Trading Day: ASX loses last week’s gain, but November a record month

Stocks sank, pulled down by miners, banks and tariffs-hit TWE, but November was still a record month for the ASX 200.

The ASX is poised to notch up its best month on record. Picture: AAP

• China PMI signals steady recovery
• Bank execs tipped for more pay rises
• Select Harvests profit falls by over 50pc
• Pyne joins board of armour maker

That’s all from the Trading Day blog for Monday, November 30. The benchmark S&P/ASX 200 index closed on Monday with its best month on record on its worst day of the month. This week brings the Reserve Bank’s last meeting for the year and the release of GDP figures.

David Ross 7.27pm: Savings jump despite low rates

Australian households poured more than $13bn into savings in the 12 months to October 2020 despite record low interest rates as unprecedented support from banks and the government converged.

The newly released data from the Australian Prudential Regulatory Authority shows a 12 per cent surge in savings that have coursed through the financial system on the back of record government assistance and a nation fearful of what comes next.

This mammoth savings injection comes on the back of the cash rate continuing to climb down the stairs from 0.75 per cent in October 2019 to 0.25 per cent in October 2020, before falling even further to 0.1 per cent in November.

Speaking earlier in November Reserve Bank governor Philip Lowe noted how low rates “can encourage some additional risk-taking, as investors search for yield”.

“(The RBA) also recognises that low deposit rates can create difficulties for some people. These issues will need to be closely watched over the months ahead,” Dr Lowe said.

“In terms of interest rates, I think we have gone as far as it makes sense to do so in the current environment. “

The June to July jump saw the greatest savings boost for Australian households, leaping 3 per cent despite the continued downward trajectory of rates of return.

“There has been no change to the Board’s view that there is little to be gained from lowering the policy rate into negative territory,“ Dr Lowe said.

“While a negative rate might lead to a helpful depreciation of the Australian dollar, it could impair the supply of credit to the economy and lead some people to save more, rather than spend more.”

Overall household deposits grew from $1.03bn in June to $1.06bn in July.

The unprecedented government support in expanded JobSeeker payments, coupled with JobKeeper only added to inflows.

This came after the new financial year opened another opportunity for Australians to take another hit of early access to superannuation on the back of government policy that opened Australian’s accounts in April.

The savings boost also came as the Australian Bureau of Statistics recorded an economic contraction of 7 per cent for the June quarter, the largest quarterly fall on record.

The savings splurge by households was mirrored in overall residential deposits which have exploded by $29bn in the past 12 months, untempered by fires, floods, pandemics, border closures and the sharpest hit to economic activity in Australia ever.

Many Australians took advantage of leniency from the banks to defer loans, stemming many potential outflows from accounts.

APRA data shows loans subject to deferrals peaked in May, at one point representing as many as one in 10 housing loans and three in 20 business loans.

Investors were the greatest users of the loan deferrals, capturing almost 40 per cent of mortgage deferrals.

As of 31 October 88 billion in loans remains on temporary deferral, around 3.3 per cent of total outstanding loans.

James Kirby 6.33pm: Your Bitcoin, your super?

Should your superannuation be buying Bitcoin? As big super funds stand well back from the action, self managed super funds are leading the charge into digital currencies.

But unlike their younger counterparts, SMSF operators are not trading the digital currency, typically they are making significant deposits with a view to keeping their holdings long term.

“We are seeing more and more SMSF operators come into the market. Typically, they will put in anything from $30,000 up to $100,000 and leave it there,” says Lasanka Perera, COO at independent Reserve, a local digital currency exchange that has signed up more than 8000 Australian SMSFs.

SMSF administration specialist Robert Joseph at MySMSF adds: “We are seeing a similar group that would have traditionally invested in gold moving into cryptocurrency, but compared to the last rush back in 2017, this time round older Australians are much more considered in how they deal in this area.”

During the 2017 boom when participation across all age groups soared, investors rushed into a variety of digital currencies. In contrast, in 2020 Bitcoin is very much dominant in our market with local exchange numbers showing around five Bitcoin trades for every trade by its nearest rival, Ethereum.

Industry figures compiled by the independent Reserve group show that almost one in three younger investors in big funds want their funds to participate in the second crypto boom. However enthusiasm drops sharply among older members of retail and industry funds where only 13 per cent want their fund to buy digital currency.

Read more

Elise Shaw 5.09pm: $A briefly above US74c as USD eased

USD eased a bit further in the Asia session to the lowest level since April 2018, notes Commonwealth Bank’s Global Markets Research team. “The USD faces cross‑currents this week. High infection rates and the risk the global economy slows materially in the near term supports the USD.

“On the other hand, vaccine optimism, and the growing likelihood of a smooth transition of power in the US, are weighing on the USD. In addition, the USD is likely to weaken today because of end‑of‑month re‑balancing of hedges by portfolio managers. The Dallas Fed manufacturing index is released today ahead of tomorrow’s ISM manufacturing index.

“AUD/USD briefly nudged over US74c in the Asia session. Australian company profits increased by 3.2% in Q3 2020. Government payments to businesses to support them and their employees through the pandemic continued to support profits in the quarter. At this stage estimate GDP expanded by a very strong 2½%/qtr in Q3 2020.

“We will refine our point estimate for GDP after the release of government spending and current account data tomorrow. The RBA is widely expected to leave monetary policy unchanged tomorrow too.”

4.45pm: ASX best and worst for the month

The benchmark S&P/ASX 200 index closed on Monday with its best month on record on its worst day of the month, ending the session and the month of November with gains of 9.95 per cent.

Rising tension with China and a negative outlook for EU and US equities sent the local market backwards, erasing gains made last week when the market was in touching distance of recovering ground lost over the year.

