Trading Day: ASX swings up as US futures gain; Westpac result disappoints

Stocks turned positive amid choppy trade, oil plunged and Westpac’s profit missed expectations, though AMP jumped.

David Rogers and Samantha Bailey

35 min read

8:05PMNovember 02, 2020

The ASX was tipped to make a positive start to the week. Picture: AAP

CSR pays special dividend
IAG restructure as Milliner exits
Westpac cash profit down 62pc

That’s all from the Trading Day blog for Monday, November 2. Australian stocks gained in choppy trade, ahead of a volatile week that includes a likely RBA rate cut and the US election. Locally, Westpac handed down its full-year results and CSR released its interim result.

Jared Lynch 8.02pm: Express Post for Virgin’s Scurrah?

Outgoing Virgin boss Paul Scurrah has emerged as one of the leading candidates to replace Christine Holgate as chief executive of Australia Post after she resigned, effectively immediately, over the Cartier watch gift row.

Mr Scurrah will step down as chief executive of Virgin later this month when its $2.6bn sale to US private equity giant Bain Capital is finalised.

While he did not comment, The Australian understands Mr Scurrah — who served on Australia Post’s board for almost two years from July 2017 — could step into running the postal service almost immediately at it prepares for its biggest Christmas delivery period.

Mr Scurrah’s experience in building good relationships with unions and across a large workforce is appealing, given the relationship between Australia Post and the postal union has deteriorated since the government allowed it to deliver every other day in cities earlier this year, with little consultation.

Other possible candidates include former Myer chief executive Richard Umbers, who ran Australia Post’s parcel business for four years from 2010. After he left Myer, Mr Umbers joined German discount supermarket Kaufland, but is understood to be in the market for another job after the company pulled its plans for an Australian launch in January.

Ms Holgate said that her employment at Australia Post had become a distraction — one the organisation could do without as it entered its peak Christmas delivery period and continued to combat a surge of coronavirus-fuelled parcel deliveries.

David Swan 7.27pm: Offer ‘too good to refuse’: Amaysim

Amaysim’s $250m sale to Optus represents a moment of poignancy for Amaysim co-founder and chief executive Peter O’Connell, who said it was increasingly difficult for challenger telcos to compete in Australia’s highly competitive and commoditised communications market.

Speaking to The Australian shortly after the deal was announced on Monday, Mr O’Connell said the blockbuster proposal from Optus was too good to refuse, despite Amaysim reviewing several offers on the table.

If approved, the deal will lead to the delisting of the virtual network operator, which will continue to operate as a budget brand under Optus. Amaysim is Australia’s fourth-largest telco, with 1.2 million customers, and Mr O’Connell said it was ahead of the curve in offering plans with no lock-in contracts and the ability for customers to bring their own handsets.

Mr O’Connell said the telco industry had changed immensely since Amaysim’s inception 10 years ago, and that it was no longer viable to compete in a 5G era for an MVNO, or mobile virtual network operator, that did not control its own network infrastructure.

“We served a vital role in the telco industry, we really took on the big carriers back in 2010, and we woke them up,” Mr O’Connell said. “They had hidden charges like the plague, and huge tariffs for going over limits. We changed it, and provided a completely different mobile services, and consumers have benefited.

“Now it was time to either raise more money and go harder at 5G, or give shareholders an opportunity to see if they want to take what’s offered on the table … It’s hard for smaller MVNOs to exist, unless they serve a very distinct segment of the market in a very low-cost way.”

Ticky Fullerton 7.02pm: Mob rule delivers on AusPost boss

Falling on her sword on Monday, Australia Post CEO Christine Holgate was profuse. “My sincere apologies if my words or actions have offended others as this would never have been my intention.” To stay she said, would be a distraction both for the business, gearing up for a record online parcel post Christmas, and herself as she cooperated with the inquiry.

In gifting four Cartier watches, total value under $20,000 to managers who had secured a $220m investment for the huge profit driven business trying to turn itself around, Holgate was absolutely within her rights. Twenty grand in cash split four ways for a bonus is utterly unremarkable. Moreover, Holgate says she had the support of the then chairman.

These events happened not during Covid, they happened two years ago. But they surfaced during Covid when Holgate was ambushed by a Labor senator at estimates, one who no doubt was familiar with the CEO’s penchant for flashy wristwear herself.

If Holgate is to be criticised in all this, it is not for how she has run AusPost in extreme circumstances, and not for rewarding for outcome; it is for those few agonising moments under questioning in Senate Estimates where she appeared to forget that she ran a business owned by the government, owned by the taxpayer. “I have not used taxpayers’ money” she said. “We are a commercial organisation. We do not receive government funding. We are a commercial organisation.”

Corporatised businesses like Australia Post are a curious halfway house between public and private, set up by governments, state and federal precisely to incentivise productivity and to make profit, often ahead of a privatisation. No, they do not receive government funding. They are set up to make more money for the government, which is then reinvested or skimmed off by government into general government coffers. But to be quite clear, it is owned by the government, on behalf of the taxpayer.

Ben Wilmot 6.47pm: Unibail-Rodamco-Westfield ‘cautious’ sales update

Unibail-Rodamco-Westfield has turned in a cautious sales update as the coronavirus pandemic sweeps through Europe and the United States.

The international Westfield empire is performing below market consensus expectations and the landlord has been unable to cut back rent relief for struggling tenants.

Macquarie Equities said new restrictions in place across Europe implemented over recent days were “headwinds” to expected improvement in rent collections.

Non-essential shops have now been closed in France, Britain and Spain, with other restrictions also coming into place in more areas including the company’s US malls.

