal, regulatory and national security requirements,” said the statement.
EDF is working alongside long-standing partner China General Nuclear Power Corporation (CGN) to build nuclear power plants in Britain.
The French group said in May that Sizewell C will generate low-carbon electricity to power six million homes -- but Greenpeace had argued that there were more cheaper and safer alternatives than nuclear.
Construction of the plant would create 25,000 jobs and 1,000 apprenticeships, while the operational power plant would employ 900 staff.
Britain, which will host the UN’s next major climate summit COP26 in the Scottish city of Glasgow next year, announced the EDF talks in its Energy White Paper. The document set out the government’s plans to meet its goal of net zero emissions by 2050.
Business minister Alok Sharma stressed on Monday that EDF has not yet been given a “green light” for construction.
AFP
Ben Wilmot 7.15pm: Canva HQ sold for $97m
Sydney’s status as a stable office market continues to draw investors from around the world with German group Real I.S. snapping up buildings that house tech unicorn Canva as part of a $97m deal.
The blocks in Surry Hills are two of a host of buildings set to benefit from the area’s regeneration with software company Atlassian also building its headquarters in the nearby precinct around Central Station.
Property groups Dexus and Frasers have also proposed a twin tower development aimed at technology companies. Others in the area include LaSalle Investment Management and superannuation funds revamping buildings for tech tenants.
Real I.S. bought two adjoining office buildings in Surry Hills from private developer Cornerstone Property Group.
Cornerstone offered the buildings known as Surry Hills House and No.1 Lacey to market in June via JLL and IB Property after they were refurbished.
Both buildings are located on the corner of Kippax Street and Waterloo Street and comprise a total of 6,902 sqm of space.
The deal marks Real I.S. Australia’s twelfth acquisition in Australia and reflects their strong commitment to the local market.
Director of Real I.S. Australia, Maximillian Kube said the building would continue to perform well into the future. Real I.S. has more than $16bn of funds under management of which $1.4bn is in Australia.
“The acquisition is in line with the strategy to build exposure to prime office and logistics buildings, located in core markets with resilient cash flows,” he said.
The buildings were 90 per cent leased at the time of sale and the deal was granted Foreign Investment Review Board approval within four weeks from lodgement.
6.24pm: Reddit buys Dubsmash
Reddit has acquired the Tik Tok-like app Dubsmash, both companies said , as big tech moves to carve out territory in the lucrative short-form video-sharing market.
In a statement, Reddit said it had been drawn to Dubsmash -- which reports over a billion video views a month -- because of its commitment to diversity and promoting under-represented voices.
“Both Reddit and Dubsmash share a deep rooted respect for how communities come together,” Reddit CEO Steve Huffman said.
“Dubsmash elevates under-represented creators, while Reddit fosters a sense of community and belonging across thousands of different topics and passions,” he added.
News of the deal comes as big tech scrambles to acquire space in the massive video-sharing app market following the success of TikTok, which is now under sustained pressure from the US government over its Chinese ownership.
Dubsmash, which allows users to lip-sync to popular music or dance along to their favorite songs, has been described by tech press as the “number two” video-sharing app online.
Neither company has disclosed how much Reddit paid for Dubsmash, though the tech news website The Information earlier this year reported that a similar offer from Facebook had been in the range of hundreds of millions of dollars.
Facebook later opted to develop its own TikTok-like platform, known as “Reels”, as did popular video messaging service Snapchat.
Dubsmash clawed its way back from the brink of collapse following brief success in 2017, with executives rebuilding the company from scratch to become one of the web’s top video sharing platforms.
AFP
6.18pm: Tokyo stocks close higher
Tokyo stocks closed higher on Monday after the Bank of Japan’s key business confidence survey showed improvement for the second straight quarter.
The benchmark Nikkei 225 index advanced 0.30 percent or 79.92 points to end at 26,732.44, while the broader Topix index climbed 0.48 percent or 8.51 points to 1,790.52.
The Bank of Japan’s December Tankan business survey -- a quarterly poll of about 10,000 companies -- showed a reading of minus 10 among big manufacturers, after recording minus 27 in the previous survey and minus 34 in the June survey.
The latest figure, released 10 minutes before the opening bell, beat the market consensus of minus 15.
AFP
Perry Williams 5.14pm: Ampol mulling Lytton future
Fuels retailer Ampol is still considering the future of its Lytton refinery in Brisbane after the Morrison government accelerated its rescue package for the industry.
Refiners will receive a minimum payment of 1c per litre for production of petrol, diesel and jet fuel from January 1 under an accelerated subsidy designed to bridge the gap until a long-term package kicks in by July 1, 2021.
Ampol said it was open to either an import model or retaining its Lytton refinery as it works out what best meets buyers’ needs.
“Today’s announcement acknowledges the acute challenges facing the refining sector in the short-term and provides an opportunity to get long-term settings right,” Ampol chief executive Matt Halliday said in a statement.
“Ampol remains confident in our ability to continue to meet our customers’ needs through either an import model or a model including operation of the Lytton refinery. We will continue to engage with government as we work through the review of our refinery operations, while ensuring we make decisions to ensure safe and reliable supply for Australians, protect our balance sheet and maximise shareholder value from our integrated supply chain.”
Three Australian refineries, in addition to BP’s Kwinana operation, have shut since 2012. The remaining plants produce less than half of the country’s fuel needs, with most imported from bigger facilities in Singapore, South Korea and Japan.