The ASX 200 closed at 6517.8 points on Monday, down 83.3 points, or 1.26 per cent.

Most sectors were in the red with utilities, consumer discretionary and financials down 1.69, 1.63 and 1.53 per cent respectively, but the tech index managed to pull away with growth of 0.33 per cent.

Driving the tech index’s upside were EML Payments, up 4.48 per cent, and WiseTech Global, up 3.17 per cent.

Whitehaven Coal’s share price fell 9.56 per cent, followed by Treasury Wine Estates - still reeling from the Chinese government’s decision to hit Australian wine with tariffs - falling 6.93 per cent.

Gold miners also dropped as the spot gold price continued to fall, reaching $US1767.6 and ounce when the market closed, sending Perseus Mining down 4.72 per cent, Regis Resources down 4.16 per cent and Gold Road Resources down 4.02 per cent.

Fisher & Paykel Healthcare was the best performing equity, up 5.07 per cent, while Charter Hall gained 3.08 per cent following the news its long WALE REIT had received a net 4.5 per cent valuation uplift.

Ben Wilmot 4.33pm: Domus launches $US165m property fund

Property fund manager Domus is launching a new US multifamily fund for wealthy and institutional investors, sponsored by Geringer Capital, in Australia.

Domus are going to the market with their fourth fund, with three assets under firm contract for an acquisition price of $US165m in Nashville, Tennessee and Phoenix, Arizona.

All assets are located outside of the city centres in suburban areas, which have been performing well in COVID-19 conditions.

Both cities are top of the radar for the multifamily housing market.

Two properties are in Nashville: Bellevue West valued at US$94m, comprising 556 dwelling units, and Highlands at the Lake, valued at $US41m which has 258 units. It will also include The Madison in Phoenix valued at $US23m containing 96 units.

Multifamily assets are more common in the US and are sought after by investors due to their consistently stable returns and resilience through macroeconomic events and real estate cycles, particularly now with capital retreating from other asset classes.

Geringer Capital is the US sponsor of the three previous successful closed-end funds and is involved in this one as well.

With the lowest interest rates in history, the opportunities in this asset class are compelling.

The completion of the fourth fund will take Domus US Multifamily total assets to more than $US500m.

Nick Evans 3.39pm: Biswas rules himself out of Rio Tinto job

Newcrest boss Sandeep Biswas has ruled himself out of the running for the top job at Rio Tinto, telling staff at the gold mining major he is “not interested in any other CEO role outside of Newcrest”.

Mr Biswas told Newcrest staff on Monday he was not interested in the Rio job, describing speculation over his future as a “distraction”.

‘’Some of you may have seen recent articles and speculation in the media regarding my future at Newcrest. To ensure that none of us waste time or get distracted by these media reports, I would like to let you know that I am not interested in any other CEO role outside of Newcrest,’’ he said in a staff memo.

‘’I remain committed to Newcrest and to the people that have made this company a safe, healthy and exciting place to work.’’

Mr Biswas was believed to be one of the front runners for the role, with other names still believed to still be in contention including Anglo American finance boss Stephen Pearce, former Fortescue chief executive Nev Power, former BP chief financial officer Brian Gilvary and a handful of others.

Some early contenders, including Shell’s Zoe Yujnovich, are believed to have dropped out of contention and other high profile executives – like Anglo boss Mark Cutifani, South32 chief Graham Kerr and Newmont CEO Tom Palmer – have also made statements ruling themselves out of the running.

Mr Jacques agreed to step down from Rio’s top job over the Juukan Gorge scandal on September 11, along with iron ore boss Chris Salisbury and corporate affairs chief Simone Niven. He is due to leave the company when a successor is found, with the company having put a deadline on its search for a new chief executive of March 31, 2021.

But the parliamentary inquiry into Rio’s destruction of 46,000 heritage sites at Juukan Gorge in the Pilbara is due to deliver its report by December 9, and Rio is believed to be keen to have a new boss in place before the report is handed down with its global search now understood to be winding to a close.

2.52pm: ASX loses last week’s gain

The local sharemarket momentarily completely erased the 0.9 per cent gain it achieved last week as the ASX 200 plunged 64.251 points, or just under 1 per cent to 6536.8 points before slightly rebounding.

Joining Whitehaven, Treasury Wine Estates and the gold miners as the underperforming stocks of the day are gambling stocks Aristocrat Leisure and Crown Resorts, down 3.53 per cent and 3.32 per cent respectively.

The tech index has made a slight rebound as other sectors fall further into the red, up 0.69 per cent as EMP Payments emerges as the best performer of the day so far, up 4.62 per cent while Domain is up 2.15 per cent.

Financials Netwealth Group, Virgin Money and Platinum Asset Management have made modest gains of 2.82, 3.07 and 2.10 per cent respectively while Charter Hall lifted 3.30 per cent following the news its long WALE REIT had received a net 4.5 per cent valuation uplift.

Despite the broader market downturn, AUD pushed past $US0.74 cents for the first time since September earlier in the day before dropping back down to $US0.7388 later in the afternoon.

Bridget Carter 2.03pm: JPMorgan’s Anthony Brasher jumps ship

JPMorgan managing director Anthony Brasher is the latest investment banker to jump ship to the recently launched Barrenjoey Capital.

Mr Brasher has worked at JPMorgan since 2016 where he has headed the Financial Institutions and Government Group for the Australian investment banking arm.

He is a board member of Baseball Australia, was earlier president of Baseball NSW and has worked in the past for Credit Suisse and Deutsche Bank.

His departure comes after JPMorgan’s Australian real estate investment banking head Rob Stanton was recently hired by Barrenjoey after working at the bank since 2007.

