ASX reverses losses as banks rally; BlueScope jumps on guidance
After dropping as much as 0.5 per cent, the ASX clawed back into positive territory.
That’s all from Trading Day. The ASX finished slightly higher, reversing an earlier fall of 0.5 per cent. The turn was led by the major banks. Goodman Group, Prime Media and FlexiGroup all held AGMs while day two of The Australian’s Strategic Forum featured speakers including Andrew Liveris, Catherine Livingstone, Phil Chronican and Alan Joyce.
Bridget Carter 7.25pm: SILK Laser Australia IPO priced
The initial public offering of SILK Laser Clinics Australia has been priced at $3.45 per share.
The company will raise $84m, with its market value to be $163m.
The pricing was in the middle of the range of $3.30 to $3.65 per share.
It is understood that the book was covered across the entire range, but private equity owner Advent Partners wanted the business to trade well in the aftermarket, say market sources.
The price equates to 11.2 times the group’s forecasted earnings before interest, tax, depreciation and amortisation for the 2021 financial year.
Working on the listing is Highbury Partnership, Wilsons Corporate Finance and Ord Minnett.
The company had planned to raise between $80.9m and $87.3m, with the value including debt at between $150.4m and $164.8m.
That equated to between 10.8 times and 11.8 times its earnings before interest, tax, depreciation and amortisation.
The prospectus will be lodged on November 24 and the company will start trading on December 16.
SILK Laser Clinics has been described as one of Australia’s largest speciality non-surgical aesthetic clinic chains offering a range of treatments and health and beauty services and products such as laser hair removal, injectables, skin treatments, body contouring and fat reduction services and facial skincare products.
The company was co-founded in 2009 by chief executive Martin Perelman and has grown from a single clinic in South Australia to 53 nationally.
Its model is primarily focused on organic growth through expansion in existing clinics and a network clinic rollout plan.
The objective of the business is to open six to 10 clinics per year, with a network plan to grow to 150 clinics.
SILK is forecasting $53.5m in annual revenue for the 2021 financial year, equating to 66 per cent growth, and $14m of EBITDA.
Following the listing, Advent will reduce its 64.3 per cent interest to about 28 per cent and new shareholders will own between 51.1 per cent and 51.7 per cent of the company under the offer.
6.50pm: Listen to the latest Money Cafe podcast
Wealth editor James Kirby and InvestSMART’s Alan Kohler discuss:
- Bitcoin rises once more – up 120% since the start of 2020 – are people losing faith in the US dollar?
- The race for a vaccine continues.
- Reforms during a crisis – what impact will NSW’s stamp duty changes have on first home buyers?
- Investing in Chinese stocks.
- Has the ASX abandoned retail investors?
Don’t forget to send your own questions to James Kirby and Alan Kohler via moneycafe@theaustralian.com.au
6.35pm: Xmas retail sales set to grow 2.8%: Roy Morgan
Roy Morgan’s annual Christmas retail sales forecasts conducted in conjunction with the Australian Retailers Association (ARA) indicate Australians will spend over $54.3bn across retail stores during the Christmas trading period.
Forecast retail spending this Christmas of over $54.3bn is an increase of 2.8% from the $52.9bn of retail expenditure during the 2019 Christmas trading period and is a better than expected forecast than many would have thought possible during the year as Australia dealt with the unprecedented pandemic.
Because of the huge impact on spending patterns caused by COVID-19, and the associated lockdowns around Australia, spending across the six categories measured has diverged significantly during 2020.
The clearest example to highlight is the plunge in spending on Hospitality businesses as forced lockdowns closed restaurants, hotels, pubs and cafes for extended periods and the concomitant surge in spending on Food bought at supermarkets and other fresh food retailers that remained open.
The impact of COVID-19 measures on Hospitality businesses continues with social distancing measures in place and restrictions on the number of customers allowed in many States.
Unsurprisingly, the largest percentage increasing in spending is predicted for the Food category with pre-Christmas spending forecast to grow by a large 10% from a year ago to over $23.8bn. Due to the impact of COVID-19 and the continuing restrictions, Hospitality spending is forecast to be 18.7% down on a year ago at just under $6.1bn.
Analysing the two categories of Food & Hospitality together shows a combined growth rate of 2.6% from a year ago to total spending of over $29.9bn – in line with overall retail growth predictions.
Growth in Household goods is expected to grow strongly on a year ago to be up by 9.6% to over $9.7bn but spending on Clothing, Footwear and Accessories is set to be down 12.2% to $3.7bn.
Department stores are set to experience a slight decline on a year ago, down by 2%, to overall spending of almost $3bn. The category combining ‘Other retailing’ which includes online retailing is predicted to experience significant growth of 6.6% on a year ago to spending of over $8bn.
READ MORE: Online boom boosts David Jones
6.01pm: CBA moves currency forecasts
CBA’s Global Markets Research has released new currency forecasts. “We predict the USD will weaken further over the medium term because of a widening US current account deficit led by the widening federal government budget deficit. A recovery in the world economy would also support commodity prices and encourage capital to flow out of the US, undermining the USD. Interest rates are unlikely to be a large mover of currencies in 2021.