4.32pm: Closing match trims ASX gains
Australia’s sharemarket rose along with US futures but substantially trimmed its gain in the closing single price auction.
After rising 0.8 per cent to a 2-day high of 6693.7, the S&P/ASX index finished up 0.3 per cent at 6660.2 after losing 20 points in the closing match.
US futures rose as the global risk appetite improved after the Pfizer-BioNtech vaccine got emergency US authorisation Friday and Brexit talks were extended and US lawmakers warmed to additional US fiscal stimulus.
The Australian market got an added boost after Australian Health Minister Hunt indicated the Oxford/AstraZeneca vaccine could be approved in early January, giving vaccine availability in Australia about 6 months earlier than expected.
Banks did much of the heavy lifting with CBA up 1.9 per cent, while Afterpay soared 8.8 per cent - hitting a record high - Wesfarmers rose 2.7 per cent, and Xero added 1.9 per cent.
But CSL remained heavy after its COVID vaccine was canned on Friday, falling 1.7 per cent.
Iron ore miners also suffered with Fortescue down 3.4 per cent after iron ore futures fell 3.3 per cent.
Bridget Carter 3.40pm: MACA in $200m Downer Mining buy
MACA is understood to be buying the Western Australia-based Downer Mining business in a deal believed to be worth about $200m. The company is raising equity to fund the transaction, with the amount raised believed to be at least $80m.
The company confirmed it was in talks to buy the unit last week following a report in The Australian’s DataRoom column about a potential acquisition.
MACA has a $310m market value and shares last traded at $1.16 each.
Downer hired Macquarie Capital to sell its entire mining services business in August 2019.
Downer has been looking to exit mining services division because it is too capital-intensive.
The asking price for Downer Mining was at least $500m.
Since Perenti walked away, Downer has broken up the portfolio and sold it off in parts.
Downer recently announced it had sold its blasting business for $62m to Enaex, a subsidiary of Chilean company Sigdo Koppers. Downer has also sold its blasting services business, Snowden Consulting, and its share in the RTL Mining and Earthworks joint venture.
The company has said that it was in active discussions about the rest of its mining services portfolio. It comprises four components — Open Cut East, Open Cut West, Underground and Otraco, which is a specialist tyre management business.
In WA, Downer has contracts with major mining groups including Fortescue Metals.
Clients include Regis Resources, Ramelius and Pilbara Minerals.
It provides services in the areas of mining, civil and infrastructure maintenance and has $2.3bn worth of work in hand. It also has an international mining services operation but recently ceased operations in Brazil, which had been impacted by the softening coal price.
MACA is led by chief executive Mike Sutton.
While mining services conditions in WA are buoyant due to the rising price of commodities such as gold and copper, MACA reported a $17.4m bottom line loss during 2020 after it was weighed down by its international arm. This is despite a lift in revenue to $808m and earnings before interest, tax, depreciation and amortisation to $120.4m for 2020.
MACA entered a trading halt on Monday.
An announcement is due by Wednesday.
3.15pm: Medibank Private shares up 3.2%
Medibank Private shares have jumped 3.2pc to a 2-week high of $2.92 today.
With interest rates at record lows, investors were encouraged by AGM comments last month indicating that the dividend payyout ratio will stay in the 75-85pc, that claims are picking up after falling 50pc at the height of the covid crisis and that policy holder growth grew at an encouraging pace of 2.3pc, while management expected to growth its market share with digital channels contributing significantly to the business and its hospital in the home program getting strong traction.With the business on track and moving forward solidly, Medibank may be one of the domestically-focused recovery stocks favoured by investors over some of the offshore exposed stocks outside of resources that could deliver currency-related profit warnings.
3.00pm: ASX hits 2-day high; Afterpay at record
Australia’s share market surged as US futures rose on positive weekend developments for global markets, confirmation that AU-NZ travel bubble will start next year, and a surge in Afterpay shares to a fresh record high.
The S&P/ASX 200 rose 0.7pc to a 2-day high of 6692, with CBA, Wesfarmers, Afterpay, NAB and ANZ making the biggest contributions to strength.
Friday’s regulatory approval of the Pfizer-BioNtech vaccine for US distribution this week, plus the extension of Brexit talks and improving prospects for imminent US fiscal stimulus pushed S&P 500 futures up 0.6pc, pointing to a positive session on Wall Street overnight.
CBA surged 2.5pc as investors expected an uplift in capital management from the banks following APRA’s latest guidance. Wesfarmers rose 3.2pc ahead of a final investment decision on a WA lithium plant early next year. Afterpay surged 7.5pc to a record high of 7.5pc amid optimism about its new partnership with eBay.
2.30pm: RBA to extend QE - Bill Evans
Westpac chief economist Bill Evans says he expects the RBA to extend its QE program to a further $100 billion purchase in the six months following June next year.
Those purchases are expected to be made up of $70 billion in AGS and $30 billion in semi–government securities.
In 2022 he expects the QE program will be reduced to two $50 billion tranches and the target rate on the three year bond rate will be gradually lifted through the year.
“The RBA will also be making its decision on the extension of the program in the context that other central banks are continuing to expand their balance sheets,” Mr Evans says.