The newly formed Barrenjoey Capital is headed by former top UBS Australia investment banking operatives, including Guy Fowler and has been on a major hiring spree ahead after launching this year.

Last month, it poached Australia’s most dominant block trader, George Kanaan from UBS along with its Australian head of infrastructure banking Jarrod Key and his team members and telecommunications and media banker Peter Nelson.

In the past year, JPMorgan hired former Credit Suisse banker Duncan Mann to head up its private equity and industrial company coverage.

Meanwhile, Highbury Partnership has hired former UBS real estate banker Ben Roberts.

1.53pm: ASX close to erasing last week’s gain

The local sharemarket cames within 10 points of entirely erasing last week’s 0.9 per cent gain, with the benchmark ASX200 falling 0.81 per cent in mid-afternoon trading to 6547.3 points.

Dragging the market down were the consumer discretionary, consumer staples and financials index, falling 1.54 per cent, 1.12 per cent and 1.07 per cent respectively.

And the tech index - up 0.99 per cent when the markets opened this morning - slipped to be up just 0.06 per cent shortly after 1.30pm (AEDT). Afterpay was up by just 0.4 per cent and Zip Co down 0.83 per cent.

The local sharemarket decline came as US futures turned negative, with S&P500 futures down 2.44 per cent and Dow Jones futures down 0.38 per cent, while the tech-orientated NASDAQ’s futures where up by 0.15 per cent.

The banks continued to drag the markets down with Commonwealth Bank dropping 1.38 per cent, NAB down 1.11 per cent, ANZ down 1.17 per cent and Westpac, 1.17 per cent.

Treasury Wine Estates was supplanted as the day’s worst performer by Whitehaven Coal, which fell 7.51 per cent as trade tensions with China rose over new tariffs on Australian wine. Treasury was down 7.37 per cent decline.

Bega Cheese gained 3.14 per cent, with Fisher & Paykel Healthcare lifting 3.51 per cent and EML Payments up 3.64 per cent.

Magellan Financial fell 3.33 per cent after Goldman Sachs cut it to a sell and various gold miners maintained losses of between 3 and 4 per cent as gold fell to $US1776.54 an ounce.

Ben Wilmot 1.22pm: Charter Hall fund value lift

The Charter Hall Long WALE REIT has unveiled a series of healthy revaluations as it said 89 per cent of its portfolio had been independently valued as at the end of December.

This has resulted in a $150m net valuation uplift or a 4.5 per cent increase over prior book values for those properties independently valued.

Post the revaluations, the portfolio’s overall weighted average capitalisation rate firmed by 18 basis points from 5.42 per cent to 5.24 per cent.

The measure is a sign of the resilience of long-leased commercial properties in the face of the coronavirus pandemic. Charter Hall said all properties in the portfolio had been independently valued at least once over the past 12 months.

The REIT’s shares dipped by 1.5c to $4.88 in early afternoon trade.

12.43pm: Early super withdrawals top $35bn

A total of $35.3bn has been withdrawn under the COVID-19 early release of super scheme, putting it on course to meet the government’s drawdown target of $36bn by December 31, when it ends.

A total of $146m was paid out over the most recent week to 20,000 fund members, one of the lowest weekly amounts on record.

The average payment made since the inception of the scheme is $7650. The maximum amount allowed to be withdrawn is $10,000.

Robyn Ironside 12.36pm: Another 2000 Qantas jobs to do

Qantas will no longer employ groundhandling crews after confirming it will outsource 2000 jobs to other companies to save more than $100m a year.

The move will take the number of jobs lost across the Qantas Group as a result of the COVID crisis to about 8500, reducing the total workforce to just over 20,000.

The airline first flagged the outsourcing proposal for baggage handlers, cleaners, bus drivers and other ground crew, after announcing a $2.7bn pre-tax loss for the 2020 financial year and forecasting another significant loss in 2021.

Although employees were given the opportunity to lodge an in-house bid in the hope of saving their jobs, the proposal did not deliver the same cost-savings as those of specialist ground handlers.

It’s understood the bid actually increased the workforce by 900 roles without any details on how that would deliver cost savings.

Another proposal from employees at the various airports involved, including Sydney, Melbourne and Brisbane, promised $18m in savings, well short of the third party providers’ offer of a $103m annual saving.

Qantas Domestic and International chief executive Andrew David said it was “another tough day” for the airline and particularly the ground handling teams and their families.

12.30pm: China PMI signals steady recovery

A gauge of China’s factory activity climbed to a three-year peak in November, signaling the steady recovery of the world’s second-largest economy from the coronavirus shock.

China’s official manufacturing purchasing managers index, a key gauge of factory activity, rose to 52.1 in November from 51.4 in October, according to data released Monday by the National Bureau of Statistics. Economists polled by The Wall Street Journal had expected the index to edge up to 51.5.

China’s industrial sector has led the nation’s economic recovery since the second quarter, with the official manufacturing PMI above the 50 mark separating expansion from contraction since March.

The subindex measuring production increased to 54.7 from 53.9. Total new orders stood at 53.9 after remaining unchanged for two months at 52.8. The subindex of new export orders rose to 51.5 in November from 51.0, standing above the 50 mark for a third straight month.

China’s nonmanufacturing PMI, which includes services and construction activity, rose to 56.4 in November from 56.2 in October, according to the statistics bureau.

A Chinese car factory. Picture: AFP

Dow Jones Newswires

12.20pm: ASX dips by lunch as banks drag

After charging out of that gates and lifting 0.6 per cent after 10am, the local sharemarket had slipped into the red by noon, falling a full one per cent from the intraday high to 6571.398 points at midday.