Gearing has hit 41.9 per cent but the company has said it plans to sell €4bn of properties. Investors are watching the group’s progress ahead of a crucial vote on its €9bn turnaround plan.

Lachlan Moffet Gray 6.35pm: REST Super settles with McVeigh

REST Super has settled with a 25-year-old member who sued the $57bn industry superannuation fund for failing to provide information related to climate change business risks as well as any plans made to address them.

The fund, which looks after the retirement savings of retail employees, has also agreed to a target of net zero emissions by 2050.

Mark McVeigh launched the action in the federal court in 2018, claiming the trustee had violated the Corporations Act 2001 by not disclosing the risks of climate change to member returns, and later amended the action to allege that the fund did not act in his best interest or with the required care, skill and diligence in its failure to disclose.

6.10pm: Booktopia aims for $43.1m raise and list

Online book business Booktopia has lodged a prospectus to raise $43.1m and list on the ASX in early December.

The company is offering 10.9 million shares and 7.9 million existing shares at $2.30 per share, giving it an implied market capitalisation at of $315.8m.

About $25.1m of the IPO proceeds will be used to fund growth and pay down debt, and nearly $18.1m will be paid to existing shareholders, the company announced on Monday.

Booktopia has a significant portion of the online book market stitched up, having acquired parts of the Co-Op business, as well as Angus & Robertson (which went into receivership) in recent years. Booktopia also distributes books to 700 bookstores, including to Dymocks and QBD.

The company said on Monday that it currently holds a 6 per cent share of the Australian book market and accounts for almost 15 per cent of total online consumer book sales in Australia.

“When it comes to buying books (online) in Australia, there’s not really anywhere else that you can choose from,” chief executive Tony Nash told The Australian.

James Kirby 5.40pm: Seven words to help you refinance your mortgage

Official interest rates are very likely to be cut again this week sparking another round of home loan refinancing.

If you have a mortgage - or a loan of any description - and you have not reviewed it over the past year, the chances are you are paying too much.

Put simply, your mortgage - whether it is a home loan or an investment loan - should not be over 3 per cent, it should be closer to 2 per cent.

Most people don’t know the mechanics of refinancing or how to approach their bank without the right terminology to get a quick response.

The good news is that it is all quite simple.

Tell your bank these seven magic words: “I am considering signing a discharge authority.”

If you ring the bank and ask them how does refinancing works, you are immediately on the back foot.

If you ring and say these seven words - which is exactly what you need to do in banking terminology - then alarm bells will ring and the bank will very likely respond.

Signing a mortgage discharge authority form would mean the bank has to release the security you have provided for your home loan.

For the bank it means they are set to lose you as a home loan customer. Either the bank will offer you a lower rate or you will know it is time to seriously think about switching to a better offer elsewhere.

I’m honour-bound to thank Stuart Wemyss of ProSolutions - a regular contributor to The Australian - for contributing the right choice of words to articulate clearly to the banks that you are serious about getting your rate down.

Moreover, in the interests of full disclosure: This approach is highly effective, I just did it with an investment mortgage at a major bank ... and it worked.

4.34pm: ASX higher; Westpac disappoints

Australia’s share market rose in choppy trading before major events including the RBA meeting and US election on Tuesday, the US Federal Reserve meeting on Wednesday, and the RBA’s statement on monetary policy and US jobs data on Friday.

The S&P/ASX 200 closed up 0.4pc at 5951.3 after Wall Street didn’t fall as much as expected on Friday, domestic takeover activity intensified and Australia achieved zero new locally acquired cases of COVID for the first time in four months.

The index fell as much as 0.4pc to a 4-week low of 5904.1 as WTI crude oil futures dived as much as 5pc and S&P 500 futures dipped 0.6pc as the UK joined France and Germany in fresh lockdowns amid record new cases of COVID last week.

But oil recovered a little and US futures turned up slightly, and Australian shares were helped by strong gains in some “economic reopening” stocks and AMP’s disclosure that Ares Management had offered $1.85 a share.

AMP rose 10pc to be up 30pc in two days, while ANZ rose 2.4pc, Sydney Airport jumped 4.4pc, Vicinity Centres jumped 3.7pc and Qantas rose 2.9pc.

CSL slipped 0.5pc, ResMed fell 1.6pc despite multiple upgrades, and Westpac lost 0.6pc after its full-year profit missed expectations by about 2pc, although its dividend was near the upper end.

CSR rose 5.7pc after declaring a special dividend of 4c a share on top of an ordinary dividend of 8.5c a share, even as net profit fell 15pc to $58.7m in the half year to September.

Seek fell as much as 8pc but closed down just 0.8pc after rebutting a short-sell recommendation from Blue Orca Capital.

CoreLogic’s house price data for October and ABS building approvals data for September were stronger than expected.

The Australian dollar fell as much as 0.5pc to a 3.5-month low of US69.96c and by the close of the ASX session was weaker by around 0.3pc against the US dollar, trading around US70.06c.

Akane Otani 3.46pm: Election result will be felt for years to come

Jim Baird remembers sitting on his couch four years ago watching election results stream in. At first, all was calm. Then Donald Trump unexpectedly seized the lead -- sending Dow futures and overseas markets careening overnight.

Mr Baird grabbed his laptop to draft a memo to his clients. He didn’t go to sleep until 5am. By 8am, he was back in the office.

“I’m hopeful we won’t have a repeat of that this year,” said Mr Baird, chief investment officer of Plante Moran Financial Advisors.

