BHP, Rio lead ASX recovery as AMP boss Francesco De Ferrari faces parliamentary probe
Shares settled to a 0.5% gain, as AMP’s chief tells a parliamentary committee the past few months have been the most challenging of his life.
- Wilson: What the hell is going on at AMP?
- Myer posts historic $173m loss
- 38k customers drain Hostplus super balances
- Charter Hall WALE raising $70m for BP buy
That’s all from the Trading Day blog for Thursday, September 10. Shares gained as much as 1.3pc in opening trade but finished higher by 0.5pc thanks to lift in BHP and Rio Tinto.
Myer fell to a loss of $173m, its second worst on record, while Charter Hall WALE launched a $70m raise and Nearmap a $90m raise and the latest meeting of the parliamentary economics committee probed the superannuation sector.
Paul Garvey 9.23pm: Rio ‘knew Juukan caves significant’
Rio Tinto and the Puutu Kunti Kurrama and Pinikura people were well aware of the historical significance of the Juukan Gorge caves at the time the mining giant sought and obtained government approval for the caves’ destruction.
Documents obtained by The Australian under Freedom of Information legislation on Thursday show the PKKP had requested that Rio Tinto carry out a salvaging operation before the caves were destroyed, with Rio Tinto agreeing to the request.
Legal approval for the destruction of the caves was given by the Aboriginal Cultural Materials Committee — a panel of Indigenous representatives and archaeology experts that advises Western Australia’s Aboriginal Affairs Minister on applications to destroy Indigenous sites — in December 2013 after it considered a host of factors including an absence of “specific ethnographic stories” relating to the area.
Chris Griffith 8.12pm: Amazon flexes its online muscle
Lockdowns have seen a boost to Amazon’s retail business in Australia with a 17 per cent increase in online shoppers in a year.
A survey by global e-commerce specialist Pattern found the number of online shoppers using amazon.com.au grew from 30 per cent to 47 per cent in the past 12 months.
The pandemic has been kind to the online retail giant with about 30 per cent of those who bought from Amazon Australia in the past 12 months citing lockdowns as one reason why they purchased there.
The survey results represent a longer-term vindication for Amazon since it entered the Australian retail space in 2017.
In its early days of home deliveries its offerings in many categories were sparse and it struggled to match prices of Australian retailers. It also lacked supply chains and warehouses to quickly dispatch goods to shoppers.
That has changed over time, and the impact of Amazon has seen rivals Woolworths, Coles and others introduce more efficient home-delivery services.
The local Amazon operation has come into its own. Pattern says in 2019 more Australians were still usingAmazon.com than buying from the localised Australian site. This has flipped, with 13 per cent reporting they had bought from the US site last year, down from 35 per cent in 2019.
Read more
Robyn Ironside 7.46pm: Qatar calls for luxury quarantine option
Qatar Airways’ chief executive has urged the Australian government to relax its tough entry restrictions and fill “empty hotels” with returning travellers.
The airline has maintained more flights to Australia than any other carrier during the COVID-19 crisis, carrying thousands of Australians home in the process.
But strict passenger caps designed to limit the number of people going into hotel quarantine could force Qatar to pull services.
CEO Akbar Al Baker said travellers should have a choice of paying to quarantine in three, four or five-star hotels on their return, as occurs in Qatar.
He said the current caps, restricting airlines to between 25 and 60 passengers a flight, were unsustainable and severely disadvantaging those who wanted to come home to Australia.
“It is making things difficult, and it’s putting a great strain on the cost for us operate,” Mr Al Baker told The Australian.
Gerard Cockburn 6.51pm: CBA joins no interest payment card crowd
Commonwealth Bank has launched a new no-interest credit card in a bid to attract younger spenders turning their backs on high debt accruing lending products.
For a monthly fee ranging between $12 and $22, CBA’s new CommBank Neo card provides customers with a credit limit of up to $3000, attracting zero-interest, no annual or late fees and no foreign currency charges.
The new card offered by Australia’s largest retail bank, also gives customers a range of discounts and cash back offers through CBA’s loyalty rewards program.
Nick Evans 5.49pm: BHP ties exec bonuses to emissions cuts
BHP boss Mike Henry will put 10 per cent of his leadership team’s bonus payments on the line over the mining giant’s plan to reduce its carbon emissions by 30 per cent by 2030, as the company outlines its approach to dealing with its contribution to climate change over the next decade.
Speaking to investors on Thursday evening, Mr Henry unveiled BHP’s carbon emission targets for the coming decade, committing the company to “pursue efforts” to limit global warming to 1.5 degrees celsius above pre-industrial levels.
Mr Henry told analysts the company would seek to slash scope one and two carbon - those directly attributable to its own emissions, and third party providers that power its sites - by 30 per cent form 2020 levels within a decade.
The BHP boss also outlined the bones of BHP’s plans to work with its customers to reduce emissions coming from the use of its products, setting a target of helping its steel mill customers to “to identify pathways and develop technologies by 2030 to reduce emissions intensity by 30 per cent”.
“We will adjust our baseline for acquisitions and divestments – there will be no ‘free pass’ from any material divestments of higher-carbon operations,” Mr Henry said.
“We are also making a direct connection between these measures and executive remuneration, with 10 per cent of the short-term incentive part of my remuneration, and those of our leaders, contingent on meeting targets and goals associated with these commitments. Every year.”
BHP has estimated its operations directly produced 9.3 million tonnes of carbon dioxide equivalent in the 2019 financial year, with scope two emissions worth another 4.9 million tonnes.
Emissions attributable to the use of its products have been estimated about about 565 million tonnes.
Bridget Carter 5.40pm: De Grey Mining launches placement
De Grey Mining has launched a placement, selling shares at $1.20 each through Bell Potter.
The group will use the placement to raise about $100m through the issue of about 83.3 million shares.
It comes as De Grey Officers, including Simon Lill, Andy Beckwith and Craig Nelmes will also be selling down about 2.6 million shares at the same price as the placement by way of a special crossing, equating to $3.1m.
The group’s shares last closed at $1.435.
De Grey Mining is a Western Australia-based mining company focused on gold exploration and development activities.
It has a market value of $1.72bn.
Lachlan Moffet Gray 4.59pm: Wade appointment was reasonable: De Ferrari
With AMP culture again in the spotlight, chief Francesco De Ferrari tells the parliamentary economics committee that the appointment of Alex Wade to be the head of the group’s Australian business, was a reasonable decision at the time.
Mr Wade’s surprise exit from the group in August was said to be linked to allegations of poor conduct, including lewd photos, presented to the company.
“The appointment of anybody who reports to me within the executive team is ultimately my responsibility as CEO of the company,” Mr De Ferrari tells the committee.
“When I looked at some of the challenges that we were facing in our wealth business in Australia, Alex really had a lot of relevant experience.”