“AUD/USD ignored the stellar Australian jobs report for October. The USD was strengthening at the time the labour force report was released. Still, the lack of a response by AUD/USD suggests some market participants were long ahead of the release of the report. Employment rose by 178.8k (CBA: ‑ 50k). We and the consensus expected a decrease in employment because of the weak ABS payrolls data and continuation of restrictions in Victoria at the time of the survey.”
Glenda Korporaal 5.45pm: Markets look for ‘calm’: Mellody Hobson
US stock markets were pleased with the election of a Biden president with a potential US Senate restraining his most radical policies, Chicago fund manager Mellody Hobson told the Australian’s Strategic Forum on Thursday.
Ms Hobson who is co-chief executive of Ariel Investments, vice chair of Starbucks Corporation and a board member of JPMorgan Chase, said the US stock market was continuing to rise on the good news of a potential vaccine against the pandemic, looking ahead to a post COVID US business world.
“The markets like the outcome,” she said.
“The market likes the fact that we have a Congress divided from the executive branch,” she said.
“That meant that there would be restraint in terms of some of the progressive policies that might come out of the Biden administration.”
She said the market also like the potential for a “sense of calm” from the White House after the turbulent four years of President Trump.
Eli Greenblat 5.26pm: Online boom boosts David Jones
David Jones is witnessing early signs of a recovery outside of Victoria, with sales growth in other states and a booming online business providing evidence of a pick up from the lows of earlier this year when the global health crisis emerged.
Upmarket department store David Jones said shuttered stores in Victoria and a shrinking of demand for formal wear during the worst of the COVID-19 pandemic in Australia was partially mitigated by a move to online by shoppers, and strong sales in beauty and appliances.
And the retailer did manage to eke out a lift in revenue across its David Jones stores and its specialty chains such as Country Road, Mimco and Trenery after excluding the Victorian store network, with its core David Jones business increasing sales by 6.7 per cent for the first half to November.
4.20pm: ASX closes higher on late rally
After dropping as much as 0.5 per cent in early trade and spending most of the session in the red, the ASX clawed its way back in late trade, closing the day up 16.1 points, or 0.25 per cent, at 6547.2.
The losses came after Wall Street closed lower overnight, after New York City shut schools as the coronavirus crisis intensifies. The falls came despite positive news from Pfizer overnight, which announced its COVID-19 vaccine was at least 95 per cent effective.
Commonwealth Bank gained 1.7 per cent while Westpac lifted 2.3 per cent and BHP backtracked 0.9 per cent.
Suncorp and QBE were among the worst performers after the NSW Court of Appeals found in favour of two insured businesses in a test case brought by the Insurance Council, that could mean insurance companies are required to pay out business interruption claims through the coronavirus pandemic. Suncorp dropped 3 per cent while QBE lost 3.9 per cent.
Meanwhile, Crown dropped 1.9 per cent after it was announced that it would have to delay the opening of its Barangaroo casino as the inquiry into whether the company is suitable to hold a NSW casino licence rolls on.
BlueScope was among the best performers, gaining 5.3 per cent, after lifting its first half earnings guidance on better-than-expected construction activity in Australia. Buy now, pay later player FlexiGroup surged 5.6 per cent as it announced a partnership with MasterCard and said first half profit would be ahead of last year’s result.
Tech was the best performing sector, with Afterpay up 3.5 per cent and Xero 2.3 per cent higher.
Ben Wilmot 4.07pm: Grocon faces financial pressure
Developer Grocon is again under financial pressure after being hit by delays and extensive claims of late payments to subcontractors on a building site in the inner-city Melbourne suburb of Collingwood.
The company, which is run by construction scion Daniel Grollo, has faced renewed scrutiny after last month failing to lodge a solvency certificate with the Australian Securities and Investments Commission.
Grocon is developing the new office tower and documents obtained by Melbourne paper the Herald Sun show that it is in dispute with the building’s funder and end purchaser Impact Investment Group.
The project has been hit by delays relating to the coronavirus pandemic but has also been subject to longer-term rumours about its progress and disputes between the pair.
Grocon said in September it would face financial difficulties as it embarked on a $270m legal action against the NSW government over its treatment when attempting to develop the Central Barangaroo precinct.
The developer alleged that it was misled by the Barangaroo Development Authority into believing that it could build a super tall skyscraper on the site but these plans were quashed when James Packer‘s Crown Resorts and development giant Lendlease won a legal case to protect their views.
Grocon complained it was cut out of settlement talks and was later forced to sell out at a discount to Chinese development partner Aqualand.
The company warned that it would face financial difficulties in fighting the legal battle but was ordered to pay a $1m security order to pursue the case.
In the course of the court case it warned that sacking its staff and becoming a shell company to fight the case was an option it could pursue.
However, Grocon on Thursday insisted that work was still going on in Collingwood with a company statement saying: “Work is continuing on Grocon’s Northumberland project at Collingwood. Covid has slowed the completion of the project but work has not stopped.”
3.33pm: ASX turns positive
The ASX has turning positive with half an hour of trade remaining. The index is now up 0.1 per cent or 5.6 points at 6536.5.