However the ASX200 remained on course to record the best month since the indexes introduction in 2000, with a gain of around 11 per cent.

Behind the sudden plunge are the consumer discretionary and financials index, falling 1.17 per cent and 1.0 per cent respectively, while the tech index was the only one holding the fort, up 0.24 per cent as Afterpay managed a 0.87 per cent gain and EML Payments jumped 1.68 per cent.

The big banks all suffered - Commonwealth Bank was down 1.38 per cent, ANZ 1.26 per cent, Westpac 1.3 per cent and NAB, 1.07 per cent.

Bega Cheese was again the best performer, up 4.61 per cent, followed by Lynas Corp, up 3.80 per cent, and Fisher & Paykel Healthcare, which continued its rally to rise 3.35 per cent.

Nine Entertainment reversed some of its losses from last Friday, lifting 2.38 per cent while Platinum Asset Management was up 2.23 per cent, ensuring its continued supremacy as the best performing stock of the last week, now up 16.71 per cent over 5 days.

Treasury Wine Estates was still the worst performer, down 7.10 per cent for a total 14.34 per cent decline over the past five days, while Whitehaven Coal lost 6.83 per cent.

Corporate Travel Management lost 4.43 per cent while the Gold Miners held their earlier decline as the gold price trended slightly lower to $US1783.70/OZ.

The Australian dollar was trading slightly higher at US74.02c.

11.54am: Profit rises ease in quarter

Seasonally-adjusted company gross operating profits rose 3.2 per cent over the September quarter, while wages and salaries increased 2.4 per cent, according to the Australian Bureau of Statistics’ latest business indicator figures,

It’s a result that’s below consensus and compares to a 15 per cent growth in company gross operating profits and a 3.3 per cent decrease in wages and salaries in the June quarter.

The reducing rate of gross operating profits is attributable to the scaling back of government subsidies that occurred over September. 3.

Accommodation and food services was the strongest performing sector following a decline last quarter as hospitality was still greatly constrained by lockdowns. Gross operating profits rose 35.1 per cent while wages and salaries rose 11.3 per cent.

Chain volume estimates for inventories fell 0.5 per cent over the quarter.

11.22am: WPP shares soar after bid offer

Shares in advertising group WPP AUNZ have shot up 34.15 per cent to 0.55c following a bid for full control by majority shareholder WPP.

This morning the London-based group offered to buy the remaining 38.5 per cent shares it doesn’t own for $0.55 a share.

WPP AUNZ has advised shareholders to take no action until a formal recommendation is made.

11.28am: Bank execs tipped for more pay rises

Analysts at Citi believe bank executive remuneration could be poised for growth after falling in the years after the GFC and the Hayne royal commision.

In 2001 major bank CEO remuneration as a multiple of average staff cost was 35.9.

By 2006, that figure had nearly trebled to 96.2 before declining to 41.5 in 2018 and a century low of 35.9 by 2020.

But the analysts believe the banks have made “great inroads” in repairing their social licences damaged in the aftermath of the Hayne Commision and have front-loaded provisions, remediation efforts and other asset impairments.

“While remuneration structure will undoubtedly evolve in coming years, we expect that the turning point for both financial and non-financial metrics would signal a pending lift in bank executive remuneration,” the analysts wrote in a note.

The analysts also said that APRA’s move to implement the CPS 511 standard on tightening remuneration requirements by lengthening deferral periods may increase base remuneration levels.

11.23am: ASX sinks after solid open

The ASX200 slipped into the red after opening firmly higher.

In late morning trade it was down 0.24 per cent at 6585.

Bridget Carter 11.02am: Stilmark recruits for Optus bid

Telco tower company Stilmark is understood to have added another investment bank to its advisory team to buy the $2bn-odd portfolio of Australian towers from Singtel’s Optus.

As well as the Royal Bank of Canada, US-based Q Advisors will also be working on its efforts, with the pair taking on a joint advisory role.

Q Advisors, formed in 2001, consists of a group of telecommunications experts including investment bankers who previously worked at Bank of America.

It describes itself as a world-class global boutique investment bank serving public and private companies, private equity firms, entrepreneurs and large multi-nationals in the telecom, media and technology sectors.

A telco tower.

Stilmark is bidding for the Optus towers portfolio as part of the Symphony Consortium, which includes Stilmark, Canada-based OMERS Infrastructure and ATN International.

The auction is being run by Bank of America and is expected to be launched around February.

Stilmark counts a raft of high-profile executives among its backers, including former Telstra boss David Thodey, outgoing Stockland chief executive Mark Steinert, former BCA chair Graham Bradley, the Liberman family and former Vodafone Hutchison Australia boss Nigel Dews.

11.00am: What’s impressing analysts?

Altium raised to outperform at Credit Suisse

Oventus Medical introduced at buy at CG Capital Markets

Treasury Wine Estates cut to Sell at Citi

Envirosuite cut to Hold at Bell Potter

10.58am: Treasury to suspend payout: analysts

Analysts at Citi predict that Treasury Wine Estates will suspend dividends for 12 months and see its share price fall to between $7.50 and $8.50 as the company pivots from China following the imposition of tariffs on Australian wine.

The analysts have also cut the stock to sell.

“While the move looks political, the reality is Treasury Wines will need to significantly alter its growth focus away from China,” the analysts wrote in a note.

“The challenge will be an overhang of industry supply of roughly 11 per cent, or 16 million cases.

“Reallocation will be hard initially. An inventory write down is possible with China focused labels at risk, a write down of $160 million is an 8 per cent drop to inventory.”

At 10.51am shares in Treasury Wine Estates were trading at $8.76, down 5.09 per cent.