Mr Wade had worked as Mr De Ferrari’s chief of staff when the two were at Credit Suisse Australia previously.
Read more: ‘Inappropriate photos’ behind sudden exit of AMP exec
4.51pm: Afterpay gains fade at the close
Tech names led the market recovery on Thursday, following the lead of the US Nasdaq overnight, but it was the heavyweight mining stocks that did the heavy lifting.
Afterpay led the market for much of the day, gaining as much as 4.8 per cent intraday before settling to a 2.1 per cent gain at $75.63 by the close.
Across the rest of the tech sector, Appen put on 3.2pc to $32.51, while REA Group added 1 per cent to $110.95 and NextDC jumped 3 per cent to $11.15.
Myer shares fell 18 per cent to 21c as it sunk to a loss of $172m, while key shareholder Solomon Lew reignited his campaign to spill the board.
Here are the biggest movers at the close:
Lachlan Moffet Gray 4.32pm: AMP defends remediation account fees
With questions on culture answered (for now), the parliamentary economics committee moves on to probe AMP’s practice of charging fees for accounts used to remunerate its customers.
Chief Francesco De Ferrari says there is no issue with charging fees on those accounts used to return money to clients caught up in the fee-for-no-service scandal, as the customers are getting a crediting rate – also known as an investment return.
“We are managing the accounts of the client, and again the client gets a crediting rate net of all the fees,” Mr De Ferrari says.
“The client gets a crediting rate of 1.65 net of all the fees – that’s capital guaranteed, so it actually compares very favourably to what you can get on a bank account.”
Earlier this year it was revealed that AMP was moving money it owed clients for remuneration into new AMP super accounts opened in their name, instead of asking where the money should be moved.
Lachlan Moffet Gray 4.20pm: Surveys show no culture problem: AMP
Mr De Ferrari is continues to insist that there is no systemic culture problem at AMP, citing employee surveys.
Labor MP Anne Aly cautions Mr De Ferrari against relying on employee surveys, suggesting that employees might not feel confident being completely honest on internal processes, and that AMP needs to provide external channels.
Mr De Ferrari says that AMP offers external channels of complaints through an anonymous whistleblowing service supported by 21 employees trained to handle complaints.
4.18pm: Shares cling on to 0.5% lift
The local market recovered at the close, to cap out a rocky session with a 0.5 per cent gain, even as the major banks pulled back.
Shares had clocked gains as much as 1.3 per cent in the morning session, but fell into the red in afternoon trade only to finish up by 30 points or 0.51 per cent to 5908.5.
All sectors by real estate gained over the day, taking lead from the Wall Street bounce, with tech and materials shares leading the charge.
BHP was the biggest contributor to the market rally at the close, adding 0.5 per cent to $36.98, while the four major banks clocked losses between 0.1pc and 0.7pc.
Lachlan Moffet Gray 4.10pm: Pahari penalty not just financial: De Ferrari
AMP’s chief refuses to disclose the financial penalties levied on ex-AMP Capital boss Boe Pahari after he was demoted over allegations of sexual misconduct.
Probed by the parliamentary economics committee over the incident, Mr De Ferrari describes the penalties as “private and confidential”.
“The consequences applied were not just financial in nature, there was training, there was commitment to diversity and inclusion and there were a number of other coaching aspects that were included in a package of consequences,” Mr De Ferrari says.
Mr De Ferrari says while there is a clear reason to publicise penalties levied on sexual harassers, it is important to “avoid the risks and the harms this reporting might cause on the victims, but also whether or not it undermines procedural fairness with respect to the harasser”.
Read more: Murray quits, Pahari demoted over culture scandal
Lachlan Moffet Gray 4.02pm: Wilson: What the hell is going on at AMP?
Committee chair Tim Wilson doesn’t beat around the bush with his first question to AMP chief Francesco De Ferarri:
“What the hell is going on at AMP?”
“We’ve had a series of issues clearly all linked to the culture of the organisation that have not just emerged recently, they’ve appeared since the royal commission and no doubt before then,” Mr Wilson asks.
“Can you please step us through what the hell is going on and what you are actually practically doing and how you’re measuring that change.”
Mr De Ferrari apologises for the recent controversies and outlines changes being made, including an inclusion task force chaired by himself, a new board working group established by new chair Debra Hazelton and the elevation of whistleblower processes.
“We can’t really change the past, what we can change, is (to) determine how we move forward from here,” Mr Ferrari says.
Deputy chair Andrew Leigh asks if AMP regrets claiming that many allegations made about Mr Pahari’s behaviour were “lower-level.”
Mr Ferrari says he recognises after listening to feedback from employees, clients and shareholders that the decision did not meet expectations and that “we have taken action”.
AMP last up 3.3pc to $1.57.
Read more: New chair Debra Hazelton draws line in sand on AMP’s future
Lachlan Moffet Gray 3.48pm: Past months ‘most challenging’: AMP chief
AMP group chief Francesco De Ferarri tells the parliamentary economics committee that the past few months have been the most challenging “personally and professionally” of his entire life.
The wealth group was been rocked by controversy over the past two months as two of its top execs faced allegations of inappropriate behaviour, prompting the appointment of two consulting firms to improve its battered culture this week.
Mr De Ferrari tells the committee he wants to update the government on actions taken to address recent instances of inappropriate behaviour at the company, the progress made in the superannuation business and the changes made to the company’s advice arm.
“Based on the data we have seen, I do not think misconduct is a systemic issue within our business. However, I am committed to drive a program of initiatives to build a more diverse, inclusive and respectful culture,” he says.
Mr De Ferrari says that good progress is being made in simplifying its superannuation business, reducing the number of products on offer and reducing fees, as well as its financial advice arm.
Read more: Words not enough to change AMP’s culture
Bridget Carter 3.46pm: MyDeal prices IPO shares at $1 apiece
DataRoom | MyDeal has priced its initial public offering in a move that will see it float as a business worth $258.8m.
Shares have been priced at $1 each as it looks to raise $40m. On an enterprise value basis, the company will be worth $221m.
The company will lodge its prospectus on September 23 and start trading on a normal settlement basis on October 22.
Shareholders selling out of the company will receive $5m.
Founded in 2011, MyDeal.com.au is an Australian e-commerce group that sells household goods such as furniture and homewares.
It operates as an intermediary, facilitating transactions between consumers and sellers.
Lachlan Moffet Gray 3.28pm: Super infrastructure spree halted by policy jitters
Industry super funds remain “willing and ready” to invest in infrastructure to aid in Australia’s economic recovery, but require certainty around the government’s super policy, says Hostplus.
Chief of the $47.8bn fund, David Elia says that the sector would appreciate the government allowing the legislated increase to the super guarantee to go ahead next year, as it would increase the amount of capital that could be invested in productive assets.