Whether markets will prove more orderly after Tuesday’s elections is anybody’s guess. Investors are heading into what could be the most volatile week for markets all year. Although national polls show Democrat Joe Biden leading in the presidential race, many money managers and strategists are reluctant to project confidence after being caught off guard by a number of market-jolting shocks over the years, including Mr Trump’s 2016 victory, the UK’s Brexit vote and the coronavirus pandemic.

About the only consensus across the Street now is that Tuesday’s elections will have stark consequences for investors for years to come.

It is true that stocks have historically risen regardless of who has controlled the White House. But the stock market will enter the week in a vulnerable position, having closed out its worst month since March after a steep rise in coronavirus cases heightened fears of more lockdowns. The S&P 500 fell 5.6 per cent last week, trimming its gains for the year to 1.2 per cent.

Dow Jones Newswires

Richard Gluyas 3.39pm: Former Westpac chief takes $2.8m pay hit

Former Westpac chief executive Brian Hartzer lost $2.8m in share-based pay last year, with the Austrac debacle costing the bank’s entire senior executive team a short-term bonus.

Long-term incentives also lapsed, making it five years since the troubled bank’s top executives have been paid an LTI.

Westpac’s annual report, released on Monday, confirmed that Mr Hartzer only received his contractual entitlements after he was ousted a year ago in response to Austrac’s statement of claim.

His 2020 entitlements included $3m in fixed pay, offset by $2.8 in lapsed share rights and $21.5m in lapsed CEO performance share rights.

While some executives received a short-term incentive in 2019, there was a clean slate last year on the recommendation of chief executive Peter King, reflecting the bank’s $1.3bn penalty for more than 23m transgressions of anti-money laundering legislation.

Remuneration committee chairman Craig Dunn said the chief executive and board felt it was “fundamental” that collective accountability for the financial crime outcomes in Westpac’s businesses, which had led to Austrac’s action, be recognised.

2.36pm: Christine Holgate resigns

Australia Post chief executive Christine Holgate has tendered her resignation “with immediate effect” after she was stood aside two weeks ago as the federal government launched an her credit card use, as well as the gifting of Cartier watches to four executives, totalling $19,950.

“The current issue I am managing is a significant distraction and I do not believe it is good for either Australia Post or my own personal wellbeing,” Ms Holgate said in a statement.

“Consequently, I have made the difficult decision to resign, hoping it will allow the organisation to fully focus on serving our customers.”

Ms Holgate has served as Australia Post’s chief executive for three years.

Robyn Ironside 2.18pm: Qld boarder closure, ‘extremely frustrating’: Joyce

Qantas CEO Alan Joyce has warned the newly re-elected Queensland Premier that “sometimes the popular decision isn’t the right one”, has he continues to campaign for borders to reopen.

Annastacia Palaszczuk has confirmed the decision not to reopen Queensland to residents of greater Sydney or Victoria, will not be reviewed until the end of the month.

Speaking on Sydney’s radio 2GB on Monday, Mr Joyce described the Premier’s hard line on borders as “extremely frustrating” and said the stance was causing economic and social damage.

“What gets me is this is obviously popular. She’s won the election and congratulations to the Premier. But sometimes the popular decision is not the right decision and there’s a lot of factors going into this that clearly are not going into it,” Mr Joyce said.

“We have a very different position across the country.”

He questioned why Australia’s states and territories could not adopt a uniform approach, such as that achieved within the Qantas Group.

1.31pm: Citi upgrades housing outlook

Citi has upgraded its Australian housing prices outlook amid evidence of a “soft landing”.

“The soft landing has surprised even our less pessimistic than consensus forecasts over the course of the pandemic,” says Citi Australia chief economist Josh Williamson.

“Given the results of the last few months, improvement in our mobility index and strength in leading indicators of employment such as job ads, we have revised up our forecast for capital city house prices.”

He now sees a peak-to-trough yearly price change of minus 2.3pc in the year to the September quarter of 2021, up from a previous forecast of minus 4.9pc.

House prices are now expected to finish 2021 up 2.8pc from a previous forecast of 0.2pc. Citi now expects house prices in Melbourne to start rising in November that year.

It comes after capital city house prices rose 0.2pc in October according to Core Logic, in what was the first rise since March, with gains in all capital cities bar Melbourne.

Excluding Melbourne, the average capital city increase was a robust 0.8pc. The surprise October result meant that in yearly terms, prices are up 3.7pc.

Elsewhere, housing market activity has picked up, which is evidenced by rising building approvals, with a 15.4pc rise in September was well ahead of the consensus of 1.5pc.

Mr Williamson says demand for houses is expected to remain firm towards the year’s end thanks to the government’s HomeBuilder stimulus package, which gives an $25,000 grant for eligible owner-occupiers to construct a new home.

“Our liaisons with the sector equity analysts suggests that the take-up of the program has been strong, particularly in States with low median home values,” he says.

“Thus building approvals have been especially strong in states outside of NSW and Victoria, where median home values are lower.

“Moreover, states like WA have also provided additional grants for new home builds, explaining the relative strength there compared to other states.”

Elsewhere, the federal government recently extended its grant assistance for first home buyers, which is expected to provide additional support for housing construction.

“Overall, the monthly volatility aside, we expect the momentum in building approvals to remain strong towards the year’s end because of pent-up demand from the Victorian economy reopening,” Mr Williamson says.

1.09pm: Seek’s response, a ‘fob-off’: MST Marquee

Seek’s brief response to the lengthy short-selling recommendation from Blue Orca Capital was inadequate, according to MST Marquee senior research analyst, Hasan Tevfik

“Unfortunately Seek did not heed our advice and provide a detailed response to the accusations by Blue Orca,” he said.