“We expect that by June next year, despite a much more positive growth and risk environment, central banks will still assess that they have major challenges in reaching their inflation targets and will be continuing to expand their balance sheets given they have no flexibility on short term interest rates. The RBA will also be mindful of the direct cost to Australian governments of rising bond rates. We expect bond rates will be rising steadily next year and the RBA will be concerned to influence the margin between AGS/Semi government bond rates and those of other countries.”
Westpac is forecasting that the AUD will be rising to USD0.80 over the course of 2021 and there is a risk that the RBA will assess USD0.80 as being overvalued.
Angelica Snowden 12.57pm: NZ closer to travel bubble with Oz
New Zealand Prime Minister Jacinda Ardern has revealed her cabinet has agreed to an in-principle travel bubble with Australia.
At a press conference after a cabinet meeting, Ms Ardern said the bubble would likely start to operate as early as next year.
“Cabinet has agreed in principle to establish a travel bubble with Australia, we anticipate in the first quarter of next year,” she said.
“It is our intention to name a date for quarantine free trans-Tasman travel ...when the details are locked down.”
She said “constraints” are not just around preparation but what is viable for airlines too, and said “we want to make sure staff crewing flights are part of the safe zone too … which is quite a logistical challenge.”
The travel arrangements would mean Australian residents do not have to quarantine in New Zealand.
The agreement is subject to sign-off from the Australian government, Ms Ardern said.
12.46pm: MYEFO ‘to show $10bn improvement’
The federal government’s mid-year fiscal and economic outlook is due later this week.
Economists estimate that the government’s projected underlying cash balance for 2020-21 will be at least $10bn better than when the budget was published in October this year, bringing the deficit projection down from $214bn to around $204bn.
“The most expensive policy in 2020-21 is JobKeeper, and the government has said 450,000 fewer-than-expected employers are eligible for it because of improved trading in October,” notes ANZ senior economist Cherelle Murphy.
“This means this policy will cost the government around $10bn less in the December and March quarters than expected at the time of the budget.”
She also notes that monthly figures show that by October the deficit was $3.6bn smaller than the 2020-21 budget had predicted by this point in the year, due to lower than expected payments, even as receipts were also a little lower than expected.
“It is likely that this rate of improvement will continue, if not accelerate as the financial year goes on,” Ms Murphy adds. “We have upgraded our economic forecasts, as a number of indicators have confirmed that the recovery is underway.”
“The stronger than expected iron ore price is a particularly important revenue booster, as it lifts company profits...although how prices, iron ore export volumes and the AUD behave through the rest of the year compared to Treasury’s forecasts are also important determinants.”
12.40pm: GenusPlus, Errawarra up on listing
IPO success continues with GenusPlus and Errawarra Resources both rising on listing today.
GenusPlus opened at $1 versus an IPO price of $0.96.
Erawarra Resources came on at $0.25 versus an IPO price of $0.20.
It comes after Live Verdue came on at $0.25 earlier today versus its IPO price of $0.20.
12.17pm: Tassal up 6pc on good volume
Shares in salmon farmer Tassal have surged 5.8pc to a 9-day high of $3.65 on good volume.
Fundamental catalysts are lacking but there must be some decent buying with volume 2.8 times the 20-day average for this time of day.
Certainly it has built a good base around $3.45. on the chart in the past six months.
The 200-day moving average offers resistance at $3.66.
12.06pm: ASX defies leads to be up 0.6pc at noon
Australia’s share market bucked slightly negative leads from Friday night as US futures rose strongly.
The S&P/ASX 200 index rose 0.6pc to an intraday high of 6680.7 on light volume with S&P 500 futures also up 0.6pc.
Gains in US index futures followed positive weekend developments including the extension of Brexit talks, renewed hopes for another US coronavirus relief bill and emergency use approval of the US rollout of the Pfizer-BioNTech vaccine.
The Technology, Consumer Staples, Financials, Utilities, Consumer Staples sectors outperformed, while the Health Care, Energy, Health Care and Materials lagged.
Bravura Solutions and Eagers rose more than 6pc, the latter having sold its Daimler Truck operations and property for $108m.
Afterpay jumped 4.3pc and JB Hi-Fi also rose 3.3pc.
Major banks rose strongly with CBA up 1.6pc as the market anticipated higher capital returns in the wake of APRA’s capital proposals last week.
Wesfarmers, Woolworths, Transurban and Coles were also standouts in large caps with gains of 1.3pc-2.2pc.
Ampol and Viva Energy rose 0.7pc and 1pc respectively after the federal government brought forward an $83.5 million refineries lifeline by six months.
Travel stocks lagged despite indications that the Oxford/AstraZeneca vaccine could be approved for use in Australia in early January, giving vaccine availability in Australia about 6 months earlier than expected.
Qantas lost 1.3pc, while Webjet fell 4.2pc and Flight Centre dived 5.1pc.
11.50am: Japan business confidence improves again
Confidence among major Japanese manufacturers has recovered further after plunging on pandemic woes to its worst level since the global financial crisis, a key survey showed.
The Bank of Japan’s December Tankan business survey -- a quarterly poll of about 10,000 companies -- showed a reading of minus 10 among big manufacturers, after recording minus 27 in the previous survey and minus 34 in the June survey.
The latest figure compared with a market consensus estimate of minus 15. The June figure was the lowest since June 2009 when worldwide financial shocks hammered the planet’s third-largest economy.
The short-term business sentiment survey reports the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.