“The reality is that we’ll still be able to invest, but we certainly won’t be able to invest as much as we would like to and as much as the Australian economy would want us to,” Mr Elias says.
“Our ability to invest more is driven to a large degree by ongoing increases to the super guarantee.”
Mr Elia also requests some certainty around preservation requirements, saying that although Hostplus supported the early release of super scheme, “going forward” the government needed to provide “policy stability” about when individuals can access their super before retirement.
Committee member Jason Falinski quizzes Mr Elia on why Australia’s reliance on foreign capital hasn’t decreased since the start of compulsory super.
“The Canadian pension funds have spent a lot of time, money and effort buying up our infrastructure …. In fact, we are very happy to talk to the government about buying the Port of Darwin if you’re interested in having a conversation,” Mr Elia replies, noting that it was preferable that Australian infrastructure assets were locally owned.
Laughing, Mr Falinski says he is interested in having that conversation.
Read more: Pressure grows to delay rise in superannuation
3.09pm: Citi boosts iron ore forecasts
Citi has boosted its iron ore price forecasts and iron ore miner price targets, saying the steelmaking commodity is likely to stay near its elevated levels for the rest of the year.
After spot recently hit a more than 5-year high of $US130 a tonne, Citi now sees iron ore staying in a range of $US100-$US120 for the rest of 2020 and has raised its 2020 average price forecast to $US100 from $US90.
As such, the broker boosts its price target for Fortescue Metals, Rio Tinto and Mount Gibson by 6pc, 15pc and 25pc, to $18.50, $115 and $1.00, respectively.
They say ongoing strength in China is driving a more broadly balanced seaborne market versus a notable surplus previously, with a more constructive Chinese outlook boosting forecasts out to 2023. Iron ore prices are forecast to average $US90, $US80 and $US75 in the next three years versus Citi’s previous forecasts in the $US60-65 range.
Citi economists expect the Chinese government to set the growth target at around 5.5pc for the 14th Five Year Plan from 6.5pc for the 13th, implying moderation but not collapse of growth.
“A refocus on the domestic market as a key growth driver, highlighted during the mid-year politburo meeting, suggests that steel-intensive sectors including property, infrastructure and automotive sectors remain key pillars for China’s economic growth,” they say.
“As a result, we now expect steel end-use demand to rise 1-2pc y/y per annum during 2021-23, compared to our earlier forecast of a modest 1pc decline per annum.”
They note that Chinese steel demand is the biggest swing factor for the iron ore price outlook.
Lachlan Moffet Gray 2.48pm: Negative returns to trim Hostplus salaries
Hostplus execs and investment managers are likely to have their final pay cheques trimmed as the fund’s returns dip amid the pandemic.
Hostplus chief David Elia agrees with a similar sentiment from Australian Super chief Ian Silk, that executive remuneration at funds should be reduced if their returns dipped into the negative throughout the crisis.
Mr Elia says Hostplus’s balanced fund produced a -1.74 per cent return, and as such, remuneration would be affected.
“We are actually going through that process as we speak,” he tells committee chair Tim Wilson.
“There are two components to senior executive and investment staff salaries: there is a fixed base salary, and there is a variable component And there is no doubt that those variable elements will be affected as a result of the performance of the fund.”
Read more: Super funds kick-off financial year in positive territory
Perry Williams 2.31pm: BHP likely to demerge coal mines: Citi
BHP will likely demerge its coal mines due to a lack of buyer interest while a potential $US1.5bn ($2.1bn) sale of its stake in the Bass Strait oil and gas fields will dilute earnings, Citi says.
The mining giant is selling its thermal coal mines – Mt Arthur in NSW and its share in the Cerrejon mine in Columbia – and an 80 per cent stake in the BHP Mitsui Coal metallurgical business in Queensland.
“While on paper, the assets might have a notional DCF valuation of ~ $2.7bn net of provisions (Citi estimate), trade buyers for large scale coal assets are in short supply with major miners wishing to either cap coal exposure (Glencore) or reduce thermal exposure (Anglo American),” Citi says.
“We think the coal assets will end up being spun out to BHP shareholders as per South32 …. we expect that BHP will provide the spun-out company with a strong balance sheet to ensure it every success as a stand-alone company.”
BHP would be unlikely to retain an interest in CoalCo and the coal exit would see it lose $690m in FY22 earnings and $900m in FY23 based on Citi’s forecasts for a recovery in coal prices.
The coal divestment is understood to involve Goldman Sachs, UBS, Macquarie Capital and JP Morgan as advisers.
Meanwhile, the sale of its 50 per cent stake in the Bass Strait may be worth $US1.5bn including rehabilitation liabilities but would be dilutive to earnings per share.
“Reducing low cost debt by $1.5bn certainly won’t make up for an FY20 EBIT contribution of $312m. Exiting a mature asset like Bass Strait with high and uncertain rehab costs is probably the right strategy but it won’t help BHP’s near term valuation multiples,” Citi said.
Rehab costs for the Bass Strait are expected to be ~$4bn.
BHP shares have turned lower alongside the market, last flat at $36.78 after earlier gains.
Lachlan Moffet Gray 2.25pm: 38k customers drain Hostplus super balances
Next up in front of the parliamentary economics committee is Hostplus, who says despite the impacts of COVID-19, including the drawdown of billions of dollars in the early access scheme, it managed to grow its assets under management.
Chief David Elia tells the committee the fund grew by $4bn, even as 38,000 fund members emptied their super accounts through early release.
Mr Elia says that overall, 387,000 applications were received for early withdrawal totalling $2.8bn.
Of those applications, 100,000 members made a repeat application to access a second payment during tranche two of the scheme.
Read more: $32bn paid out in superannuation early access scheme
2.20pm: ASX falls into the red
Australia’s share market has been a big disappointment today.
Despite strong gains in US and European markets, the S&P/ASX 200 index has turned down after a 1.3% opening rise.
It comes after a similar reversal of strength in US stock index futures. S&P 500 and Nasdaq futures are down about 0.2% after early gains of about 0.5%.
Falls in the Real Estate, Financials and consumer sectors are offsetting gains in Technology, Materials, Communications, Health Care, Energy and Industrials.
Heavyweight stocks including CSL, BHP, CBA, Westpac, ANZ, NAB, Wesfarmers and Woolworths have seen sharp intraday reversals.
Share trading volume 20% below average suggests the intraday reversal is mainly due to a lack of buying rather than strong selling.
2.06pm: Jakarta stock drop triggers circuit breaker
Indonesia’s stockmarket has returned to trade after a circuit breaker move, as the national stockmarket dropped 5% on the resumption of a broad lockdown in the capital city.
The governor of Jakarta made the announcement earlier today after an escalating outbreak, with reports that 77% of hospital beds available for patients were occupied.
The exchange was halted after just over an hour of trade, with shares down by 5%, and resumed with a 5.06% drop just after 11am local time.