10.28am: Higher opens puts ASX record in sight

The local sharemarket rose 0.6 per cent at the open to 6640.699 points to put the ASX200 on track to record its best month in the index’s history.

Last week the ASX200 rose by 0.9 per cent after a strong first half of the week before faltering slightly and closing on FRiday at 6601.1 points - barely maintaining a four week winning streak, but still up 11.36 per cent for November.

It’s the best monthly return for the ASX200 in its history and comes close to the record-breaking 13.2 per cent gain seen by the sharemarket at large in March 1988.

Leading the charge this morning was the tech index, up two per cent, followed by the healthcare index up 0.99 per cent.

Driving the index was Afterpay was up 3.51 per cent while Zip lifted 2.81 per cent ahead of its AGM.

The healthcare index was supported by Mesoblast, up 3.93 per cent, while Avita Therapeutics was up 3.85 per cent.

The best performer was Bega Cheese, following a strong performance last week when it acquired Lion Drinks & Dairy, by jumping 4.61 per cent

Unsurprisingly, Treasury Wine Estates was the worst performer, emerging from a trading halt to fall 6.93 per cent as the impact hits home of China’s decision to hit Australian wine imports with tariffs of up to 200 per cent.

Kathmandu was down 5.1 per cent following the news chief executive Xavier Simonet will leave the company to take the helm at the Australian Trade and Investment Commission.

Elsewhere, gold miners were underperforming with Perseus Mining down 2.58 per cent and Evolution down 2.55 per cent as the gold price’s resolve weakened and plunged below the $US1800/oz threshold over the weekend to $US1786.57/oz.

Brent crude was also trending downwards, trading at $US47.44 a barrel.

The Australian dollar was trading at $US73.99c.

Joyce Moullakis 10.25am: Trans­ferWise wins banking licence

Richard Branson-backed Trans­ferWise has secured a limited licence from the banking regulator, giving it greater access to the Australian market which it hopes will act as “a springboard” for its local products and operations.

The Purchased Payment Facility licence - a special class of deposit taking institution that can undertake a limited range of banking activities - was announced by the Australian Prudential Regulation Authority on Monday.

It is the first such licence issued in more than a decade after global giant PayPal received one. Trans­ferWise, a global technology-led money transfer and foreign exchange group, will still use Macquarie Group as its local banking partner given the licence does not make it a fully fledged domestic bank.

APRA on Monday granted the PPF licence to provide purchased payment facilities to TransferWise, as a limited authorised deposit-taking institution under the Banking Act.

TransferWise Australia, country manager Tim Cameron said it had taken two years and a “long process” to secure the limited licence.

“But it’s great to come to the end of the journey,” he added.

“The steps we have taken today which include taking on the additional regulatory requirements, is driven by our commitment to Australia, our mission, and to setting a new global standard to give millions access to truly competitive services, even if regulations have not kept up with the new breed of services fintechs provide.

“By becoming independent and cutting out the middleman, we’ll be able to save our customers even more money.”

The limited licence doesn’t, though, provide funds held protection like bank deposits receive - up to $250,000 per account holder - under the Australian Government’s Financial Claims Scheme.

Adeshola Ore 10.07am: Kathmandu’s Simonet to head Austrade

Outgoing Kathmandu chief executive Xavier Simonet will take the helm at the Australian Trade and Investment Commission (Austrade).

Trade and Tourism Minister Simon Birmingham said Mr Simonet’s appointment as chief executive of the agency comes at a critical time for helping businesses maintain global supply chains and diversify export markets.

“As our key agency for promoting Australian trade, investment and education to the world, and developing tourism policy, Austrade’s role in providing advice and support to Australian businesses has never been more important, as they continue to face enormous challenges,” Senator Birmingham said in a statement.

“Mr Simonet will bring proven and strong leadership to Austrade, as it plays its part in helping Australian businesses to navigate through and bounce back from this significant period of economic and trade uncertainty.

Mr Simonet has resigned from Kathmandu after more than five years in the role, during which he expanded the company with acquisitions of Rip Curl and Oboz brands.

Bridget Carter 9.57am: Goldman, UBS tapped for WPP bid

British-based advertising giant WPP has called on the services of investment bank Goldman Sachs to acquire the shares it does not already own in its listed Australia and New Zealand arm for $181m.

WPP Australia and New Zealand (known as WPP AUNZ), meanwhile, has tapped investment bank UBS.

WPP AUNZ counts Rob Mactier as its chairman, who is a UBS consultant.

However, working on the transaction from UBS is understood to be Geoff Davis.

The move by the British-based WPP comes as part of an attempt to tidy up its structure globally, where operating businesses are 100 per cent owned by the parent company.

It also comes as the company wrestles with challenging advertising conditions which have been intensified by the Covid-19 pandemic and the digital disruption of mainstream media by technology giants.

The parent company already owns 61.5 per cent of the $350m WPP AUNZ and is offering 55c per share, which represents a 34.1 per cent premium to the November 27 closing price.

It takes the total proposed amount being paid to $181m.

The proposal is yet to be put to WPP AUNZ shareholders.

Lilly Vitorovich 9.52am: UK bid for control of WPP AUNZ

Australia’s biggest advertising group WPP AUNZ has received an unsolicited proposal from its largest shareholder, UK ad giant WPP PLC, to buy the remaining shares it doesn’t already own.

The London-based group has offered to buy the remaining 38.5 per cent that it doesn’t own for 55 Australian cents a share in cash, which is being considered by the independent directors of WPP AUNZ and its advisers.

WPP AUNZ, led by chief executive Jens Moonses, on Monday advised its shareholders to take no action until they receive the independent director‘s formal recommendation.