“We would classify Seek’s response as a sophisticated ‘fob-off’ - investors don’t like it and the stock price has collapsed.”

Seek shares fell as much as 8pc to a 6-week low of $19.78 before recovering to $20.66.

Mr Tevfik’s research found that during half of Blue Orca’s campaigns there has been a follow-up activist-short report, some from another activist.

“If there is a follow-up report - and they usually happen within days or a week - we would imagine Seek’s share price to plummet again,” he warned.

“Without a detailed response by Seek refuting the acquisitions we believe the share price will be weighed down as investors fear another, potentially better informed, activist short-seller report could be published.

Despite Seek’s Australian business being a major beneficiary of COVID normalisation, we imagine many investors would refrain from a massive overweight position given the potential governance issues.”

Bridget Carter 12.26pm: UBS recruits Scade from Macquarie

Investment bank UBS has hired Macquarie Capital banker Andrew Scade to lead its Australia and New Zealand real estate investment banking team with Victoria Hardie.

Mr Scade, a managing director, has worked as a division director at Macquarie Capital since 2004. Before then he worked for Grant Thornton in Britain.

His appointment follows the departure of former UBS real estate investment banking head for Australia and New Zealand Tim Church, who has taken on the role of chairman of Morgan Stanley for Australia and New Zealand after 11 years at the Swiss financial.

Other UBS real estate bankers to recently depart the Australia office include Mitch Schauer, who now heads real estate for Jarden, Ben Roberts and also Sam Bates, who will work with Mr Church at Morgan Stanley.

Other bankers are set to be hired by UBS imminently, including those at Macquarie, say sources.

Plenty of money is once again being spent on the investment banking scene to attract top talent.

Barrenjoey Capital Partners has recently hired UBS infrastructure banking team members including the division head Jarrod Key and capital markets banker Barry Sharkey as well as the most successful block trader in the Australian market George Kanaan and his team members.

Credit Suisse has named Rahul Bharara has its head of real estate investment banking in Australia, following the promotion of Angelo Scasserra to co-head of investment banking with James Disney.

New Zealand-based Jarden is said to have outlaid more than $US10m hiring UBS global chairman of capital markets Robbie Vanderzeil, former Goldman Sachs equity markets boss for Australia and New Zealand and ex-UBS operative Sarah Rennie, former UBS equities syndicator John Spencer and ex-UBS Australian equity capital markets boss Dane Fitzgibbon, along with UBS managing director Aidan Allen.

JPMorgan has also this year hired well-regarded banker Duncan Mann from Credit Suisse to head its financial sponsors and co-head its Australian industrial coverage.

Ms Hardie, meanwhile, takes on the role heading real estate after working as an executive director in the team.

UBS is hiring.

12.22pm: Tokyo opens higher, eyes US vote

Tokyo stocks opened higher as investors factored in the rout last week in New York and shifted attention to the US presidential election and other market-moving events.

The benchmark Nikkei 225 index was up 0.61 per cent or 139.86 points at 23,116.99 in early trade, while the broader Topix index gained 1.04 per cent or 16.37 points to 1,595.70.

“Japanese shares are starting with gains as investors factored in falls in US shares,” Toshiyuki Kanayama, senior market analyst at Monex, said in a commentary.

Investors are waiting to see the results of the US presidential election on Tuesday, analysts said.

“Covid-19 infections and (the) prospect of new lockdowns is another theme that will keep investors preoccupied,” Rodrigo Catril, senior strategist of National Australia Bank, added in a commentary, also noting the US Fed and BoE meetings this week and US non-farm payrolls due out on Friday.

AFP

12.13pm: Westpac facing multi-year turnaround: UBS

Westpac faces a multi-year turnaround after a 62pc fall in FY cash profit, UBS says.

The investment bank says Westpac’s stronger capital and deferral run-off were the highlights of the result, but warns of challenging underlying trends, noting that net interest margin fell by 10 basis points amid liquidity and deposit headwinds.

It says a FY 2020 cash profit of A$2.61 billion missed market consensus by about 6pc but was likely in line with expectations once one-off items are excluded.

UBS maintains a buy rating and $20.50 target price on the stock.

Shares are down 1.4pc at $17.66.

Dow Jones Newswires

12.08pm: ASX positive at lunch

Australia’s share market has tracked US futures in choppy trading ahead of the US election on Tuesday.

The S&P/ASX 200 was up 0.3pc at 5842 at midday after rising 0.4pc to an intraday high of 5951.1 then falling 0.4pc to a 4-week low of 5904.1.

The early rise came after the US share market fell less than expected on Friday, with the S&P 500 recovering almost half of a 2.3pc intraday fall to close down 1.2pc.

But S&P 500 futures dived 0.9pc in early APAC trading after the UK started a 4-week lockdown and as WTI crude oil futures dived more than 5pc amid concern about the impact on demand of fresh lockdowns in France, Germany and the UK.

The US futures later trimmed their decline to just 0.2pc, sending Australia’s S&P/ASX 200 back into the green by 0.3pc.

AMP was up 8.3pc after surging 10pc after the company revealed Ares Management had offered $1.85 a share.

Seek fell 6pc when trading resumed after its response to a short selling report from Blue Orca Capital which the short seller described as “flimsy”.

Westpac fell 1.3pc after its full-year profit missed the consensus estimate by about 2pc although its 32 cents a share dividend was near the top end of expectations.

Other banks were mixed, as were the major miners with BHP up 0.5pc and Fortescue down 1.4pc.