Eli Greenblat 1.47pm: Myer boss, board need to go: Lew
Myer’s biggest shareholder, retail billionaire businessman Solomon Lew, has resumed his bitter public campaign against the department store after more than a year of being silent, calling for the immediate resignation of the Myer board and for an urgent management overhaul after the chain posted a $172m loss.
For the first time Mr Lew has also turned his sizeable corporate guns on the Myer CEO, demanding he also follow the board out the door.
“Today’s results are disastrous and shameful,” Mr Lew said in a statement from his ASX-listed Premier Investments.
“Two years into John King’s tenure – it’s clear the Myer turnaround is in tatters. It’s now time for the CEO to follow the Board through the exit.”
Mr Lew first launched a savage attack on the Myer board three years ago when his Premier Investments bought an 11 per cent stake in the struggling department store, calling for board resignations and savaging the company at its annual meetings where he tried to eject the board.
But in the last year he has been silent, especially after the new Myer chief executive Mr King was appointed. That has now changed as after posting its 2020 results, a large loss, Mr Lew resumed his public brawl with the Myer board.
Read more: Myer boss mauls Vic retail shutdown
1.30pm: DroneShield lifts 20% on US defense funding
Drone-buster DroneShield takes off with shares up 20 per cent after it reveals that has received funding from the United States Department of Defense for development of its DroneShield Complete Command-and-Control system.
DroneShield said the DoD is working with DroneShield, providing funding for an agreed list of feature enhancements, for a project expected to span over several months.
Importantly, following that period, the DoD is expected to make multiple purchases of DroneShield’s C-UAS equipment.
Financial details of the contract were not disclosed.
DroneShield last traded at 18c, up 3.2c
1.08pm: PayPal BNPL move a ‘turning point’: UBS
PayPal’s entry to the buy now, pay later sector is a “significant turning point” for the sector, according to UBS analyst Tom Beadle.
He warns that the marginal cost of PayPal’s “Pay in 4” product might be just 10 basis points, while its merchant reach is about 500 times that of Afterpay and 900 times that of Zip.
“While the buy now, pay later sector has provided innovative payment and credit solutions with attractive economics, our two key concerns have been the risk of competition and regulation,” he says.
“With PayPal’s 346 million monthly active users, more than 26 million merchants globally, and $US790bn of total payment volume over the last 12 months, its entry into ‘Pay in 4’ in the USA could be a significant turning point.”
He notes that ‘Pay in 4’ comes at no additional cost to its merchants and is free to customers who pay on time, highlighting the attractive economics of BNPL.
While PayPal charges merchants about 2.4% on average, Afterpay charges 3.9%, and Zip’s US venture QuadPay may be slightly higher.
He now sees two scenarios for the local players amid increasing competition: “meet halfway”, where Afterpay and Zip lower margins by about 90bps over 5 years to match competition, or “intense competition”, where margins are lowered by about 140bps over 5 years.
Scenarios 1 and 2 would lower Afterpay’s consensus FY25E profit by 55% and 70% respectively, and his FY25E profit forecast for Zip falls 20% and 40% respectively.
He says it highlights the challenge Afterpay and Zip now face to win the long tail of smaller merchants as well as larger merchants not yet on their platforms, given PayPal’s offering is significantly cheaper and requires no additional integration.
APT last up 4.2% at $77.16 – the biggest contributor to the market’s bounce today, while Z1P trades flat at $6.63.
Read more: Revolut, Afterpay results shouldn’t spook investors
1.02pm: Share rally fades to 0.5%
The local share rally is losing speed as lunch, with shares fading to gains of 0.5 per cent as banks and real estate reverse.
At 1pm, the ASX200 is off by 30 points or 0.51 per cent to 5908.5.
Afterpay is leading the market higher with a 4.2% rebound, while the major miners edge higher and CSL adds 0.6%.
The major banks are weighing – Commonwealth Bank down by 0.3% as NAB trades down by 0.9%, Westpac lower by 0.6% and ANZ by 0.7%.
Myer shares are down 15% to 21.7c, while the rest of the retail space edges higher.
Here’s the biggest movers at 1pm:
12.49pm: Iluka outperforms on demerger
Iluka Resources is a top performer at lunch as the mineral sands miner laid out plans for the demerger of its royalty business.
The keenly-anticipated move will see Deterra become the largest independent royalty company listed on the ASX and will be voted on at a meeting of shareholders on October 16.
Citi also lifted its price target on the stock to $10.50 from $10.10, as it raised its iron ore forecasts to stay within the range of $US100/t to $US120/t for the balance of 2020.
ILU shares gained as much as 5.4 per cent in morning trade to $10.31 – within a whisker of its 12-month high of $10.58 – but last traded up 2.1% to $9.98.
Lachlan Moffet Gray 12.29pm: ISH concedes New Daily is loss-making
Industry Super Holdings concedes to the parliamentary economics committee that their free new website The New Daily, funded by industry super fund capital, is loss-making.
“The New Daily is firstly a valuable service to our shareholders,” company secretary Joshua Lim tells members of the committee asking for the rationale behind the news site’s establishment.
“It provides for member engagement, it improves financial literacy of the members of industry super funds, so it’s a valuable service that shareholders would like us to continue.”
He adds that the site started in 2013/14 with no subscribers and had grown to 1.75 million subscribers.
Committee member Julian Simmonds asked whether a financial return is provided to industry super fund members via The New Daily, or if it is a one-way street for member capital.
“It’s a valuable service, the directors of industry super holdings continue to see the merit, the utility of the New Daily both from a service perspective and from a financial perspective. There are many companies out there that are currently making a loss but are valuable, that can be sold for millions.”
“The New Daily is currently in a loss-making position, we do provide capital, but is a long-term investment.”
Lachlan Moffet Gray 12.11pm: Industry Super makes case for super increase
Representatives from Industry Super Holdings are mounting the case for an increase to the superannuation guarantee to the House standing committee on economics.
The superannuation guarantee is set to increase to 10 per cent by July 2021, but the arguments are being made to delay the increase to encourage employment in the aftermath of the pandemic.
“We need an increase in the superannuation guarantee. We also need stability in the policy settings for infrastructure manager … .to confidently invest into the economy,” ISH company secretary Joshua Lim said.
“I’ve got a number of statistics her …. that show that the super guarantee reduces reliance on the aged pension, it saves the federal budget $17bn per year right now, rising to almost $100bn by 2058, so it is important.”
Committee member Jason Falinski asks how ISH could use superannuation money to invest heavily in advertising and a “loss-making” news service.
“Industry super holdings is a proprietary limited company, the directors act in the best interest of the company and its shareholders,” Mr Lim said, noting that the company is not covered by the sole purpose test applied to funds under the Superannuation Industry Supervision act.