WPP PLC said its offer represents a premium of about 34.1 per cent of WPP AUNZ‘s closing share price of 41c last Friday, and is in line with its global strategy of simplifying its structure. If successful, it will give the UK group full ownership and control of its Australian and New Zealand operations.

WPP AUNZ has more than 60 brands across Australia, NZ and Asia, including Ogilvy, Ikon Communications, Wunderman Thompson and Xaxis.

The total aggregate consideration payable by WPP for the remaining shares would be around $181m.

9.31am: TransGrid gets CEFC loan

TransGrid Services has received a $125m debt facility from the Clean Energy Finance Corporation, part owner Spark Infrastructure has announced.

The money will be used to increase the amount of electricity TransGrid can provide to the national electricity market as part of a project that will see the Snowy Hydro 2.0 scheme connected to the national network.

9.25am: Pyne joins board of armour maker

Former defence minister Christopher Pyne has been appointed a non-executive director of listed ballistic armour producer Xtek.

Mr Pyne, who is also the current chairman of Pyne and Partners and Principal of lobbyist GC Advisory, said he was looking forward to helping the company grow its footprint.

“XTEK is on the verge of significant growth as it continues to develop and commercialise its IP globally, building on its domestic distribution networks and capabilities,” he said.

“I look forward to contributing to this next stage of growth and being part of this market leading company.”

Christopher Pyne.

XTEK chairman Uwe Boettcher said Mr Pyne’s defence industry knowledge would help the company “commercialise its proprietary technologies globally, as well as further strengthen its domestic capabilities.”

XTEK has a market cap of $43.57m and last traded at $0.62 cents a share.

9.22am: Telix buys biotech TheraPharm

Telix Pharmaceuticals will acquire Swiss-German biotech TheraPharm for a €10.2m ($16.5m) upfront payment and earn-out program.

TheraPharm will be purchased from parent company Scintec Diagnostics GmbH and will expose Telix to “developing innovative diagnostic and therapeutic solutions in the field of hematology” such as blood cancers.

Following the upfront payment, one tranche of €5.0m ($8.1m) will be paid following approval trial of Y- besilesomab, a therapeutic product TheraPharm is developing, and another will be paid when it is approved for therapeutic indication in the US or Europe.

Following that, a 5 per cent royalty on the net sales for the first three years of the product’s life will be paid to Scintec.

9.17am: Newcrest loan for Greatland JV

Newcrest Mining will loan Greatland Gold $US50m ($67m) to fund early works and drilling activities at the Havieron Project joint venture.

It means Newcrest has met the stage 3 expenditure requirement of US$45m, entitling it to a further 20 per cent joint venture interest, resulting in an overall interest of 60 per cent.

Interest on the loan will accrue at LINOR plus 8 per cent and has been secured against Greatland Gold’s joint venture interest.

8.53am: Treasury acts to counter China blow

Treasury Wine Estates has announced a suite of measures to reduce the impact of surprise anti-dumping tariffs applied to Australian wine by China on Friday.

Faced with a 169.3 per cent tariff on wine sold to China, Treasury said it would reallocate its Penfolds Bin and Icon Range from China to other “key luxury growth markets where there is unsatisfied demand, including Asian markets outside of China, Australia, the US, and Europe.”

The company also said it would accelerate investment and sales and marketing resources to drive this reallocation to other markets and divert luxury grapes to other premium wine brands in the portfolio like Wynns, Wolf Blass and Pepperjack, “which have been significantly supply constrained over recent years.”

Treasury will also enhance its China business model by alternating operating and supply chain models and accelerate their multi-country of origin portfolio growth strategy, “with a focus on growing sourcing for TWE’s portfolio from its existing asset base in France and potentially from China.”

Global overheads and costs will also be reduced.

The Chinese market represented approximately two-thirds of the total Asia region earnings, or 30 per cent of the company’s earnings last financial year.

Australian-made wine on sale in Beijing. Picture: AFP

8.47am: Select Harvest profit sinks over 50pc

Almond and food grower Select Harvest has announced a full year net profit after tax of $25m, more than 50 per cent lower than the prior period due to a challenging water market and “historically low” almond prices.

The company announced a dividend of four cents a share, bringing the full-year total to 13 cents a share.

The result comes after the company raised $120m from shareholders to purchase the Piangil Almond Orchard for $129m, a transaction the company expects to be completed in the third week of December.

Managing director Paul Thompson said he expected a more favourable almond price to emerge next year.

“Recent monthly US almond shipment data shows that demand has responded strongly to historically low almond prices, with record monthly shipments to key world markets,” he said.

“Select Harvests’ next crop will begin harvest in February 2021, with early deliveries reaching the market in April.

“By this time, a more definitive market and piercing environment is likely to emerge.”

8.35am: GetSwift quizzed over Treasurer letter

Beleaguered company GetSwift has been questioned by the ASX as to whether its notified shareholders quickly enough about Treasurer Josh Frydenberg’s statement that the company’s effort to re-list in Canada would be “contrary to the national interest.”

GetSwift informed shareholders of Mr Frydenberg’s view on November 24 through an ASX release which displayed a letter from Mr Frydenberg sent November 20.

The ASX on that same day sent an “aware query” to GetSwift asking when the company received the letter, as listing rule 3.1 “requires a listed entity to immediately give ASX any information concerning it that a reasonable person would expect to have a material effect on the price or value of that entity’s securities.”

Treasurer Josh Frydenberg. Picture: Getty Images

In a response, company secretary Julian Rockett said the company did not receive the letter under Monday November 23 at 5.25pm, after the market had closed, although the company’s lawyers Jones Day were informed of the letter at 4.40pm that day over the phone by a government representative and told “that the letter would be provided to Jones Day following completion of that telephone discussion.”