CBA is now up 1.2 per cent while BHP is down 1.2 per cent and CSL is 1 per cent lower.
Tech is now the best performing sector thanks to a 2.7 per cent lift in after pay while Xero is also up 2.7 per cent.
Lachlan Moffet Gray 3.27pm: Packer group ‘compromised reporting lines’: inquiry
The commissioner of the NSW Inquiry into Crown has said the influence of Mr Packer and his nominee directors blurred reporting lines but was not done in a “malevolent” way.
Counsel assisting Adam Bell SC submitted to the inquiry that the failure for Packer nominee director Michael Johnston to inform his fellow directors of his knowledge of the questioning of a Crown employee in Wuhan led to the arrest of 19 staff the following year for illegally promoting gambling.
“We submit that he does bear the responsibility for failing to inform his colleagues on the board,” Mr Bell said.
He submitted that Mr Johnston’s position on the VIP working group – a Packer-created group that advised on the international business – meant that executives in China reported issues to him instead of then CEO Rowen Craigie or other board members.
“We submit that the compromised reporting lines that the directors had collectively admitted in the evidence were a factor that led to the arrests.
“We submit that the evidence is clear that if the questioning had been brought to the attention of the board, evidence would have been taken.”
But Commissioner Patricia Bergin said that it was likely Mr Johnston’s failure was not purposeful, but rather his many executive and managerial duties driving him to distraction.
“In some senses it was benign because it was so unfortunate … in terms of what Mr Johnston did, it was his trouble with too many hats again,” she said.
“I don’t think he stopped for a second to say ‘what are they looking at me as?’” But he was clearly the most powerful person in the room, when Mr Packer wasn’t there.
“It doesn’t seem to me a dishonest or malevolent connection.”
Lachlan Moffet Gray 2.45pm: Counsel assisting argues Crown is ‘unsuitable’
The counsel assisting the NSW Inquiry into Crown Resorts has returned to make a final argument about why gaming giant should be deemed unsuitable to run the Barangaroo casino in Sydney.
Counsel assisting Adam Bell said he had issues with many of the defence arguments advanced by Crown and James Packer’s Consolidated Press Holdings, including the idea that counsel assisting’s arguments were affected by “hindsight bias.”
Mr Bell said that numerous Crown staff gave evidence about the events leading up to the arrest of 19 staff in China in 2016 for illegally promoting gambling that demonstrate that paint a picture of “serious failure”.
“These are collective admissions against the interests of Crown Resorts by the men and women who had the destiny of Crown Resorts in their hands at the time,” Mr Bell said.
“We submit it’s powerful and compelling evidence that can’t be dismissed merely as hindsight bias.”
Included in the many “obvious escalations of risk” to the Crown staff in China was a failure for Australian Resorts CEO Barry Felstead to report that a staff member was questioned by Chinese police to CEO Rowen Craigie.
Instead, Packer nominee director Michael Johnston was told who in turn did not inform the rest of the board, which is “indicative of a corporate governance problem at Crown Resorts.”
Mr Bell reasserted the idea that reporting lines at Crown were compromised by the existence of a VIP working group, which resulted in information about the Chinese business being reported to the group instead of the board.
He said that Michael Johnston, contrary to Crown’s submissions, regularly attended the group and failed to pass on information to the rest of the board as it arose.
“It’s to be observed that Mr Johnston was the only member of this group that was a director of Crown Resorts,” Mr Johnston said.
Read more: Crown argues for closely supervised trial run for Barangaroo casino
Bridget Carter 1.48pm: DBCT IPO covered
Brokers working on the $1.3bn float of the Dalrymple Bay Coal Terminal are understood to have the deal covered as the book build for the IPO unfolds on Thursday.
It is understood that institutional investors from North America supported the deal, providing enough orders for coverage of the IPO.
Earlier this week, they were trying to ring fence a group of investors ahead of broker bids due on Wednesday.
The so-called ‘ring fencing’ process involves brokers locking in a group of investors for a particular amount of stock for a certain price.
The prospectus will be lodged on Friday for the initial public offering of the Queensland-based coal export facility.
It is understood that advisers to the terminal’s owner, Brookfield, have spoken to 30 institutional investors in recent days ahead of the listing in an effort to gain their support.
The DBCT is one of Queensland’s major metallurgical coal export facilities and handles about 20 per cent of the world’s seaborne metallurgical coal trade.
Ben Wilmot 1.44pm: Unibail-Rodamco-Westfield taps new chief
French company Unibail-Rodamco-Westfield, which bought the international Westfield mall empire three years ago, has installed a new chief executive after investors dramatically rebelled against a recapitalisation plan that would have prompted the largest ever listed property raising.
Dissident investors in Unibail last week won a proxy battle and rejected management’s call for it to raise €3.5bn in fresh equity as part of a broader €9bn turnaround plan.
The move prompted a share price surge, including in its ASX-listed secondary stock, which had traded below $3 before the plan was rejected but was at $4.68 in mid-day trading.