Lachlan Moffet Gray 11.40am: Industry Super tight-lipped on New Daily funding
Industry Super Holdings is keeping mum on the support it provides to its fully-owned news website New Daily, amid questioning from the parliamentary economics committee.
The group is a holding company that receives money from industry super funds and offers research, advertising and policy development services.
Owned by a collection of major funds, the company has no employees, but owns four companies with a total value of $1.07bn including IFM investors and the New Daily news website.
Answering questions from the committee chair Tim Wilson, company secretary Joshua Lim says the group’s cash holdings are confidential, saying “the information that we have has been disclosed in accordance with law”.
“We contribute capital to the New Daily, as required,” Mr Lim says, declining to give an exact figure.
“What the hell does that mean?” Mr Wilson replied. “How many times have you supplied them with capital as required?
“That information is confidential, chair,” Mr Lim said.
Lachlan Moffet Gray 11.33am: Commercial property values will fall: ISPT
ISPT chief Daryl Browning tells the House standing committee on economics that commercial property values will fall as office worker density is unlikely to ever return to pre-COVID-19 levels.
“I don’t think there is any doubt values will fall,” Mr Browning says. “I think the key to it will be the occupancy levels and the return of workers to the CBD. I don’t believe we will get back to the same density we had.”
Mr Browning says his industry super-affiliated property fund has not evicted a single tenant, and expects it will maintain a moratorium on evictions well into next year.
“We took the view we would not evict anyone under COVID-19 conditions,” Mr Browning says.
“Hopefully we see some easing of restrictions where the economy can get back into full run. That does not look likely in the short term so it looks like we will have to support tenants well into 2021.”
Read more: Developers step up call for stimulus
11.25am: Myer takes beating on weak results
Department store Myer is taking a hit this morning after delivering a $172m loss, the second worst result in the company’s history.
Shares in the retail group are off by 15 per cent to 21.7c in the second hour of trade, and while they remain higher than the March trough of 8c, the level represents a more than 55 per cent slide from the start of the year.
The group said online sales were up 61.1% from the previous year to $422.5m, with beauty sales up 218% and homewares up by 177% – the latter in line with data showing a jump in home improvement spend during the pandemic.
At current levels, the stock has a market capitalisation of just $176m, dwarfed by emerging online retailer Temple & Webster who now has a market cap of $1.12bn.
Read more: COVID-19 drags Myer to $172m loss
11.21am: ASX fades with US futures
Australia’s S&P/ASX 200 has halved its intraday gain from 1.3% to 0.7% as US index futures pulled into the negative by 0.1%.
It comes as a number of major stocks in the Australian market come off their highs.
The four major banks are flat to down as much as 0.5% after rising 0.9-1.6% in early trading.
CSL went from gains of 1.5% to 0.2%, while BHP is up 0.5% from earlier 1.6%.
It seems as though there’s still some urgency to sell major stocks into rebounds after the recent tech-led correction on Wall Street.
Lachlan Moffet Gray 10.50am: Liberals ‘waging ideological war against super’
Deputy chair of the standing committee on Economics, Labor MP Andrew Leigh, has launched a blistering attack in today’s hearing into the superannuation sector, accusing the government of waging an “ideological war against superannuation”.
Mr Leigh says the purpose of the hearing should be to question the retail funds caught up in the Hayne Royal Commission – yet only one, AMP, is appearing while the rest of the day is composed of industry funds and industry-fund related bodies.
“It’s worth people watching the hearing being aware that today’s schedule was set entirely by the Liberals,” Mr Leigh says.
“Labor would have preferred to hear from those superannuation funds that were called before the royal commission, but this request was ignored by the Coalition, which is using this committee to wage an ideological war against superannuation.”
Chair of the committee, Liberal MP Tim Wilson interjects to accuse Mr Leigh of making misleading comments: “You can lie as much as you want”.
Undeterred, Mr Leigh continues, saying the schedule reflects “the ideological disposition of the coalition”.
Both parties have been butting heads over the legislated increase in compulsory super contributions to 12 per cent, which is set to occur by 2025.
Read more: Pressure grows to delay rise in superannuation
Lachlan Moffet Gray 10.40am: ISPT details scope of rental relief claims
The latest meeting of the House of Representatives’ standing committee on economics is underway, with superannuation this time the focus, especially how super funds have supported their customers and the implications of the early release super scheme.
CEO of unlisted property fund manager ISPT Daryl Browning, is the first on the stand, and says the uncertainty of COVID-19 had created a lot of angst and concern across his tenant community.
ISPT has $19bn of funds under management, with primary investors and shareholders of its property portfolio some of the most significant industry superannuation funds in the country such as Cbus and Hesta.
Committee chair Tim Wilson asks if ISPT had provided any relief to those the tenants of ISPT’s assets.
Mr Browning replies that they had, noting that rent relief “varies because the test for small and medium enterprises was there was a threshold of a 30 per cent reduction in revenue … it’s quite dramatic particularly, in food, hospitality, events … on the other end, supermarkets are doing quite well”.
Mr Browning says ISPT had received about 1400 applications for rent relief, and provided it on a scale from 10 per cent of rent up to 100 per, changing on a monthly basis, with more relief provided to Victorian tenants given they had been “drastically affected in a majority of circumstances”.
Representatives from Industry Super Holdings, Mine Super, Hostplus, AMP and Cbus will also appear throughout the course of the hearing today.
Bridget Carter 10.35am: Kina Securities halted for $91m raise
DataRoom | Kina Securities has entered a trading halt ahead of an equity raising through Morgans to secure $91 million.
It comes with Westpac said to be close to selling its Pacific banking operations, as first flagged by DataRoom on August 31, with expectations that groups such as Kina Securities, Bank of South Pacific and French bank BRED said to be the logical acquirers.
Shares are being sold at 80c each.
Ben Wilmot 10.25am: Charter Hall builds servo portfolio with BP
Charter Hall has set up a new fund with oil major BP that will take a 49 per cent interest in a $NZ534m portfolio of 70 New Zealand petrol stations.
The portfolio, consisting of the majority of BP’s owned service stations in NZ has been acquired in a sale and leaseback transaction and will have a 20-year average lease term.
It is geographically diversified with 78 per cent in metropolitan areas and 72 per cent in NZ’s top three cities, with Auckland representing 51 per cent of the portfolio.
The Charter Hall managed fund will be owned 50 per cent by Charter Hall Long WALE REIT and 50 per cent by Charter Hall Retail REIT.
The fund value is approximately $NZ262m and represents a 6.25 per cent initial yield.
Charter Hall chief executive David Harrison said the off-market transaction “further extends our relationship with BP, builds upon the success of our Australian Partnership and demonstrates our conviction in NNN leased Long WALE convenience retail”.
Last December, Charter Hall-managed funds forked out $840m on a 49 per cent stake in a portfolio of 225 BP sites in Australia.