“The company did not receive the letter prior to 5:25 pm on Monday, 23 November 2020,” Mr Rockett wrote.

“This letter and draft announcement was reviewed overnight by GSW’s counsel and authorised for release at 9:45 am on Tuesday, 24 November 2020 (prior to trading commencing).

“In addition, an administrative and technical issue contributed to a 20-minute delay after the markets opened at 10:00 am.”

8.11am: Biden picks economic team

President-elect Joe Biden intends to nominate a diverse group of economic advisers to serve alongside Treasury Secretary nominee Janet Yellen as he prepares to confront the economic fallout from the coronavirus pandemic, people familiar with the decision said.

Mr Biden will nominate Neera Tanden, the president and CEO of the Center for American Progress, a center-left think tank, to serve as director of the Office of Management and Budget. He will nominate Cecilia Rouse, a Princeton University labor economist, to be chair of the Council of Economic Advisers, these people said.

The president-elect also plans to choose Adewale “Wally” Adeyemo, a former senior international economic adviser during the Obama administration, to serve as Ms. Yellen’s top deputy at the Treasury Department. And he will turn to two campaign economic advisers, Jared Bernstein and Heather Boushey, to serve as members of the CEA alongside Ms. Rouse, the people said.

Dow Jones

7.33am: Kathmandu CEO Simonet resigns

Adventure retailer Kathmandu Holdings says CEO Xavier Simonet has resigned to take up a senior role in the Australian public service.

It says he will stay on as CEO for up to six months while a replacement is found.

Kathmandu chairman David Kirk said: “We are disappointed to lose Xavier, but understand his desire to take up a senior role in the Australian Public Service, for which he is very well credentialled.

“Xavier has led Kathmandu Holdings through a period of growth and repositioning of the company.”

Mr Simonet, who has been at Kathmandu for five years, thanked directors and shareholders and said the group “has great brands, passionate teams and strong values”.

The group includes the Kathmandu, Rip Curl and Oboz brands.

Outgoing Kathmandu CEO Xavier Simonet. Picture: David Geraghty

7.30am: ASX tipped to open higher

Australian stocks are set to begin the week on a positive note, after gains on Wall Street on Friday.

At around 7am (AEDT), the SPI futures index was up 39 points, or about 0.6 per cent.

On Friday, Australian stocks closed lower after reports of Chinese anti-dumping moves against Australian winemakers, although the ASX ended the week ahead.

However the local index is still expected to rack up its best month on record for stocks, with gains for November still above 11 per cent.

The Australian dollar is lower at US73.83c.

Spot iron ore is up 0.8 per cent to $US130.95 a tonne.

Ahead lies a busy week for the economic calendar.

The Reserve Bank board meets for the final time this year on Tuesday. No change is expected, after its recent cut on official interest rates to 0.1 per cent, but the market will be looking at commentary about the Australian dollar.

On Wednesday, GDP figures for the September quarter are expected to show positive growth, ending the rechincal recession. Economists expected a 1.7 per cent expansion in GDP in the last quarter, after a 7.0 per cent drop in the previous quarter, and the 0.3 per cent fall before that.

Oil prices will also come under scrutiny this week, as members of OPEC+ hold their biannual meeting to discuss the energy market and oil production.

6.00am: Black Friday a bust for many US stores

Roughly half as many people visited US stores on Black Friday as they did last year, according to research firms that measure foot traffic, as the coronavirus pandemic accelerated the yearslong shift to online shopping.

Web shoppers on Amazon.com Inc. or Best Buy Co. could get many of the same deals that stores once dangled only to those who lined up overnight. Those who did venture out made fewer stops and increasingly turned to big-box chains like Walmart Inc. and Target Corp. that sell everything from lettuce to Legos, according to the foot-traffic data, shoppers and retail analysts.

The well-worn formula of one-stop shopping has proven especially lucrative during the pandemic. Big-box stores with groceries were deemed essential and allowed to stay open when department stores and malls were closed. Plus, Walmart and Target already offered curbside services in addition to online ordering.

Shoppers in New York. Picture: AFP

Some of the big-box stores’ pandemic advantages were on display over the Black Friday weekend. This year many retailers closed on Thanksgiving Day, instead offering holiday deals both online and in stores as early as the first week of October. Online sales have jumped, favoring Amazon and those chains with robust e-commerce operations.

On Black Friday online sales hit $US9 billion, up 22 per cent from last year, according to Adobe Analytics, which measures 80 of the top 100 US e-commerce sites. The gain was near the low end of Adobe’s forecast, which had projected growth of between 20 per cent and 42 per cent from last year.

It was the second biggest online-sales day, after Cyber Monday 2019 when sales hit $US9.4 billion, according to Adobe. The firm expects this Monday to set a new record, with online sales of at least $US10.8 billion or growth of at least 15 per cent from last year.

Meanwhile, foot traffic to stores on Black Friday fell 48 per cent this year from last year, said RetailNext, which provides cameras, software and analytics to thousands of U.S. stores and shopping centers. Sensormatic Solutions, another tracking firm with cameras in stores, said in-store traffic fell 52 per cent on Black Friday compared with last year.

Dow Jones

5.00am: Australia threatens WTO action against China

Australia is preparing to take action against China at the World Trade Organization over tariffs on barley imports, the latest salvo in a trade dispute that has disrupted the supply of commodities from coal to wine.

China in May placed tariffs of 80.5pc on Australian barley--commonly used for beer brewing--saying it was being sold at unfairly low prices with the help of subsidies. Australia rejected that finding and directly appealed to Chinese authorities to reverse the duties, but was rebuffed.