A negative reading means more companies are pessimistic than optimistic. It is considered to be the broadest indicator of how Japan Inc. is faring.
Nick Evans 11.42am: BCI wins federal funding for Mardi project
Kerry Stokes-backed BCI Minerals has won the vast majority of the debt funding needed for its Mardi salt project in the Pilbara from the federal government’s Northern Australia Infrastructure Facility, which has struck a conditional agreement to loan the mining hopeful $450m.
BCI’s Mardi salt and potash project will cost about $780m to build, with the company planning to find about 65 per cent of the cash for the port and network of drying ponds through debt, or about $510m.
The NAIF loan delivers the overwhelming majority of that to BCI, with the company on Monday flagging plans to fund early works at the project through equity.
To win final approval for the loan BCI must demonstrate “meaningful progress” at Mardi by the end of March 2021, win final state and federal government approvals for the project to go ahead, and land the rest of its funding package from other lenders and the capital markets.
BCI plans to export about 4.4 million tonnes of salt for industrial purposes from Mardi each year, as well as produce about 120,000 tonnes of sulphate of potash fertiliser each year.
Mr Stokes’ Australian Capital Equity owns about 39.6 per cent of the former iron ore miner, which still receives royalty payments from the Mineral Resources-run Iron Valley iron ore project in the Pilbara. BCI had had about $88m at bank at the end of October.
BCI shares last traded at 28c.
11.22: Crown Resorts falls on class action claim
Shares in Crown Resorts fall 1.2 per cent as the casino operator says it has become “aware” that Maurice Blackburn has filed a class action in the Supreme Court of Victoria against the company. Crown says it has not yet been served with an originating process.
Earlier Maurice Blackburn disclosed that the claim alleges that, in the period from December 11, 2014 to October 18, 2020, Crown had inadequate systems and processes for ensuring compliance with its obligations under anti-money laundering laws and that Crown breached its continuous disclosure obligations.
Interestingly Maurice Blackburn’s disclosure says that the class action aims to recover compensation from Crown, seeks the potential buy-back of investors’ shares at a fair value, and seeks that Crown implement a proper anti-money laundering training program.
Crown was last trading at $9.60 a share.
10.41: Stag profit for Live Verdue
Another day, another fat stag profit for new Australian share listing.
This time it’s Live Verdue, maker of locally-sourced plant-based products.
Live Verdue came on at $0.25, up 25pc on its IPO price of $0.20, and continued to surge.
LV1 shares were last at $0.275
10.24am: ASX up 0.3pc as US futures jump
Australia’s share market rose in early trading as US futures jumped on positive weekend developments, including the extension of Sunday’s Brexit deadline, renewed hopes for another US coronavirus relief bill and emergency use approval of the US rollout of the Pfizer-BioNTech vaccine.
The S&P/ASX 200 was up 0.3pc at 6662 after rising as much as 0.4pc to an intraday high of 6668.7, as S&P 50 futures rose 0.6pc in early trading.
Eagers rose 3.8pc after selling its Daimler truck operations and property for $108m, while Afterpay and JB Hi-Fi also rose more than 3pc.
The Consumer Staples, Tech, Industrials, Financials, Real Estate and Consumer Discretionary sectors outperformed, while Energy, Health Care and Materials lagged.
Among the biggest contributors to strength, CBA rose 0.7pc, Afterpay rose 3.5pc, ANZ rose 1.1pc , Woolworths rose 1.3pc and NAB gained 0.6pc.
The biggest drags included a 0.3pc fall in CSL and a 1pc fall in Woodside.
10.10am: ASX200 to rise over 10pc in 2021: Macquarie
Macquarie Equities expects the S&P/ASX 200 to rise more than 10pc in 2021, supported by an improving economic cycle driving an earnings recovery.
The index return including dividends could be as much as 20pc, according to Macquarie’s Australian equity strategist, Matthew Brooks.
“We are positive on the outlook for stocks, especially while the expansion phase continues,” he says.
With the support of a vaccine and stimulus, he favours reflation trades (cyclicals, value, commodities) and Covid losers, and also expects rising bond yields.
He also favours domestic exposures as commodities drive up the Australian dollar.
Mr Brooks highlights Worley, Ampol, Oil Search, Aristocrat, Crown Resorts, Telstra, Sydney Airport, Seven Group, BlueScope, Computershare, United Malt Group, Ramsay Health Care, Lend Lease, Westpac, ANZ, SUN and NIB Holdings as the value and/or Covid-19 losers, with BHP, FMG and RIO in Mining.
10.00am: Pilbara raising $240m for lithium buy
Pilbara Minerals is rising $240m via a completed $119m cornerstone investment and a $121m fully-underwritten one-for-7.6 non-renounceable entitlement offer, both at a fixed price of $0.36 a share.
The money will help fund its purchase of the neighbouring Altura Project for $175m.
“The acquisition provides a unique opportunity to realise tangible operational synergies by consolidating the two neighbouring projects into a single integrated operation,” the company says.
The timing looks to be perfect as a new upcycle in lithium gets underway, helped by the US election outcome, with IGO’s move into the space last week very well received by the market.
Perry Williams 9.53am: Viva happy, Exxon evaluating refinery aid
ExxonMobil said it is “evaluating” the Morrison government’s refinery rescue package after rival Viva Energy said it would take up the interim deal to help safeguard its facility.