Read more: Charter Hall WALE raising $70m for NZ play
10.15am: Shares bounce by 1.1%
The local market has bounced back early, rising by 1.1 per cent as all sectors recover parts of yesterday’s sell-off.
At the open, the ASX200 is higher by 64 points or 1.08 per cent to 5942.3.
Tech shares were leading the recovery, up 3.1% as Afterpay jumps 4.3%, WiseTech adds 2.5% and Xero lifts by 2.9%.
CSL is bouncing by 1.1% while the major banks are the notable laggards, edging only slightly higher by between 0.1% to 0.2%.
9.57am: Brenner to join Woolies board
Seasoned board member Maxine Brenner will join the Woolworths board, adding to her membership on the boards of Orica, Origin and Qantas.
Woolworths said this morning Ms Brenner would join the board from December 1 and will chair the supermarket chains sustainability committee following the retirement of Jillian Broadbent at the 2020 AGM.
“I am delighted that the Board was unanimous in the decision that Maxine should join the Board, following the conclusion of a thorough and externally-supported search process,” chairman Gordon Cairns said.
“Having previously worked with her at Origin, I have no doubt that her skills and experience will add tremendous value to the Woolworths Group Board.”
9.44am: US futures suggest upside for ASX
Gains in US stock index futures this morning may magnify an expected bounce in Australian shares.
S&P 500 futures are up about 0.3%, adding to potential gains after S&P/ASX 200 futures rose 1.3%.
After underperforming global markets with a 2.2% fall on Wednesday, the S&P/ASX 200 may outperform today.
With the 100-day moving average at 5853 basically holding, it could test Tuesday’s high at 6025.5, implying a potential 2.5% intraday rise.
Overnight, the Nasdaq came back from a 10% correction and its worst first five days of September on record, with its best day since in 4 months, surging 2.7% to 11141.56. The tech-heavy index regained its 50-day moving average as Tesla bounced 11% and Apple, Microsoft, NVIDIA and PayPal rose at least 4%.
But the Nasdaq trimmed a 3.4% intraday gain in the “hour of power” and the S&P 500 went from +2.8% to +2%, suggesting there was some “smart” selling into the close.
Also, while the VIX index fell 2.65 percentage points to 28.81 per cent, it closed above its rising 200-day moving average at 28.53 per cent.
9.37am: What’s impressing analysts, what’s not
- AUB Group rated new Positive – Evans and Partners
- Appen raised to Neutral – Credit Suisse
- Mt Gibson price target raised 25% to $1 – Citi
- PointsBet raised to Neutral – Credit Suisse
- Rio Tinto price target raised 15% to $115 – Citi
- Steadfast rated new Positive – Evans and Partners
- Technology One raised to Add – Morgans
- Woodside raised to Add – Morgans
Bridget Carter 9.30am: Charter Hall WALE raising $70m
DataRoom | Charter Hall Long WALE REIT is raising up to $70 million through investment bank JPMorgan to fund the acquisition of BP convenience retail sites in New Zealand.
Shares are being sold at $4.87 each, a 3.2 per cent discount to the last closing price on Wednesday of $5.03.
The group will raise $60m by way of an institutional placement and up to $10m through a share purchase plan.
It comes as the listed fund buys a 50 per cent interest in a new Charter Hall-managed partnership that will acquire a 49 per cent stake in a portfolio of 70 long lease BP convenience retail sites in New Zealand.
The sale and lease back to BP by the Charter Hall interests will cost NZ$130.8m.
Eli Greenblat 9.24am: Myer posts historic $172m loss
The nation’s biggest department store owner Myer has sunk to a full-year loss of $172.5m for fiscal 2020, the second biggest loss in the company’s more than century long history, as the COVID-19 pandemic shuttered its stores.
The loss for 2020 was against a small profit of $24.5m in 2019and came as revenue for the year slid by 15.8 per cent to $2.519m.
In 2018 Myer posted a full-year loss of $486m, then its biggest loss in its history as write downs and impairments drenched its accounts in red ink.
Myer said on Thursday the COVID-19 pandemic and subsequent government actions had a significant impact on the company during the second half.
Early impacts on the company were generally limited to delays in supply chain and sourcing private label product, primarily from China. However, as the COVID-19 pandemic progressed, the impact on the company’s business began to increase, as government bodies announced the implementation of various isolation and distancing measures, and restrictions, Myer said.
But in late March Myer was forced to temporarily close all 60 of its physical stores to protect the health and wellbeing of its customers, team members, their families and the broader communities in which it operates.
No full year dividend was declared.
Jared Lynch 9.11am: PPE demand lifts Sigma profits
Soaring demand for face mask sales and other personal protective equipment has failed to offset reduced demand for other pharmaceutical goods, with Sigma Healthcare’s half-year revenue diving 12.5 per cent to $1.64bn.
Australia’s biggest pharmaceutical wholesaler and owner of the Amcal, Guardian, Chemist King, Discount Drug Stores and PharmaSave chemist brands, reported a 5.1 per cent slump in underlying net profit to $10.6m in the six months to July 31.
The period also included the partial resumption of its Chemist Warehouse contract, which it lost in 2018 and with it almost a third of its revenue. Sigma has since regained the fast moving consumer goods component of the Chemist Warehouse contract but not the part covered by the Pharmaceutical Benefits Scheme.
It comes as demand soared for face masks during the devastating summer bushfires and then surged again during the COVID-19 pandemic leading to shortages of hand sanitiser and other personal protective products.
“Results from Sigma’s pharmacy business have unfortunately been negatively impacted by reduced merchandise and marketing income, due to lower promotional activity during COVID-19 restrictions, and the increased provision for doubtful debts given the uncertainty of the current economic environment,” chief executive Mark Hooper said.
“This has however been offset by underlying growth in other parts of the business and cost reduction initiatives.”
The group’s statutory net profit jumped 87 per cent to $4.7m. On a like-for-like basis, revenue grew 9.5 per cent across Sigma’s Pharmacy brands
SIG last traded at 65.5c.
8.54am: Nearmap taps market for $90m
Nearmap has launched a $90m capital raise in a bid to capitalise on tailwinds in the industry, alongside a selldown by director Ross Norgard.
Announcing the move this morning, Nearmap said it was tapping institutional investors for $70m in a placement fully underwritten by Citi, and a retail investors in a non-underwritten share purchase plan to raise a further $20m.
The offer price will be determined via a bookbuild, with a floor price of $2.69 per share – a 6.9% discount to the stock’s most recent closing price.
Director Ross Norgard will also sell down 15% of his holding alongside the placement – roughly 4.2 million shares and 0.9% of the total shares in the company.
Nearmap said proceeds of the raise would be used to penetrate industry verticals, accelerate the rollout of its HyperCamera3 systems and invest in operational systems to support rapid scaling.