“So now the WTO appeal for barley is the next step,” Australian Trade Minister Simon Birmingham said. The government is holding talks with the local grains industry and other sectors to gauge support for filing a complaint, he added.

Australia drew China’s anger in April when it sought support from European leaders to investigate whether Beijing’s early response to the coronavirus contributed to the pandemic. Many Australian lawmakers and economists see the tariffs as retaliation by China for that diplomatic push.

Days before the barley tariffs were imposed in May, China said it had suspended beef imports from four Australian exporters, citing inspection and quarantine violations. Trade frictions have since broadened to a range of other Australian products. On Friday, China imposed anti-dumping tariffs on imports of Australian wine following a Ministry of Commerce investigation that began in August.

Harvesting barley in NSW. Picture: AFP

Dow Jones

4.55am: Tesla’s S&P 500 debut to pose challenges

Additions and subtractions to the S&P 500 are normally a ho-hum affair. The 509th biggest company in the U.S. might jump to 497th place, and thus into the index. Investors who track it buy the one stock and sell another.

But no one has ever tried to add Tesla Inc, a $US555 billion company prone to huge swings in price. That’s happening next month, and it’s causing headaches across Wall Street.

To avoid missteps, S&P polled big investors on whether they would prefer adding Tesla’s weight all at once on December 21 or split over two trading days in December -- an unprecedented move for S&P.

Asset managers and trading desks across Wall Street have held virtual summits to debate the matter. The vote from many appears to be for the two-day option, partly because of Tesla’s size, along with the potential for elevated volatility in the stock market.

“If we begin to anticipate a worst-case scenario from what could happen from the Thanksgiving holiday, we could expect greater than usual volatility,” said David Mazza, a managing director and head of product at exchange-traded-fund manager Direxion, referring to a possible further surge in coronavirus cases. He endorses Tesla’s addition to the S&P 500 over two separate trading sessions.

Tesla’s addition to the index is expected to be particularly challenging because the company will be the largest to ever join, and it is expected to make up at least 1% of the gauge. At its current value, it would be the sixth-largest company in the S&P 500, just bigger than Berkshire Hathaway Inc. and smaller than Facebook Inc.

The stock, which has a cultlike investor base, has surged more than 40pc to $US585.76 since November 16, when S&P announced its intended inclusion, extending its gains for the year to sevenfold. The S&P 500 itself is up 13pc in 2020.

The decision rests with S&P, which said it intends to announce results of the consultation on Monday. Regardless of the outcome, investors and traders expect the market for Tesla shares to heat up even further ahead of the inclusion. Goldman Sachs Group Inc. predicts shares will eventually touch $US600, a 2pc gain from current levels, by the time Tesla joins the index.

Tesla’s inclusion is expected to put more than $US100 billion into motion. Index funds will have to sell smaller stocks already in the S&P 500, somewhere between $US60 billion and $US80 billion depending on Tesla’s market cap, and use that money to buy shares of the car maker, asset managers and traders said.

Read more

Tesla boss Elon Musk. Picture: AFP

Dow Jones

4.50am: OPEC, allies mull extending output cuts

The OPEC oil producers’ club and its allies will hold a virtual meeting on Monday and Tuesday to finalise an expected extension to production cuts as the coronavirus pandemic continues to weigh on global demand.

The meeting comes as the oil industry hopes to turn a page on a disastrous year which saw the cartel forced to adopt drastic cuts in response to the cratering of demand caused by the pandemic.

Member states want to avoid a repeat of the collapse in prices seen in April. According to the deal reached in that month, the current cut of 7.7 million barrels per day (bpd) is meant to be eased to 5.8 million bpd as of January 2021, but most observers expect this to be extended by between three and six months.

Key players within the grouping have hinted in recent weeks that such a move may be on the cards despite positive news on the development of vaccines against the virus by several pharmaceutical companies.

While an extension of the cuts is the most likely scenario, there is always the possibility of discord arising among the 23 countries involved.

Participants gather ahead of an OPEC meeting. Picture: AFP

AFP

4.40am: Wall Street recap

The S&P 500 and Nasdaq both closed at records on Friday as markets continued to look past rising coronavirus cases toward a better 2021 economy with likely COVID-19 vaccines.

The tech-rich Nasdaq Composite Index led the major indices, finishing up 0.9 per cent to 12,205.85, scoring a second straight record following a holiday-shortened session.

The broadbased S&P 500 added 0.2 per cent at 3,638.35, also a record, while the Dow Jones Industrial Average gained 0.1 per cent to 29,910.37.

The Dow hit an all-time high on Tuesday, finishing above 30,000 points for the first time.

Investors have been shrugging off rising coronavirus cases in the United States and stiffened restriction on economic activity in Los Angeles, Las Vegas and some other cities.

Markets have been looking ahead to expectations for better growth in 2021. “The markets continued to climb, aided by lingering positive sentiment towards multiple potentially highly-effective COVID-19 vaccines and as the markets welcome President-elect Joe Biden’s administration taking shape,” said a note from Charles Schwab.

Next week’s calendar includes a heavy schedule of economic data, including the November jobs report, as well as a congressional hearing with Federal Reserve Jerome Powell, as well as an OPEC meeting.

Biden is also expected to name his economic team soon.jmb/ft

European equity markets earlier won modest gains. London closed up 0.1 per cent, Frankfurt added 0.4 per cent and Paris gained 0.6 per cent.

Asian markets maintained their upward momentum Friday as investors took heart from the prospect of vaccines being rolled out in the coming weeks.

Hopes are high that, with at least three in the pipeline, life can begin to get back to normal next year and give the battered global economy a much-needed boost.

AFP