Refiners will receive a minimum payment of 1c per litre for production of petrol, diesel and jet fuel from January 1 under an accelerated subsidy designed to bridge the gap until a long-term package kicks in by July 1, 2021.
Exxon in September added to fears the nation’s refining sector could face collapse after revealing its Altona refinery in Victoria is trading at a loss, echoing similar problems faced by Viva’s Geelong facility and Ampol’s Lytton unit in Brisbane.
“We are evaluating the federal government’s package to provide support for the Australian refining industry,” Exxon said in a statement.
Viva earlier on Monday said the refinery production payment will contribute $30m to underlying earnings for the six months from January 1, 2021 through June 30.
Viva will on Friday provide unaudited financial guidance for the 2020 year.
“The refining sector has been severely impacted by a significant decline in domestic and global demand for oil products this year, and this is expected to lead to ongoing weakness in refining margins which affects the longer-term viability of our refinery and has already led to a number of announced refinery closures in our region and around the world,” Viva chief executive Scott Wyatt said. “The refinery production payment announced today, together with other measures announced in September, provides material support which underscores the importance of domestic refining to the country’s broader fuel security and to the local communities in which our domestic refineries operate.”
9.53am: Watchdog clears IOOF’s MLC deal
IOOF passes a key hurdle in the planned $1.1bn acquisition of NAB’s MLC Wealth management business, with the competition regulation giving the mega-wealth management deal the green light.
Feedback from customers, financial advisers and other industry participants suggested that this deal would not be likely to substantially lessen competition,” ACCC Commissioner Stephen Ridgeway said in a statement.
ACCC noted the largely “fragmented nature” of most of the wealth market and strong constraints from remaining competitors.
Following the acquisition IOOF would be competing with and constrained by several other large firms along with a number of smaller firms for the supply of retail platforms and large industry super funds when it comes to corporate platforms.
For financial advice IOOF would still only have a market share of about 10 per cent post-acquisition and would face competition from the likes of AMP, the ACCC said.
David Ross 9.47am: Crown facing class action over money laundering
Maurice Blackburn has fired the first volley in the Victorian Supreme Court in what will prove the law firm’s second class action against Crown Resorts.
On behalf of its client, Greg Lieberman, Maurice Blackburn has begun a class action alleging that from the period of December 11 2014 to October 18 2020 Crown “had inadequate systems and processes for ensuring compliance with its obligations under anti-money laundering laws, including as they applied to its VIP international business and engagement with overseas junket tour operators”.
The class action comes after explosive allegations aired at the NSW Casino inquiry this year and a public apology from Crown chairwoman Helen Coonan for “governance and risk management failings”.
Crown’s share price tanked 8 per cent after Austrac launched a formal enforcement investigation against Crown in October “having identified potential non-compliance in relation to ongoing customer due diligence, and adopting, maintaining and complying with an anti-money laundering / counter terrorism financing program.”
Maurice Blackburn alleges “Crown engaged in misleading and deceptive conduct; breached its continuous disclosure obligations; and conducted its affairs contrary to the interests of members as a whole in the period”.
Maurice Blackburn is seeking to recover compensation from Crown and is pushing for a potential buy-back of investors’ shares at “a fair value”.
It is also pushing for Crown to “implement a proper anti-money laundering training program.”
9.40am: ASX likely flat before key events
Australia’s share market should be relatively flat before key global economic events this week.
Friday night futures relative to fair value imply a 0.2pc opening fall to a six-day low of 6630.
But the global risk appetite should improve a bit after some favourable developments over the weekend.
Sunday’s Brexit deadline was extended, a bipartisan group of US lawmakers are due to introduce a $US908bn coronavirus relief bill as soon as Monday and some Democrats are willing to drop their insistence on state and local aid.
The US rollout of the Pfizer-BioNTech vaccine will start Monday after the US FDA granted emergency use authorisation and Moderna’s vaccine is expected to get emergency use authorisation by Friday.
And Australian Health Minister Hunt indicated the Oxford/AstraZeneca vaccine could be approved in early January, giving vaccine availability in Australia about six months earlier than expected.
But it is a relatively big week of events with the FOMC meeting result due early Thursday Australian time and domestic employment data due the same day.
RBA minutes are due Tuesday and the federal government’s mid-year fiscal and economic update is due later this week.
Eurozone Markit PMI data are due Wednesday and US retail sales and Markit PMI data are due early Thursday Australian time.
On the charts, the “false break” above resistance from the November peak at 6713.7 last week may be causing some position squaring after strong gains in November and December.
But this is normally a strong time of year for the share market and history suggests there’s a strong chance of further gains after the exceptionally strong 10pc jump in November.
Eli Greenblat 9.30am: Booktopia rated a ‘buy’
Shaw & Partners has initiated coverage of newly-floated online book seller Booktopia with a “buy” recommendation and a 12 month target price of $3.85 - against a current price of around $2.60.
It says the company has a track record of positively growing all key operating metrics include average sale price, order frequency, customers and importantly margins and unit margins.
Shaw says it expects these trends to continue driven by market leadership, greater distribution relationships and, importantly, automation.
Booktopia floated on the ASX earlier this month. Shaw & Partners acted as joint lead manager to the IPO for which it received a fee.