8.40am: Air NZ says recovery slower than expected
Air New Zealand said its fleet of Boeing 777 jets will be grounded until at least September 2021 due to an expected slower recovery in international travel.
Most of the planes will be flown to the US and stored in arid desert locations in California and New Mexico, the airline said.
Chief Operating Officer Carrie Hurihanganui said a recovery for the airline’s international flights from the pandemic is “now looking to be slower than initially thought.”
A recent resurgence of virus cases in New Zealand is a reminder that the pandemic is a “highly volatile situation,” she said in a statement.
The airline had initially grounded the 777 fleet until the end of 2020.
It has seven 777-300 aircraft and eight 777-200 planes. Three of the 777-300 jets will stay in Auckland, leaving them available for a quick return to service.
Dow Jones Newswires
8.35am: Nearmap in halt for raising
Aerial imagery company Nearmap is in a trading halt ahead of a capital raising by way of an institutional placement.
8.25am: Iluka shareholders to vote on demerger
Iluka shareholders will vote on October 16 whether to approve the demerger of the mineral sands’ company’s royalty business.
Iluka chairman Greg Martin says directors unanimously recommend a vote in favour of the demerger, after an independent report concluded it was in shareholders’ best interests.
The demerger will result in two independent ASX-listed companies. Iluka will remain a global leader in the mineral sands industry and Deterra will be the largest independent royalty company listed on the ASX, with its royalty over mining area C in Western Australia’s Pilbara region, operated by BHP, as its cornerstone asset.
Iluka will maintain a 20 per cent stake in Deterra.
Read more: Iluka forgoes payout despite solid profit
8.20am: Rescue for JC Penney
US mall owners Simon Property Group and Brookfield Property Partners have agreed to acquire JC Penney Co out of bankruptcy for $US800 million, keeping the beleaguered US department-store chain alive amid the coronavirus pandemic.
The potential transaction could save some 70,000 jobs and 650 stores, CNBC reported, quoting statements from an lawyer representing Penney at a US bankruptcy hearing.
Simon and Brookfield, J.C. Penney’s landlords, have reached an agreement in principle to buy the chain, which filed for chapter 11 in May after the pandemic shut down non-essential shopping across the US.
If approved in bankruptcy court, the deal will prevent the closure of hundreds of locations across malls and shopping centres that face rising vacancies due to COVID-19 restrictions.
A group of lenders have signed on, betting that Penney can make money selling clothing, cosmetics and cookware despite the stark challenges facing American retail.
The company had about 850 locations at the time of its bankruptcy filing and has closed some for good.
Dow Jones
6.25am: ASX to surge back after US bounce
Australian stocks are set to open firmly higher after Wall Street rebounded from three days of losses, with tech stocks leading the comeback.
At around 6.00am (AEST) the SPI futures index was up 82 points, or 1.4 per cent.
On Wednesday, Australian stocks closed down by 2.2% to their lowest level since June, with tech jitters in the US extending across the equity market more broadly.
The Australian dollar was higher at US72.80.
Brent oil rebounded to rise 2.5 per cent to $US40.79 a barrel.
Spot iron ore slipped 1.4 per cent to $US127.20 a tonne.
6.10am: US stocks rebound after tech sell-off
US stocks surged, rebounding after a three-session sell-off in big technology stocks that pulled the Nasdaq Composite Index into correction territory.
The stocks that drove the sell-off — Apple, Microsoft and Amazon.com, among others — led the bounce-back as well, all climbing more than 4 per cent. Those stocks began retreating last week after soaring this year, benefiting from the stay-at-home orders implemented to slow the coronavirus pandemic.
Their gains pulled the Nasdaq up 2.7 per cent as of the close of trading in New York, helping the tech-laden index recover some of the losses it suffered during its steepest three-day drop since March.
The Dow Jones Industrial Average rose 440 points, or 1.6 per cent, and the S&P 500 gained 2 per cent. Both indexes are still lower for September.
The Nasdaq has logged 43 record closes this year, the most recent just a week ago. Its fall from a record into correction territory — a decline of at least 10 per cent from a recent high — was the fastest in history. Despite still being down more than 7 per cent over the past week, the Nasdaq is holding on to a 25 per cent gain in 2020.
“Things calmed down a lot,” said Fawad Razaqzada, an analyst at ThinkMarkets. “We got the correction we should have had a few weeks ago. Now investors are asking whether they should buy the latest dip.”
So far, few investors appear to be betting the latest sell-off will be a repeat of March when financial markets plunged as it became clear the coronavirus pandemic would batter the economy.
Still, many caution that the economy is still struggling to recover, the fate of further household stimulus is still unclear, and the coming presidential election is likely to bring increased volatility to markets.
Meanwhile, the nature and timing of a further fiscal stimulus for the US economy remains a concern among investors. Senate Republicans proposed a new, smaller package of coronavirus aid Tuesday aimed at unifying the party and bolstering it politically. Talks with Democrats have remained at a standstill, with both parties blaming the other for the lack of progress over the summer.
Overseas, the pan-continental Stoxx Europe 600 rose 1.6 per cent. Travel-related stocks, such as low-cost airline easyJet and lodging giant InterContinental Hotels Group dropped as increasing coronavirus cases led to tighter travel restrictions in Europe.
Investors appeared to shrug off news that AstraZeneca paused clinical trials of a leading COVID-19 vaccine after the unexplained illness of a study participant. AstraZeneca shares fell 0.5 per cent.
In Asia, most major stock benchmarks fell, catching up with losses in the US. Shares of games and messaging giant Tencent lost 0.9 per cent, while smartphone maker Xiaomi dropped 1.3 per cent.
Oil prices rebounded, a day after its biggest fall in months. West Texas Intermediate, the main U.S. bellwether, gained 3.5 per cent to $US38.05 a barrel. In a sign of recovering demand, the fall in producer prices at Chinese factories eased in August, data showed Wednesday.
Dow Jones Newswires
5.45am: TikTok, US discuss ways to avoid sale
TikTok’s Chinese parent, ByteDance, is discussing with the US government possible arrangements that would allow the popular video-sharing app to avoid a full sale of its US operations, according to people familiar with the matter.
Discussions around such an option, under way for months, have assumed increased urgency since the Chinese government took steps that make a sale more difficult, the people said. They take place against a fast-approaching deadline that President Trump imposed for TikTok to agree to a sale of its US operations or else be shut down, and as geopolitical wrangling over the app intensifies.
A number of options remain on the table, the situation is fluid and a sale is still a possibility, the people said. Even if there isn’t a full sale, the outcome would likely involve some sort of restructuring of TikTok, one of the people said.
The main concern for government officials involved in the talks has been the security of TikTok’s data and keeping it out of reach of the Chinese government, said people familiar with the negotiations.