Economic reopening trades did well after Australia had zero new locally acquired COVID cases for the first time since June.

Qantas rose 3.1pc, Sydney Airport gained 3.9pc and Vicinity Centres rose 2.5pc.

Mackenzie Scott 12pm: House prices lift in October

National residential property prices rose through October for the first time since the coronavirus induced downturn set in six months ago.

Property researcher CoreLogic’s latest house price data shows prices nationally were up 0.4 per cent, with all capital cities except Melbourne reporting an increase.

The smaller markets are surging ahead of their larger counterparts. Darwin and Adelaide were the strongest performers of the month, each up 1.2 per cent. Canberra and Hobart each rose 1 per cent, with both now recordings record high house prices.

Perth and Brisbane recorded modest changes, up 0.6 per cent and 0.5 per cent respectively. Sydney property prices inched 0.1 per cent higher.

11.44am: Building approvals surge for September

September building approvals surged 15.4pc vs 1.5pc expected.

While building materials are notoriously volatile, this is an encouraging sign, particularly as private sector houses rose 9.7pc.

“The rise was driven by private sector dwellings excluding houses, which increased by 23.4pc in September, but remains 12.1pc lower than at the same time last year,” the ABS said in notes accompanying the data release this morning.

“Private sector houses rose 9.7pc, driven by strength across all states and territories, to be 20.7pc higher than at the same time last year.”

Ben Wilmot 11.41am: Abacus takes control of Storage King platform

Property group Abacus is launching deeper into self-storage and has taken full control of the Storage King operating platform by buying out a 75 per cent interest in the business in a $50m deal.

Storage King was set up in 1998 by two businessmen, Michael Tate and David Scanlen, and has expanded around Australia.

Storage has become a key sector for Abacus after it got into the sector in 2005 and it is building up a portfolio of 81 sites, with a valuation of more than $1bn, which are run by Storage King.

Abacus picked up its 25 per cent interest in the operating business in 2018 and it manages more than 170 sites with around 50,000 customers.

Abacus managing director Steven Sewell said a more integrated management business was, “critical to driving our self storage business and enhancing associated asset returns”.

“The acquisition of the Storage King operating platform was identified as a key strategic imperative for Abacus, given our ownership of Self Storage assets exceeds $1.2 billion and comprises 40 per cent of our balance sheet,” he said.

Mr Tate will join Abacus and look to expand the business.

The self storage portfolio has come through the worst of the coronavirus crisis with a rebound in occupancy, following COVID-19 related declines.

Established portfolio occupancy levels lifted to 89.7 per cent at the end of September as trading conditions strengthened across all markets with the exception of Victoria, where occupancy remains flat due to lockdowns.

The September quarter saw a marginal lift in the established portfolio’s performance and Abacus also bought four storage properties for $45.1m.

The acquisitions comprised three purpose-built facilities in Melbourne and Wollongong, and a development site located in Sydney. Abacus has also settled on a further six properties in Perth, Sydney and Melbourne for a total of $45.2m.

11.31am: Blue Orca hits back at Seek

Short-seller Blue Orca has hit back at Seek after the job classifieds company responded to its allegations that its Chinese online recruiting platform Zhaopin was inundated with zombie resumes and fake job listings.

Blue Orca called Seek’s statement released to the ASX on Monday morning, “flimsy”, and said the company, “failed to meaningfully address any of the substantive evidence of fake posts and zombie resumes”.

It also said that Zhaopin had removed 64 of the 66 employers on its platforms that its report had identified as likely to be fake, which Blue Orca said was a “clear validation” of its work.

“In our opinion, Seek refuses to engage with our report because our evidence is compelling,” Blue Orca said in its rebuttal.

“But investors deserve a straight answer, not a company which is trying to sweep under the rug a discussion which would obviously undermine the market’s confidence in its critical Chinese platform.”

Earlier today, Seek responded to the claims in Blue Orca’s report, saying they were unsubstantiated.

Seek shares have slumped on its return to trade today, last down 6.1 per cent at $20.19.

Shares in the Seek temporarily stopped trading on Thursday after Blue Orca released its damning report into the company.

11am: ASX down as US futures lose ground

It’s risk off before the US election with US futures leading the way.

In a bad sign for global markets, S&P 500 futures dived 0.9pc in early APAC trading.

AUD/USD fell 0.4pc to a 3.5-month low of 0.6997 and the S&P/ASX 200 fell 0.4pc to a 4-week low of 5904.1.

WTI crude oil futures have been smashed 5.1pc to $33.95 amid European and US pandemic lockdowns.

Ramping Libyan supply is also hitting crude after the nation’s oil chief said Saturday that Libya is producing 800,000 barrels a day and targeting 1.3m by early 2021.

Even gold is wobbling with a 0.2pc fall to $US1875.3.

High volatility continues to force de-risking and deleveraging in global markets.

10.41am: Think Childcare surges on guidance upgrade

Shares in Think Childcare have shot up more than 10 per cent after the company upped its earnings guidance and said enrolments and attendance had recovered to be at or above pre-COVID-19 levels in all states with the exception of Victoria, though that state was also experiencing signs of recovery.

“As businesses begin to open and restrictions continue to ease, we expect enrolments and attendance to continue to increase,” the company said in a statement to the ASX.

The company upped its underlying earnings before interest, tax, depreciation and amortisation guidance for calendar year 2020 from between $15m and $17m, to between $22m and $23m, saying that the impacts of COVID-19 continued to dissipate.

That guidance assumes that Victoria continues its pathway or reopening and other states continue on their current trajectories, the company said.

Think Childcare last up 11.9 per cent at $1.13.