Shares in online book retailer Booktopia listed on the ASX at $2.86, representing a 24.3 per cent stag profit on the initial public offer price of $2.30, as investors warm to businesses engaged in the digital economy that has boomed through the COVID-19 pandemic.
Shaw & Partners said in a note to clients that Booktopia is delivering all the hallmarks of a dominant, improving, market leading business.
“With a prospectus beat likely (our view), operating leverage emerging, at a low in capacity utilisation and favourable e-commerce tailwinds, we expect Booktopia to outperform materially,” the broking house said.
“Shaw forecasts operating profit beating prospectus. Further, Booktopia has negative working capital and we expect operating cash flow, free cash flows and return on equity to all rise materially.”
9.00am: Eagers sells Daimler truck operations
Eagers Automotive says it’s selling its Daimler truck business and a property at Milperra in Sydney to the US-based Velocity Vehicle Group for $108m.
It says the sale will deliver an estimated net gain before tax of $32m-$36m.
The Milperra property is the location of the Stillwell Trucks operation.
Velocity is a network of commercial truck dealerships throughout the southwest US, and a global partner of Daimler Truck and Bus.
The Eagers Automotive Daimler truck business employs approximately 650 people at metropolitan and regional locations across Australia, including Brisbane, Newcastle, Sydney, Melbourne, Adelaide and Perth.
Eagers Automotive will continue to own and operate its existing Webster Truck and Isuzu Truck businesses, which are currently part of the automotive retail division. Its Hino and Iveco operations will be incorporated into the automotive retail division, removing the need for a standalone trucks division.
Eagers CEO Martin Ward said: “The divestment of our Daimler truck operations represents another key step in the ongoing simplification of our automotive retail business.”
The deal is subject to FIRB approval.
8.52am: What’s impressing analysts?
ANZ Bank raised to Hold: Jefferies
Appen price target cut 28pc to $32.60; Buy rating kept: Citi
Australian Pharma raised to Equal-Weight: MS
Estia Health cut to Underweight: MS
ImExHS Ltd started at Speculative Buy: Morgans Financial
JB Hi-Fi raised to Outperform: CS
Sigma Healthcare raised to Equal-Weight: MS
Virtus Health cut to Underweight: MS
8.44am: CIMIC unveils further buyback
New signs that cashed-up companies are starting to return funds to shareholders, with engineering interest CIMIC Group outlining a further on‐market share buyback of up to 10 per cent of its fully-paid ordinary shares over the coming year.
It will follow the end of CIMIC’S existing buy back, due to end Dec. 28.
“The new buyback will continue to meet CIMIC’s previously stated aims of enhancing shareholder returns and capital efficiency, and maintaining balance sheet flexibility to pursue future growth and investment opportunities,” CIMIC says.
CIMIC says the buyback will be funded by a combination of cash balances and working capital facilities. It notes the buyback will be within the “10/12 limit” (10 per cent over 12 months) permitted by Corporations Act which does not require shareholder approval.
CIMIC said the timing and number of shares it purchases will depend on the stock price and market conditions. It said it also aims to maintain balance-sheet flexibility to invest in growth.
Shares in CIMIC last traded at $25.86.
With Dow Jones Newswires
8.35am: Viva set for $30m boost from refinery rescue
Viva Energy has welcomed a federal six-month rescue package to safeguard the nation’s fuel security.
Under the measure outlined by Energy Minister Angus Taylor, refineries will receive at least 1 cent a litre for petrol, diesel and jet fuel they produce from January 1.
Viva says it estimates the payment will contribute approximately $30m to underlying refining EBITDA for the six months from January 1, 2021.
8.25am: Altium offloads non-core business for $US110m
Altium will sell its “Tasking” software assets to European private equity firm FSN Capital for $US110 million in a move it said will enable investment in its showpiece cloud platform.
The printed circuitboard software firm on Monday said FSN will pay $US100 million in cash, with another $US10 million subject to revenue targets in the 2021 fiscal year.
It said it expected the deal to be completed in the first quarter of calander 2021, which is its fiscal third quarter.
Altium Chief Executive Aram Mirkazemi said the sale of the non-core assets was a key moment for Altium. It follows October’s separation of Altium’s cloud operations from its traditional software business, with the aim of tapping larger markets and expanding more broadly into electronics.
“While Tasking is a great business, it does not play a central role in our design to realization strategy for the electronics industry, which is being delivered through our new cloud platform,” Mr. Mirkazemi said.
Altium said it remained confident of achieving full-year guidance adjusted for the sale of Tasking, whose results will not be included in second-half revenue and earnings.
Its first-half performance remained solid, although the sale and Covid-19 lockdowns in the U.S. will have a marked impact on its historic 45/55 revenue split between fiscal halves, it said.
Dow Jones
8.06am: Technical issue delays NZ exchange
NZX says its main board and the Fonterra Shareholders Market will not open at its normal time “due to a connection issue”.
6.04am: Shirley Lowy dies at 86
Shirley Lowy, the wife of billionaire Westfield founder Sir Frank Lowy, has died in Israel after a long battle with illness.
The family revealed her passing, which occurred on December 9, in a statement released on Saturday night, the Herald Sun reports.
“It is with deepest sorrow that we confirm the passing of Shirley Lowy, our beloved wife, mother, grandmother-in-law and great grandmother,” the family said.
“She passed away peacefully at the age of 86, in Tel Aviv, comforted in her last days by her husband, Frank, and her closest family including sons David, Peter and Steven.”