The Supervisory Board of Unibail has now appointed Jean-Marie Tritant as chairman of the management board and Group CEO, succeeding Christophe Cuvillier on January 1, 2021.
During a transition phase starting his week, Mr Tritant will hold the position of group chief operating officer. In a further move, the company’s Executive Vice President Development US, Dominic Lowe, has been appointed Chief Operating Officer US and Chairman of the Management Board.
Mr Cuvillier has promoted the capital raising as a means to get through the worst of coronavirus pandemic but a dissident movement, led by former Unibail CEO Leon Bressler and supported by French telecom magnate Xavier Niel, garnered enough support to defeat approvals that the move required.
The rebel ticket that was elected to the board will instead look to ride out the plunge in shopping malls and then sell off the entire US portfolio once the market reopens. The rebels heavily criticised the $32bn acquisition of the Westfield empire and want to refocus on Europe.
Mr Bressler, who is now Chairman of the Supervisory Board, said a transition phase was beginning for the company.
1.28pm: ASX slightly lower in afternoon trade
The ASX mostly recovered from an early slump in afternoon trade to be down just 0.05 per cent or 3 points at 6527.301.
CBA is up 0.5 per cent while BHP is down 1 per cent and Wesfarmers is 2.6 per cent higher.
Crown is still 3.6 per cent lower following the decision to delay its Barangaroo casino opening.
Ben Wilmot 1.17pm: ESR spins off industrial assets into $1bn-plus fund
Hong Kong-listed industrial property group ESR has sold off an 11-strong parcel of assets to its ESR Australia Logistics Partnership in a $302.5m deal.
EALP purchased the portfolio, spanning the eastern seaboard cities of Sydney, Melbourne and Brisbane, from another fund it had managed, with the deal showing a strong uplift.
The EALP picked up the facilities from the Propertylink Australian Industrial Partnership II and now has gross assets of more than $1bn.
EALP’s strategy is to build a diversified core-plus portfolio weighted towards income-producing assets on the eastern seaboard.
The deal lifts the EALP portfolio’s weighting to Sydney from 35 per cent to 44 per cent.
With the addition of the new assets, the portfolio now includes 36 properties with gross floor area of more than 500,000sq m. EALP was seeded with 21 income-producing assets and 19.4ha of land to develop core product.
ESR Australia chief executive Phil Pearce said the transaction gave PAIP II investors an exit in line with the fund’s original strategy, while the newer vehicle was able to add its portfolio.
ESR recently announced the sell down of the remaining 35 per cent of its stake in EALP, which gave it the capital to buy the additional assets.
Nick Evans 1.15pm: BlueScope narrowly avoids first strike
BlueScope Steel has only narrowly avoided a first strike against its executive pay at the company’s annual shareholder meeting, after strong backlash against the steelmaker’s remuneration report fell only just short of the 25 per cent threshold.
More than 23 per cent of BlueScope shares were voted against the pay report, after a proxy adviser criticised the company’s annual report for failing details the targets required for executives to win short term incentive payments, and noted that chief executive Mark Vassella’s total pay had risen for the year, to $4.6m, despite net profit at the company falling 91 per cent to $96.5m.
Lachlan Moffet Gray 12.30pm: Crown rejects limiting Packer’s voting power
Crown Resorts has rejected the idea of limiting James Packer’s voting power to just 10 per cent and restricting the number of nominee directors on the company board.
Two weeks ago the counsel assisting the NSW Independent Liquor and Gaming Authority’s inquiry into Crown’s suitability to operate the Sydney Barangaroo casino submitted Mr Packer had a “deleterious” impact on Crown’s corporate governance.
They suggested that his voting power through his holding company Consolidated Press Holdings be limited to 10 per cent from 36.7 per cent, that only one nominee director of CPH serve on the board and that all agreements allowing the sharing of information with CPH be ceased.
Currently three of the 10 directors on the Crown board are nominees of CPH. One of them, Guy Jalland, would have been voted off the board at the most recent AGM if Mr Packer was restricted to exercising just 10 per cent of his voting power.
Crown’s counsel Neil Young QC said there was no need for these measures as the company had recently cancelled two agreements that allowed confidential information to be shared with CPH and James Packer.
“There is no need for any of those further steps to be taken,” he said.
“As I have submitted, Crown’s relationship with CPH has been pulled back so that the position is the stock-standard relationship between the company and its major shareholder.”
Bridget Carter 12.26pm: IAG expected to capital raise
Investment bank Goldman Sachs is preparing to tap the market for Insurance Australia Group.
The insurer is expected to raise between $400m and $500m as it remained in a trading halt Thursday.
IAG said the halt was to consider the impact of the judgement of the NSW Court of Appeal on November 18 in relation to business interruption insurance as a result of COVID-19 and to assess the financial impact and capital requirements.
12.17pm: ASX claws back early losses
Australian stocks are clawing back early losses at lunch, after the ASX dropped as much as 0.5 per cent in morning trade.
The ASX now down 0.2 per cent at 6517.8 on weak leads from Wall Street overnight.
Materials are firmly lower with BHP down 1.1 per cent while financials are slightly positive, CBA up 0.1 per cent while Westpac is 1.6 per cent higher.