10.25am: ASX opens steady

Australia’s share market rose slightly in early trading as falls in US stock index futures crimped an expected rise.

The S&P/ASX 200 rose just 0.4pc to 5950 but soon gave up that rise as S&P 500 futures fell 0.5pc in early Asian trading.

AMP was up 8pc after jumping 10pc to $1.68 after saying Ares Management offered $1.85 a share.

But Westpac shares fell as much as 2pc after its full-year profit missed expectations.

Seek dived 4.5pc when trading resumed after its response to a short selling report from Blue Orca Capital.

10.20am: RBA to explore wholesale digital currency

The Reserve Bank has partnered with CBA, NAB, Perpetual and the blockchain technology company ConsenSys Software, on a collaborative project to explore the potential use and implications of a wholesale form of central bank digital currency using distributed ledger technology, as part of an ongoing research project.

The project will involve the development of a proof-of-concept for the issuance of a tokenised form of central bank digital currency that can be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based distributed ledger technology platform.

The proof-of-concept will be used to explore the implications of ‘atomic’ delivery-versus-payment settlement on a distributed ledger technology platform as well as other potential programmability and automation features of tokenised central bank digital currency and financial assets.

“With this project we are aiming to explore the implications of a central bank digital currency for efficiency, risk management and innovation in wholesale financial market transactions,” said RBA Assistant Governor Financial System Michele Bullock.

“While the case for the use of a central bank digital currency in these markets remains an open question, we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale central bank digital currency in the Australian payments system.”

The project is expected to be completed around the end of 2020 and the parties intend to publish a report on the project and its main findings during the first half of 2021.

10.06am: What’s impressing analysts

AMP cut to Hold: Morningstar

Ampol cut to Sell: GS

GWA Group cut to Neutral: CS

Icar Asia cut to Hold: Morgans Financial

Monadelphous raised to Buy: Morningstar

OceanaGold cut to Neutral: Macquarie

ResMed raised to Outperform: CS

ResMed raised to Neutral: JPM

ResMed raised to Buy: UBS

ResMed raised to Neutral: Macquarie

Western Areas cut to Neutral: Macquarie

Western Areas cut to Neutral: Citi

9.55am: Blue Orca claims unsubstantiated: Seek

Seek says the short-selling report from Blue Orca Capital contains many inaccurate statements and makes allegations of a very serious nature that are unsubstantiated.

Seek said in a statement this morning that the company strongly disagrees with the report’s assertions in regard to Zhaopin and accounting matters.

“We accept that market participants have different opinions, however this report is littered with inaccuracies,” SEEK CEO Andrew Bassat says.

“We are well positioned for future growth and remain confident in SEEK’s long-term outlook.

“We do not wish to engage in detail with the self-serving and unsubstantiated claims in the Report and will therefore only focus on addressing the report’s two main assertions.”

But a two page rebuttal of a detailed 39 page report may leave the market wanting.

Bridget Carter 9.48am: Whisky producer Top Shelf prices IPO

Australian-based whisky and vodka producer Top Shelf has priced its initial public offering at $2.21 per share.

The group will raise $50m, comprising a $35m primary raise and a $15m secondary sell down by shareholders.

Top Shelf will have a $109.9m market capitalisation and including debt, it will be worth $90.5m.

The price represents 4.5 times its forecast revenue for the 2021 financial year on an enterprise value basis.

The company’s owners include Drew Fairchild and Adem Karafini.

Working on the transaction is Ord Minnett and Wilsons.

The company will lodge its prospectus on November 12. Shares will start trading on a normal basis on December 10.

Top Shelf is a Melbourne-based producer and marketer of high-quality Australian spirit-based beverage brands.

The company has forecast $20m in revenue for the 2021 financial year.

9.45am: Takeovers may lift ASX

Takeover activity may magnify an expected rebound in Australian shares before major events including the RBA meeting tomorrow and US election on Wednesday.

Friday night futures relative to fair value suggest the S&P/ASX 200 would open up 0.5pc at 5957 points after the index fell 0.6pc to a 3-week low of 5927.58 on Friday.

But AMP’s disclosure that Ares Management offered $1.85 a share versus Friday’s close at $1.53 suggests AMP shares could add another few points to the index today.

Offsetting that to some extent is a potential fall in banks after Westpac reported at FY cash profit of $2.61bn, which was almost 2pc below Bloomberg’s consensus estimate of $2.66bn.

But at least Westpac will restart dividends with a 31 cents per share payment which was at the high end of market expectations.

The market will also be considering the potential for a divisional split by IAG to unlock value.

Seek shares will resume trading after the company said the claims made in a short-selling report from Blue Orca Capital were “unsubstantiated.”

On the charts, it will be important to see if the index quickly regains the 200-day moving average at 5960 after what might have been a “false break” last week.

But the next big moves will no doubt be determined by the outcome of the RBA meeting and the US election.

With volatility remaining high, there is a risk of further de-risking behaviour in global markets.

9.40am: CSR pays special dividend, profit down 15pc

Building products supplier CSR has declared an interim dividend as it unveiled a net profit after tax of $58.7m for the six months through September, down 15 per cent on the same period last year.

The drop in net profit was partly due to lower earnings in CSR’s aluminium arm, reflecting a decline in aluminium prices. Meanwhile the company’s building products segment delivered a slight lift in earnings, as cost controls and operational efficiency offset a slowdown in residential construction activity.

The company declared an interim dividend of 8.5c a share fully-franked, up from 10c a share last year. The company also declared a special dividend of 4c a share fully-franked.