Ben Packham 5.44am: Refinery rescue deal
Australia’s three remaining oil refineries will get immediate support to keep operating under an $83.5m, six-month rescue package to safeguard the nation’s fuel security.
Energy Minister Angus Taylor will unveil the measure on Monday, bringing forward support announced in the September budget that was scheduled to flow from July 2021. The move follows weeks of talks with refinery operators and unions, who had warned that plants could be forced to shut amid mounting losses.
The refineries will receive at least 1 cent a litre for petrol, diesel and jet fuel they produce from January 1. The grant funding will help carry the refineries through until the middle of next year, when a legislated, long-term market mechanism will be put in place to supply the subsidy.
“The production payments will help the industry withstand the economic shock of this crisis, protecting local jobs and industry, bolstering our fuel security and shielding motorists from higher prices,” Mr Taylor said.
He will announce the support, which will be included in this week’s Mid-Year Economic and Fiscal Outlook, at Geelong’s Viva plant on Monday.
Cliona O’Dowd 5.20am: ASX poised to edge lower
The local sharemarket is expected to open slightly lower on Monday but the US approval of Pfizer’s COVID-19 vaccine could boost sentiment through the session.
SPI futures are pointing to a small dip at the open following mixed overseas leads that saw the Dow Jones end Friday’s session higher, while the S&P 500 and Nasdaq closed in the red. European sharemarkets also ended the week in negative territory.
The US Food and Drug Administration on Friday evening authorised BioNTech and Pfizer’s vaccine, giving it the go-ahead for emergency use through the coronavirus pandemic.
The first shots would be administered “in less than 24 hours” after approval, US President Donald Trump said.
While the FDA approval may lift sentiment overall, iron ore prices, at nine-year highs, could provide an additional boost to the miners, according to CommSec senior economist Ryan Felsman.
Iron ore has risen again, by 1.5 per cent, to $US160.70 a tonne, and over the course of the past week has climbed $US15.40 a tonne, or 10.6 per cent.
The banking sector will be closely watched through the week as ANZ and NAB prepare to front shareholders at their annual meetings. ANZ is scheduled to hold its AGM on Wednesday, while NAB meets on Friday.
Afterpay, Xero and Kogan will be among the listed companies garnering attention following the S&P Dow Jones Indices’ quarterly rebalance.
Afterpay has made it into the ASX top 20, booting out IAG in the process, while Xero has made it into the top 50, as Oil Search and Vicinity Centres fell down the ranks.
Idp Education, Mineral Resources and Reece will be included in the ASX top 100 from next week, according to the rebalancing, which takes place from December 21, while retailer Kogan joins the top 200.
Iluka, Flight Centre and nib, have fallen out of the top 100, while Avita Therapeutics, Cooper Energy and Western Areas have been removed from the top 200.
Jobs data on Thursday will be another focus with CBA expecting Australia will add about 50,000 jobs, bringing the unemployment rate down to 6.7 per cent.
Central bank meetings from the Bank of Japan, the US Federal Reserve and the Bank of England are scheduled through the week, while locally the mid-year economic and fiscal outlook is released on Thursday, with some economists expecting improved forecasts, particularly around the economy and unemployment.
The Australian dollar was lower this morning at US75.35.
5.00am: Reclusive billionaire’s bond bets backfire
British billionaire Mark Coombs made his fortune winning outsized bond wagers in emerging markets like Brazil and Russia. Recently, his luck has soured.
Big trades he made in Argentina, Ecuador and Lebanon all backfired simultaneously in 2020. Ensuing losses hammered shares of his investment firm, Ashmore Group, and cost the reclusive trader around $US325 million in personal paper losses, according to data from S&P Capital IQ.
Once an approximately $US100 billion powerhouse, Ashmore’s assets under management had fallen to $US85.5 billion by September through a combination of withdrawals and investment losses. Clients including the Connecticut state retirement plan have pulled billions of dollars from the company, and competing money managers have placed bets against Ashmore stock. The outflows contrast with the roughly $US250 billion investors poured into bond mutual funds this year through September, according to data from the Investment Company Institute.
The losing streak has drawn unwanted attention to Mr. Coombs, who strives to avoid the limelight. “He’s not your typical billionaire jetting around and buying megayachts,” one former colleague said. “He hates having pictures taken of him and is incredibly, fiercely private.”
Mr. Coombs built Ashmore over the past two decades with a signature mix of radical frugality -- from his wardrobe to staff salaries -- and contrarian trades in risky countries. He has weathered previous rough patches and is responding to the current one in similar fashion -- by buying more bonds.
“We’ve done our thing, we’ve bought assets where we saw...cheap prices,” he said on a video call with analysts in September.
Ashmore’s European total return fund, for example, boosted the face amount of Ecuadorean bonds it held to $US323 million in June from about $US243 million in December 2019, according to Ashmore’s financial filings.
Still, what had been Ashmore’s largest mutual fund, which invests in short-term bonds, has lost 13.75 per cent this year while a comparable index gained 4.15 per cent, according to data from Morningstar Inc. The fund’s assets have shrunk by 69 per cent to $US2 billion, forcing it to sell Argentine, Ecuadorean and Lebanese bonds, the Morningstar data and financial reports show.