CSL is the biggest weight on the market as it trades down 1.2 per cent.
Crown is recovering, now down 1.8 per cent as it returned to trade following an announcement that the opening of its Sydney casino would be delayed, as the inquiry into the company’s suitability to hold a casino licence in NSW was ongoing. Shares in the company dropped as much as 5.8 per cent this morning.
Insurer IAG remains halted ahead of an announcement in relation to a court ruling on COVID-19 business claims, and QBE is down 4 per cent on the news.
Lachlan Moffet Gray 12pm: Commissioner ‘troubled’ by differing statements: Crown
The Crown inquiry commissioner has asked the company’s legal team why the actions of CEO Ken Barton shouldn’t influence her findings on the company’s suitability to operate the Barangaroo Casino.
Former NSW Supreme Court judge Patricia Bergin said she was troubled by a difference in CEO Ken Barton’s fourth and fifth statements regarding communications from ANZ bank in 2015, when he was CFO, regarding suspicious activity in the bank accounts of Crown subsidiaries Southbank and Riverbank Investments.
In his fourth statement Mr Barton said there were no failures or issues identified by ANZ, but then reversed that position in that fifth statement.
“I’m asking for your submission for what I should make of this, where the CEO tells me in the fourth statement, that there’s nothing there to be looked as a failure or issue for Crown, and then on notice that I might say something adverse, recognises that he should have identified it as an issue and a failure,” Ms Bergin asked Crown’s counsel Neil Young QC.
“And it really is the question why shouldn’t he have not needed that notification and identified it immediately and not identifying it – why isn’t that a problem for the character of the company?”
Mr Young said that Mr Barton did follow up on the email with a phone call, and in this context made a “misapprehension” about the seriousness of the email.
But Ms Bergin said the fact that upon reflection five years later he still did not recognise the seriousness of the email was concerning.
“It’s the fact that he had to be prompted to recognise it as CEO, that I am a little troubled by,” she said.
“It’s just a small point, but it may be important.”
Ms Bergin also asked Mr Young what she should think about Crown director and AFL boss Andrew Demetriou bringing notes into the witness box without declaring them, and then lying about the extent to which he replied on them.
“We would submit this commissioner, that you should not base any adverse view of Mr Demetriou on those matters, and you should take into account the difficult circumstances in which people in Melbourne have been operating,” Mr Young said.
“It was also the legal team’s mistake in not raising it with him … that he shouldn’t have notes in front of him.”
Ms Bergin also asked what she should think about Crown director Jane Halton “for her not willing to accept things that were put to her.”
Accepting that Ms Halton’s responses were sometimes “lengthy,” Mr Young said her answers were still credible.
“I’d say this commissioner: that her evidence and her answers in our respectful submission do not in any way reflect on her credibility, her honesty or integrity,” he said.
Patrick Commins 11.45am: Unemployment edges higher
The unemployment rate inched higher from 6.9 per cent to 7 per cent in October, with the economy adding 178,800 jobs as businesses and workers began the transition away from emergency income support.
There were 97,000 full-time jobs gained in the month, while part-time employment rose/dropped by 81,800, according to seasonally adjusted data from the Australian Bureau of Statistics.
The underemployment rate – which includes those without jobs plus those who would like to work more hours – dropped sharply from 11.4 per cent to 10.4 per cent.
Read more: Unemployment creeps up to 7% in October but underemployment drops sharply
Lilly Vitorovich 11.40am: Origin viewers down on last year
The third State of Origin match, which saw Queensland take out the series, dominated television viewing on Wednesday night, but its national audience was down 5.2 per cent from last year.
Some 2.73 people around the country watched the Maroons pull off an upset by beating the Blue 20-14, taking the No 1 spot on the TV ratings table.
The post match and pre match coverage took fourth and fifth place behind Seven Network’s one-hour news bulletin.
The third game’s audience was up 12.3 per cent from 2.43m national viewers of the second Origin game last week.
It’s also up more than 15 per cent from the first game, which had a national TV audience of 2.37m. The game coincided with the fiercely fought US Presidential election.
Across the five metropolitan cities, the third Origin match was watched by 1.88m people, down 6 per cent from just over 2m last year.
Ben Wilmot 11.36am: Village Roadshow price to be bumped up by BGH Capital
Private equity raider BGH Capital will be forced to fork out more to take over entertainment company Village Roadshow in the face of a strident campaign led by two dissident investors.
The listed theme park and cinema company went into a trading halt on Thursday morning as BGH Capital looked to head off opposition from both US based investor Mittleman Brothers, which owns 14.34 per cent of Village, and local firm Spheria Asset Management, that has a 7.8 per cent stake.
US-based Mittleman, in particular, has been a savage critic of the BGH bid accusing the private equity firm of seeking to capitalise on the coronavirus crisis by trying to scoop up Village while its operations are at their weakest.
Sydney firm Spheria had taken a more nuanced approach, complaining the bid was below its value of more than $3 per share and indicating that it would only vote down one of two schemes proposed by BGH. But its position hardened on Wednesday when it said it would vote down both schemes.