“While it has been a challenging half on many fronts, we are very pleased with the performance of Building Products,” chief executive Julie Coates said.

“The increasing diversification of our business across segments and markets, coupled with strong cost control and operational efficiency enabled us to maintain our Building Products EBIT in a contracting market.”

Still, CSR said revenue in the building products business was down 6 per cent for the first four weeks of the second-half of its reporting period.

The company said that due to the significant hedge position it expects earnings before interest and tax in its Aluminium business to be in the range of $14m and $23m for the full year, up from $6.2m at the half-year.

9.19am: GPT to sell stake in ‘iconic’ office

GPT is planning to offload its 25 per cent stake in 1 Farrer Place, Sydney, and reinvest the proceeds into new opportunities, including its logistics development pipeline.

“Farrer Place is one of Australia’s most iconic office assets attracting high quality tenants,” chief executive Bob Johnston said in a statement to the ASX.

“It is rare for opportunities of this quality to be offered to the market and we expect it will be well sought after by both domestic and offshore investors.”

The execution of the sale is subject to pre-emptive first right arrangements with co-owners, GPT said.

“GPT continues to have a very strong balance sheet position and a successful sale will further strengthen this position,” the company said.

8.48am: IAG restructure as Milliner exits

IAG’s Australia CEO Mark Milliner will leave the company as it splits its Australian business into two arms, Direct Insurance Australia and Intermediated Insurance Australia, which the company said was more aligned to its brands and customer propositions.

The leadership shake-up was flagged earlier today by The Australian.

“The changes announced today will set us up well for success as we continue to focus on delivering a simpler, stronger and more resilient IAG that meets the evolving needs of our customers and communities we serve,” group chief executive Nick Hawkins said.

The company also told the ASX this morning that Michelle McPherson had been confirmed into the role of group CFO, after acting in that capacity since joining IAG in April this year.

Amanda Whiting, who is head of IAG’s consumer distribution, will be acting group executive for Direct Insurance Australia. Julie Batch will act as group executive Intermediated Insurance Australia, in addition to her current responsibilities leading IAG’s Strategy & Innovation division.

8.15am: Amaysim sells mobile business to Optus

Amaysim Australia has agreed to sell its mobile business to long-term wholesale partner Optus Mobile in a deal that will lead to the delisting and winding up of the virtual network operator.

Amaysim on Monday said it had entered into a share sale agreement with the Singapore Telecommunications Ltd-owned firm for a cash consideration of $250 million.

It said the offer provides shareholders with a premium and certainty in an increasingly competitive market, and removes risk associated with the wholesale tender process.

The board unanimously recommended shareholders accept the offer, which is expected to go to a vote at a special meeting in January.

The transaction will see 67c to 73c per share distributed to shareholders once a deal is finalised.

Amaysim said the sale agreement came after it received unsolicited approaches for the unit following the August announcement of the sale of its energy retail business to AGL Energy.

The Australian’s DataRoom revealed on August 31 that Optus was back circling the business after on again off again discussions over recent years.

With Dow Jones

Joyce Moullakis 8.09am: IAG restructure looms

Insurance Australia Group’s new chief executive Nick Hawkins is set to announce a restructure on Monday morning, his first day in the role, sources said.

The changes include that Mark Millner - who missed out on the top job - is leaving the insurer, The Australian understands.

An IAG spokeswoman declined to comment.

7.55am: AMP takeover bid worth $1.85c per share

AMP says the takeover proposal by Ares Management Corporation has an implied value of $1.85c per share, valuing the bid at $6.36bn.

AMP confirmed on Friday that the US-based private equity firm was in talks to buy AMP, in a move that could spark an auction or a break-up of the 171-year-old financial services company.

In an update, AMP today again highlighted the “preliminary nature” of the proposal and discussions between itself and Ares.

“There is no guarantee that a transaction will eventuate and no certainty with regards to price.”

KOHLER: Wrecker’s yard a fitting end to AMP

Joyce Moullakis 7.32am: Westpac cash profit down 62pc, resumes dividends

Westpac will restart dividend payments for the latter half of its financial year, despite full-year cash earnings tumbling 62 per cent to $2.61bn.

The bank declared a final dividend of 31c per share after not making an interim payment as the pandemic gripped the domestic economy.

Westpac’s cash earnings plunged 62 per cent to $2.61bn for the 12 months ended September 30, the bank said in an ASX statement on Monday.

Analysts were expecting Westpac would post an annual cash profit of $2.66bn.

Excluding notable items, cash earnings fell 34 per cent to $5.2bn, while statutory profit slumped 66 per cent to $2.29bn.

Westpac’s chief executive Peter King will brief investors on the results - which saw the bank take a $1.22bn second half hit due to writedowns, higher customer compensation payments and a record $1.3bn Austrac penalty - later on Monday.

“2020 has been a particularly challenging year and our financial result is disappointing,” Mr King said in a statement. “Our earnings have been significantly impacted by higher impairment charges, increased notable items and the sharp decline in economic activity.”

The most recent guidance from the banking regulator capped dividend payments during COVID-19 to as much as 50 per cent of statutory profit.

“Disappointing.” Westpac CEO Peter King. Picture: Nikki Short

Cliona O’Dowd 5.30am: ASX set to open higher

The Australian sharemarket is tipped to open in positive territory despite weak overseas leads, as investors brace for a volatile week that includes a near-certain rate cut from the Reserve Bank and the chance of a delayed result in the US presidential election.

SPI futures are pointing to a 0.9 per cent, or 52 point, rise at the open at the start of the week, with iron ore majors expected to find support through the session. Positive Chinese PMI results are also expected to add to the positive sentiment.