Meanwhile, funds managed by BlackRock Inc., Eaton Vance Corp. and Wellington Management have bet against Ashmore shares this year, although BlackRock terminated short positions on the stock in recent weeks, according to data from the U.K.’s Financial Conduct Authority. Ashmore shares fell 52 per cent to $US3.55 in February and March and have since recovered about half the loss, closing at $US5.48 on Friday.
Dow Jones
4.55am: Indian iPhone factory attacked
Angry Indian workers broke windows and overturned cars at the offices of a factory that makes iPhones and has often been touted by the government as an example of India’s efforts to boost manufacturing and lure companies looking to diversify away from China.
Indian television showed workers throwing stones, tossing office furniture and setting fire to a sign at Wistron Corp.’s operations near Bangalore. Labor leaders said workers at the Taiwanese-owned company that is a contract manufacturer for Apple Inc. were upset about wages and working hours.
Police said Sunday they had detained 100 people and were investigating the incident as well as claims by protesting workers that they hadn’t been paid.
A Wistron spokeswoman, Joyce Chou, said: “We follow the law and are supporting the authorities with their investigation.” She said the company was “deeply shocked” by the unrest. A spokesman for Apple in India declined to comment.
Dow Jones
4.50am: Fed may convey optimism on US economy
After a year in which the Federal Reserve pushed out unprecedented lending to support the economy while pleading for government stimulus that never came, central bankers could show early signs of optimism this week.
The policy-setting Federal Open Market Committee (FOMC) will open its final meeting of 2020 on Tuesday (US time), capping a year that saw the world’s largest economy contract massively due to COVID-19, and Joe Biden oust President Donald Trump in the November presidential election.
The Fed and its chair Jerome Powell likely will, as usual, steer clear of making any political statement, but experts say they likely will update their view on how the economy will fare in 2021 as vaccines against the virus are rolled out.
However, the outlook is not entirely clear.
“This is actually a pretty difficult FOMC to analyse,” Steven Englander of Standard Chartered Bank said. “Picking up the pieces is going to be more complicated and will kind of look more complicated in six months than it does now.”
Looming over the meeting is continued failure of Congress to pass another spending package to help the economy recover from the COVID-19 downturn -- something Powell and other central bankers have gently but persistently urged them to do for months.
Powell will hold a press conference after the meeting ends on Wednesday (Thursday AEDT), but beyond more prodding, there is little he can do to close the thus far insurmountable gaps between Democratic and Republican lawmakers, Rubeela Farooqi of High Frequency Economics said.
“He’s going to sound a concerned and cautious note about what’s happening with the economy, but I don’t expect him to take a strong tone on what needs to be done on fiscal policy,” she said.
The central bank slashed its lending rate to zero when the pandemic arrived in March, and more recently unveiled a new inflation-targeting policy that will ensure the benchmark lending rate will remain lower for longer to maximise employment.
The Fed also rolled out trillions of dollars in lending and liquidity lines to keep markets functioning as business shutdowns to stop virus transmission stressed the economy.
AFP
4.40am: Wall Street recap
Wall Street stocks finished mostly lower Friday on disappointment over the lack of progress on a US stimulus bill, while Disney shares skyrocketed on higher streaming demand.
Major indices concluded a choppy week of trading modestly lower following the session, but remained near all-time highs.
The Dow Jones Industrial Average added 0.2 per cent at 30,046.37. The broadbased S&P 500 declined 0.1 per cent to 3,663.46, while the tech-rich Nasdaq Composite Index shed 0.3 per cent to 12,377.87.
In Washington, the US Senate approved a one-week budget stopgap that avoids a government shutdown, but the outlook for a long-awaited coronavirus relief package, without which analysts fear a renewed downturn in economic activity, remained uncertain.
A bipartisan group of lawmakers has been working to win support for a $US908 billion plan that includes new unemployment aid, help for state and local governments and limited liability protections for businesses.
But party leaders remain at loggerheads over the package, as Americans face the worst economic downturn in decades amid the greatest public health crisis in a century.
“The two big factors that pushed the market lower today are the lack of any progress on fiscal stimulus from the US and the disappointing news out of the UK regarding Brexit,” said LBBW’s Karl Haeling, pointing to sagging hopes for a deal between London and Brussels on a new trade pact.
Among individual stocks, Disney jumped 13.6 per cent after reporting that the company’s year-old streaming TV service Disney+ had passed 86.8 million subscribers, beating its “wildest expectations,” the company’s CEO said.
The growth in Disney+ has helped offset weakness in other company businesses during the pandemic, especially theme parks.
Lululemon Athletica dropped 6.7 per cent despite reporting higher profits on a 19 per cent rise in comparable sales for the third quarter. The apparel company avoided earnings forecasts amid uncertainty over the pandemic.
AFP
ASX ends up 0.5pc; Brookfield enters Insignia battle; former Star CEO cops ban
ASX 200 gains 0.5 per cent, led by resources, tech, property, industrials and communications. Macquarie weighs on financial sector. Google owner Alphabet's earnings disappoint. Brookfield lobs new offer to takeover target Insignia. Amcor lifts on reaffirmed guidance, estimates win. Former Star CFO cops ban.
ASX 200 ends flat as China retaliates to US tariffs
Australian stocks end flat, Aussie dollar dives 0.9 per cent as rebounds halted after US tariffs on China go ahead and China retaliates. Woolworths, Westpac announce leadership changes. Nine remains in 'difficult position': UBS.