In a complex approach BGH Capital had proposed two schemes one worth $2.32 per share and the other worth $2.22 per share.
Both schemes would see the private equity house take the company private alongside the founding Kirby family, who along with former chief executive Graham Burke control about 40 per cent of the company.
The dissident pair’s combined holdings could defeat the first scheme of arrangement at $2.32 per share and could also impinge on the prospects of the $2.22 bid, on which the Kirby interests could vote.
BGH Capital had been reluctant to boost the bid, partly due to uncertainty about the shape of the recovery from the coronavirus pandemic, and it had also won the support of the UBS advised independent board committee and independent expert Grant Samuel.
The board has been wary of rejecting BGH Capitals overtures as it may have to raise about $100m early next year in order to recapitalise its balance sheet if the bidder walks.
But even a sweetened offer would be well below the $4 per share that BGH Capital had put forward to outbid private equity rival PEP before the coronavirus crisis struck.
11.30am: GUD acquires AMA automotive businesses
Australian manufacturer GUD has entered into an agreement to acquire AMA Group’s automotive components and accessories division for $70m as it announced a $55m equity raising at an underwritten floor price of $10.75 a share.
The company also said in a trading update this morning that performance through October had continued at levels solidly above the same period a year ago.
GUD said the AMA acquisition was in line with its growth strategy.
“the acquisition of these businesses is highly complementary to GUD’s automotive business and provides strategic diversification across products and customer channels, along with increased exposure to fast growing pick-up truck and SUV vehicle segments,” chief executive Graeme Whickman said.
“We are excited by the opportunity to bring GUD’s strong customer focus and sales ethos to what are well managed and established businesses with impressive product development and manufacturing capabilities.”
Shares in the company remain in a trading halt.
Lachlan Moffet Gray 11.13am: Crown argues for casino licence
Crown Resorts says it should be allowed to operate the Sydney Barangaroo casino even if it is found it needs to implement changes before being considered “suitable” by the NSW gaming regulator.
Commissioner of the NSW Independent Liquor and Gaming Authority’s inquiry into Crown Patricia Bergin asked Crown’s counsel Neil Young QC what would happen to the casino if her findings necessitated a “conversion” period of unsuitability to suitability.
“Many of the matters the authority may wish to be satisfied about are going to be matters that require a working test, as it were,” Mr Young replied.
“That is best addressed by allowing the casino to operate and then very closely monitoring, reviewing and having an audit after two months, whatever it may be, of how it’s running.
“We don’t suggest that there needs to be … that all of this needs to bring about a complete postponement of the commencement of operations.”
Ms Bergin pondered if the changes Crown has offered to make require a “contractual obligation” as the regulator’s enforcement powers in this instance are tempered by historical ministerial directions preventing changes to Crown’s licence occurring without compensation to Crown.
But Mr Young said Crown was willing to co-operate with the regulator, and that Ms Bergin’s role was to simply make recommendations of what needs to occur for Crown to become suitable.
11.11am: ASX extends losses
Australian stocks have dipped as much as 0.5 per cent in early trade but the ASX has bounced back somewhat to be trading down 0.41 per cent at 6504.1.
CBA is now down 0.2 per cent and BHP is 1 per cent lower.
Real estate is the worst performing sector, with Goodman Group down 0.48 per cent on the day of its annual general meeting, while Stockland is 1.8 per cent lower.
Consumer discretionary and industrial stocks were lifting with Transurban up 0.2 while Aristocrat Leisure is up 0.4 per cent, extending a 3.8 per cent jump yesterday, after the poker machine maker declared a dividend despite unveiling a dive in net profit.
11.06am: What’s impressing analysts?
Pact Group rated new Equal Weight: Morgan Stanley
United Malt cut to Underperform: Credit Suisse
United Malt cut to Hold: Jefferies
Lachlan Moffet Gray 11.02am: Crown to take ‘necessary steps’ on casino supervision
Crown Resorts is willing to have permanent gaming regulatory inspectors on the floor of the Barangaroo casino in order to satisfy the government that its systems are immune to risks of money laundering.
Speaking to the NSW Independent Liquor and Gaming Authority’s inquiry into the suitability of Crown to operate the $2.2bn facility, Crown’s counsel Neil Young QC said the company was open to allowing “real-time” monitoring of Crown’s systems by the regulator.
“The second step that can be taken is Crown to take whatever steps are necessary to enable the authority to exercise close supervision over gaming operations at Crown Sydney,” he said, adding that this could occur through “inspectors on the floor or daily reports”.
“Crown is prepared to find ways to commit ILGA to be able to thoroughly review and audit Crown’s operating processes effectively in real-time,” he said.
In a bid to allow Barangaroo to open on time next month, Crown yesterday submitted it would allow the permanent presence of inspectors on the one floor of the casino they wanted to open for as long as ILGA thought necessary.
Their bid was knocked back by ILGA, so now Crown is open to making the presence of inspectors a permanent fixture of the casino, as well as a suite of further reforms.
Some reforms are already underway such as a reshuffling of the management structure that separates the anti-money-laundering and chief legal officer roles, a review of short term incentive outcomes and cultural practices.