The prospect of a positive day of trade comes after the local sharemarket dropped more than 3 per cent last week, while US equities markets fell more than 5 per cent.

The big ticket items in the coming days are the RBA rate decision on Tuesday and the US election, with polls opening late on Tuesday evening AEDT.

Some industry experts are sceptical the market will open just shy of 1 per cent higher. “I doubt it will rise that much because I think notwithstanding the fact that you have an expected RBA rate cut on Tuesday, there will be ongoing nervousness about the rising number of coronavirus cases in Europe, in the US and the UK,” AMP chief economist Shane Oliver said.

A fresh lockdown in Britain, adding to the lockdowns in France and Germany among others, was likely to weigh on sentiment, he said. “And I think nervousness about the election in the US might also weigh a little bit on US futures, which might also might work its way into our market through the course of the day,” Mr Oliver said.

The local sharemarket finished Friday’s session down 0.55 per cent at 5927.6, while in the US, the Dow Jones slipped 0.6 per cent and the S&P500 fell 1.2 per cent. The Nasdaq dropped 2.5 per cent as Apple, Amazon, Facebook and Twitter were heavily sold.

CommSec chief economist Craig James is expecting a degree of caution from investors until the US election result is known.

“It would be a game investor who would take significant positions on the Monday and Tuesday before the election. So we could be in the calm before the storm. And then we’ll just have to wait and see.”

Westpac releases its full-year results on Monday, with analysts eyeing a weak set of numbers from the lender. Westpac last week warned its cash earnings would take a $1.22bn hit due to writedowns, customer compensation and a record Austrac penalty.

4.55am: Bitcoin back near three-year highs

While stocks, oil and gold prices careened last week, one asset set new highs for the year: bitcoin.

The price of the digital currency has surged about 90 per cent in 2020 and traded as high as $US13,848 on Tuesday, according to CoinDesk. That is the highest level since January 2018, when bitcoin was coming down from its record high of $US19,783 set in the previous month.

Many investors agree the renewed surge of interest is tied to bitcoin’s potential as a hedge against inflation.

Bitcoin’s proponents have touted that prospect for years, mainly because the bitcoin network has a set limit on the number of units that can be created: 21 million. With the coronavirus pandemic wracking economies across the globe, governments and central banks have been forced to spend trillions to prop up their economies while sapping the purchasing power of their currencies. That has revived fear that inflation will ramp up in the coming years, and that fear is winning bitcoin new converts.

Dow Jones

4.50am: Fed in holding pattern

The Federal Reserve’s policy setting committee meets this week at a turbulent time: one day after voters head to the polls in the deeply uncertain US presidential election.

But the body pointedly keeps itself out of politics, and analysts expect the policy-setting Federal Open Markets Committee (FOMC) will do little to rock the boat at its two-day meeting beginning Wednesday (Thursday AEDT).

The Fed already zeroed out borrowing rates and offered massive credit facilities amid the coronavirus downturn, recently expanding them to reach more firms and non-profit organisations.

“I think November’s meeting is too soon for there to be a dramatic break,” said David Wilcox, a former top economist at the Fed who is now with the Peterson Institute for International Economics.

“This is a sort of a placeholder meeting while they wait for those situations to clarify.” Political uncertainty ahead of the vote comes amid continued worries about the world’s largest economy amid the coronavirus crisis.

While the Fed moved quickly with new credit lines and the rate cut as the pandemic arrived, the initial momentum to get aid bills through Congress has petered out despite increasingly desperate pleas for more aid from Fed Chair Jerome Powell.

John Mousseau, president and chief executive officer at Cumberland Advisors, said the central bank is likely to again encourage lawmakers to continue the push for new stimulus after the election in the final weeks before a new Congress is installed in January.

“The Fed has done their job,” he said.

And as they call for more aid next week “the message will be delivered to a lame duck Congress that might actually act on what the Fed’s doing.”

AFP

4.45am: Wall Street recap

Wall Street stocks finished its worst month since March on a downcast note Friday, falling further after a trove of earnings from tech giants that hit the Nasdaq.

Shares of Apple, Amazon and Facebook all dropped at least five per cent following earnings reports as investors also fretted over rising coronavirus cases and Tuesday’s presidential election.

The Dow Jones Industrial Average shed 0.6 per cent to close the week at 26,501.60.

The broadbased S&P 500 fell 1.2 per cent to end at 3,269.96, while the tech-rich Nasdaq Composite Index tumbled 2.5 per cent to 10.911.59.

The third-quarter earnings period is winding down after a busy three-week stretch, which underscored hesitancy about the growth outlook amid the pandemic, said Briefing.com analyst Patrick O’Hare.

“These companies can’t really get their mind around demand to provide earnings forecast, so they’re not offering it,” said O’Hare, who noted the losses in the tech shares followed solid gains on Thursday.

O’Hare said markets have been in “de-risking” mode all week following fresh coronavirus lockdowns in Europe, and as some polls have shown key states tightening in the US presidential contest, raising the odds of a contested election.

Among the large tech companies that reported results, Google-parent Alphabet outperformed its rivals, rising 3.4 per cent as its quarterly profits climbed to $US11.2 billion as ad spending rebounded after being hit by the pandemic.

ExxonMobil dropped 0.9 per cent as it reported its third straight quarterly loss, this time by $US680 million as low oil prices hammer the industry.

Carnival and Norwegian Cruise Line Holdings both jumped more than five per cent after the Centers for Disease Control removed a no-sail order, moving the industry one step closer to resuming service.

AFP