Mr. Trump has said repeatedly that he wants an American company to buy the operations, and it isn’t clear whether any alternative would satisfy his concerns. Where China stands is also a mystery.
Dow Jones
5.40am: Ireland to order Facebook to halt data transfers
A European Union privacy regulator has sent Facebook Inc. a preliminary order to suspend data transfers to the US about its EU users, according to people familiar with the matter, an operational and legal challenge for the company that could set a precedent for other tech giants.
The preliminary order, the people said, was sent by Ireland’s Data Protection Commission to Facebook late last month, asking for the company’s response. It’s the first significant step EU regulators have taken to enforce a July ruling about data transfers from the bloc’s top court. That ruling restricted how companies like Facebook can send personal information about Europeans to US soil, because it found that Europeans have no effective way to challenge American government surveillance.
To comply with Ireland’s preliminary order, Facebook would likely have to re-engineer its service to silo off most data it collects from European users, or stop serving them entirely, at least temporarily. If it fails to comply with an order, Ireland’s data commission has the power to fine Facebook up to 4% of its annual revenue, or $US2.8 billion.
Nick Clegg, Facebook’s top policy and communications executive, confirmed that Ireland’s privacy regulator has suggested, as part of an inquiry, that Facebook can no longer in practice conduct EU-U. S. data transfers using a widely used type of contract.
“A lack of safe, secure and legal international data transfers would damage the economy and prevent the emergence of data-driven businesses from the EU, just as we seek a recovery from COVID-19,” Mr. Clegg said.
Dow Jones
5.28am: Markets bounce back
Markets rose on both sides of the Atlantic, brushing aside falls in Asia and an overnight rout on Wall Street, but US jeweller Tiffany slumped on news its buyout by France’s LVMH was off.
Wall Street bounced back from a three-day rout mid-session as the Dow added almost two per cent while the Nasdaq Composite Index jumped nearly three per cent after recent sessions had trashed tech.
Tiffany shares swiftly sank 10.5 per cent before creeping back after French luxury group LVMH said it was withdrawing from a $US16.2 billion acquisition which would have been the biggest ever in the luxury industry. It blamed arguments over deal-closing deadlines and threatened US taxes on French goods.
At the close in Europe, London’s benchmark FTSE 100 gained 1.4 per cent, helped by the struggling pound which boosts earnings for multinationals trading on the index. Frankfurt gained 2.1 per cent and Paris added 1.4 per cent.
“Stock markets are back in rally mode as investors look to get back to their ‘buy the dip’ ways that proved so successful over the past few month,” said Chris Beauchamp, chief market analyst at IG.
Shares in British drugs group AstraZeneca limited losses to 0.5 per cent after the company “voluntarily paused” a randomised clinical trial of its coronavirus vaccine, in what it called a routine action after a volunteer developed an unexplained illness.
Sterling continued its retreat on fears Britain will fail to strike a post-Brexit trade deal with the European Union as the euro barrelled still higher to 91.09 pence to the pound before settling back below the 91 pence mark. Sterling also struck a six-week low against the dollar at $1.2919.
Oil prices rebounded slightly, meanwhile, from recent sharp losses. “European stocks and US index futures have recovered … following a big drop on Wall Street the day before, where technology shares were hammered on valuation concerns,” noted Fawad Razaqzada, analyst at ThinkMarkets.
Asian stocks lost ground, with Tokyo, Shanghai, Seoul, Mumbai, Manila and Wellington all losing more than one per cent.
AFP
5.25am: VW ex-CEO to stand trial over ‘dieselgate’
Volkswagen’s former chief executive Martin Winterkorn will stand trial over the car giant’s massive “dieselgate” scam, a German court said, five years after one of the biggest crises to rock the car industry.
“The chamber has determined that there is sufficient suspicion, that is, an overwhelming possibility of conviction, of the accused Professor Doctor Winterkorn for commercial and organised fraud,” said the court in Brunswick in a statement.
Winterkorn, 73, will stand trial with four other former colleagues, who are also accused of fraud, as well as serious tax evasion and fraudulent advertising.
Volkswagen sank into a deep tangle of legal problems over its stunning revelation in September 2015 that it had installed devices in 11 million diesel vehicles worldwide to make them seem less polluting than they were when undergoing emission tests.
Winterkorn resigned days after the revelations but denied any personal wrongdoing.
AFP
5.20am: LVMH pulls out of Tiffany deal
Luxury giant LVMH said Wednesday it was “not in a position” to go ahead with a $US16.2-billion acquisition of US jeweller Tiffany, which responded by threatening legal action to force the deal through.
LVMH said in its board had decided not to complete the deal after “a succession of events which undermine the acquisition of Tiffany & Co,” notably US threats to slap tariffs on French products.
The luxury goods giant said it had learned of a letter from the French foreign affairs minister Jean-Yves Le Drian directing it to defer the acquisition in reaction to Washington’s threat to levy taxes on French products.
It also said that Tiffany had requested an extension to the closing date of the merger.
Therefore, “as it stands, LVMH will not be able to complete the acquisition of Tiffany & Co.” Tiffany retorted, saying it would sue LVMH for breaching “its obligations relating to obtaining antitrust clearance” for the deal.
“We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders,” said board chairman Roger N. Farah, adding that Tiffany was committed to completing the deal.
The takeover would have been LVMH’s biggest acquisition and would have enabled the group to bolster its presence in the United States, currently its second-largest market.
LVMH, which is led by billionaire Bernard Arnault, is the owner of Louis Vuitton, Dior and Moet & Chandon.
AFP
5.15am: UK rejects new coal mine
The British government has rejected plans to construct an open-cast coal mine near a picturesque beach in northeastern England, agreeing with campaigners that it would harm the environment.
Family-owned Banks Mining Group had sought to build the facility at Highthorn in Northumberland, sparking outcry from environmentalists who complained it was too close to Druridge Bay.
Communities Secretary Robert Jenrick announced in a written statement published late Tuesday that he has determined that the application is “not environmentally acceptable”.
Campaigners welcomed news that the proposals have now been turned down. “With the world staring at catastrophic climate change, this is the right decision,” said Friends of the Earth climate campaigner Tony Bosworth. “Coal mines must be consigned to the history books if we are going to avoid climate breakdown.”
Banks Group had applied for permission to extract three million tonnes of coal from Highthorn, before restoring or improving the landscape.
AFP
ASX 200 trims gains as banks lose steam; miners drop
Commodity price falls, China disappointment weigh on Aussie producers. China's sharemarket dives at open. NZ's central bank cuts rate by 50 basis points, as expected. Shares in Cettire, Zip jump.
ASX 200 falls on China update; BHP leads mining reversal
Iron ore, copper futures, AUD down after China's underwhelming economic update. RBA's 'step down' in hawkishness evident in September minutes, but deputy governor Andrew Hauser says inflation job's not done yet.