Mr Young said Crown would consult with the authority about all of these actions, as well as the outcome of external reviews of their anti money laundering systems and the exact nature of additional controls of cash deposits used for gambling.
“The Crown board is consciously trying to address all of the issues in the fullest and most comprehensive way,” Mr Young said.
“The successful completion of those steps can be made the subject of undertakings as to testing, and that process can be overseen and then audited at regular intervals to ensure that the implementations are appropriate and effective.”
10.51am: FlexiGroup gains on MasterCard partnership
Shares in FlexiGroup have surged as much as 10 per cent after the buy now, pay later player announced a partnership with MasterCard and said first half profit for fiscal year 2020 would be ahead of last year.
The MasterCard partnership will allow customers to buy now, pay later everywhere MasterCard is accepted through a new product called bundl.
“While there are lots of BNPL platforms around the world, this latest development for bundl is differentiated in the way it is able to partner with existing banking systems and provide BNPL technology and products without needing to sign up local retailers, while still generating a sustainable revenue stream,” MasterCard Australasia division president Richard Wormald said.
“With the growth of BNPL, MasterCard understands that many issuers around the world are looking to solve for this increasing consumer preference.”
FlexiGroup last up 7 per cent at $1.15.
Ben Wilmot 10.32am: ARA’s David Blight could lead Cromwell: JPMorgan
The turmoil in the wake of Cromwell Property Group receiving a second strike on its remuneration report and investors voting to spill the board could see the local head of dissident shareholder ARA Asset Management, David Blight, installed as chief executive, according to a leading analyst.
The bitter battle for Cromwell, which controls a $12bn empire across Australia and Europe, flared at its annual meeting, with investors also voting down three directors and performance rights for chief executive Paul Weightman.
The dissidents, led by ARA and Singapore’s powerful Tang family, who control about 46 per cent of the company combined, voted against Cromwell chairman Leon Blitz and two other directors, Andrew Fay and John Humphrey.
Cromwell’s second strike sets the scene for an extraordinary meeting within 90 days to vote on a spill of directors who were on the board when the remuneration report was approved.
ARA nominees, corporate raider Dr Gary Weiss and Melbourne businessman and ABC director Joseph Gersh, were elected as non-executive directors with 52 per cent and 59 per cent in September, and are not subject to the spill.
But three remaining independent directors, Tanya Cox, Lisa Scenna and Jane Tongs, are subject to votes at any meeting.
JPMorgan analysts expect ARA to now nominate a replacement board, which implies a new strategy and new management if it is successful.
“If existing Cromwell directors step down, we believe that a three-person Board comprised of two ARA directors with a managing director and CEO appointed by ARA could expedite ARA’s path,” JPMorgan said
They said ARA’s Australian business was led by Mr Blight, a former global head of ING’s real estate funds operation, and he would be “a strong appointment if he were to become the new CEO”.
Lachlan Moffet Gray 10.24am: Crown drops on return to trade
Shares in Crown Resorts have dropped after emerging from a trading halt on Thursday morning, following the NSW gaming regulator’s decision to delay the opening of the Sydney Barangaroo Casino.
The NSW Independent Liquor and Gaming Authority said their decision was based on serious information about the company’s corporate governance unearthed at their inquiry into the suitability of the company to operate Barangaroo.
That inquiry is continuing today with Crown’s counsel Neil Young making submissions as to why the inquiry should not find the company unsuitable.
Mr Young has said that Crown is willing to make changes to become suitable, noting that overseas jurisdictions take a “holistic” approach to the concept of suitability and acknowledge attempts at contrition.
“The most common approach to the question of what further steps might be taken is to work out a set of concrete practical steps that can be implemented by the casino operator to address the shortcomings,” Mr Young said.
One of the steps that could be taken include the registration of junket operators by state regulators, who will require them to pass a probity test and provide “a range of information” including their registration status in other jurisdictions like Macau.
Crown Resorts was trading at $9.33 a share on opening, down 3.3 per cent.
10.23am: ASX sinks in opening trade
The ASX is dropping in morning trade, the index down 0.27 per cent at 6513 per points.
It comes after Wall Street finished lower overnight, despite positive vaccine news, with Pfizer claiming its vaccine is 95 per cent effective.
Financials are mixed with CBA down 0.2 per cent while Westpac is 1.2 per cent higher. Materials are weighing, with BHP down 0.6 per cent. CSL is 0.9 per cent lower.
Crown is down 3.5 per cent after it was told to delay the opening of its Barangaroo casino while the NSW Liquor and Gaming Authority assess the company’s suitability in holding a casino licence in the state.
Beef producer AACo is up 4.4 per cent after it flagged an uncertain outlook while BlueScope Steel is 5.9 per cent higher after lifting its first half earnings guidance on better than expected construction activity.
Insurer IAG is halted ahead of an announcement in relation to a court ruling on COVID-19 business claims and QBE is down 4.6 per cent.
Ben Wilmot 9.49am: Redcape snaps up Gladstone Hotel
Sydney’s pub boom is showing little signs of slowing with the Redcape Hotel Group snapping up the Gladstone Hotel in the inner west suburb of Dulwich Hill for $38m.
The purchase marked the largest deal in the sector in the wake of the coronavirus crisis and came as the rival, freehold owner Hotel Property Investments, snapped up $63.3m of pubs.
The Redcape purchase from the Coote family, who have held the pub for four decades, adds to the company’s portfolio of suburban gaming hotels, largely in western Sydney.
The purchase will be accretive to distributable earnings and Redcape said the pub will benefit from its operational platform and ability to refurbish properties.
Redcape CEO Dan Brady said the pub purchase was the company’s first acquisition since returning to full operation and with distributions reinstated.
JLL Hotels & Hospitality’s Ben McDonald and John Musca brokered the Dulwich Hill deal.
Other landlords are buying nationally.
Listed pub landlord Hotel Property Investments tapped JPMorgan and E&P to raise $40m to back the purchase of three pubs.
The proceeds from that raising will be used to partly fund the acquisition of the Mango Hill Tavern, the Summerhill Hotel and the Jubilee Tavern that are being bought for $63.3m.
The Mango Hill Tavern, a mixed use complex in metropolitan Brisbane comprising a pub and liquor barn, service station and specialty tenancies, was bought for $31.3m. Major tenants of the property are Queensland Venue Co (HPI’s current major tenant) and Viva Energy.
The Summerhill Hotel: a pub in metropolitan Melbourne, was bought for $22.7m, and leased to The Francis Group, an experienced pub operator and a Chemist Warehouse.
The purchasing was rounded out by the Jubilee Tavern, in Airlie Beach, Queensland, for $9.3m, on a lease to Australian Venue Co.
The HPI pub deals were brokered by Cushman & Wakefield’s Nick Spiros, HTL’s Glenn Price and Brent McCarthy and CBRE’s Scott Callow.
9.40am: AACo flags uncertain outlook
Beef producer Australian Agricultural Company has flagged an uncertain outlook as it delivered a first half earnings of $15m, up $18.4m on the previous period.
Still, revenue was 21 per cent lower on the back of a slump in cattle sales AACo brandings.
“The full force of COVID-19 hit the restaurant sector right as we began our financial year, with our 16 food service markets severely impacted in a matter of weeks,” CEO Hugh Killen said in a statement to the ASX.
“Many restaurants remain closed or are having to adapt to reduced volumes and it will likely be some time before we see the food service sector return to normal.”
9.32am: US stocks sag as New York shuts schools on COVID-19 rise
Wall Street stocks fell for a second straight session Wednesday, tumbling after New York City ordered public schools closed with anxiety over the coronavirus deepening.
Equities were choppy throughout the day, but took a distinct downward path once New York Mayor Bill de Blasio announced the school closures after the city hit its target of a seven-day average coronavirus positivity rate of three per cent.
The move came as US coronavirus cases tick higher, with Johns Hopkins University reporting nearly 162,000 new cases in the last day.
The Dow Jones Industrial Average finished down 1.2 per cent at 29,438.42. The broadbased S&P 500 also shed 1.2 per cent to 3,567.79, while the tech-rich Nasdaq Composite Index lost 0.8 per cent at 11,801.60.
“This is a tug of war between vaccine excitement and nervous trepidation” about the virus, said Art Hogan, chief market strategist at National Securities.
Still, Hogan noted that stocks are still at a high level, with both the Dow and S&P 500 ending at records on Monday.
Among individual shares, Pfizer rose 0.8 per cent as said it planned to apply for emergency use authorisation of a coronavirus vaccine “within days” following clinical trials.
Boeing ended 3.3 per cent lower after the Federal Aviation Administration cleared the 737 MAX to resume service following a 20-month shutdown. Shares had initially soared after the announcement, which had been widely expected.
Target climbed 2.4 per cent after reporting a 41.9 per cent jump in quarterly profits to $1.0bn following strong sales at the big-box retailer.
Disney dipped 0.4 per cent after S&P slashed the credit rating on the entertainment company, citing the drag from coronavirus on Disney’s theme park business.
AFP
Nick Evans 9.26am: Coal miner calls in the administrators
Chinese-owned Carabella Resources has become a victim of the coal slump, with mining contractor MACA calling in receivers over $34.7m of unpaid bills.
Carabella was bought in 2014 by China’s Wealth Mining, a subsidiary of privately owned China Kingho Energy Group, and had operated The Bluff PCI coal project in Queensland. The company put the mine into care and maintenance in late October, citing “below economic” coal prices and uncertainty around China’s ban on Australian metallurgical coal imports.
MACA said at the time it was owed about $34.7m for its work at the mine, and said on Thursday it had called in FTI Consulting as receivers and managers over Carabella in an attempt to recover its debts.
Bluff produces about a million tonnes a year of lower grade metallurgical coal, and MACA was handed a 10-year $700m contract to run the mine in 2018.
Wealth Mining paid about $70m for Carabella in 2014 in a hostile takeover bid.
9.18am: BlueScope raises earnings guidance
BlueScope has lifted its earnings guidance, telling the market this morning that it now expects to report an underlying earnings before interest and tax of around $475m for the first half, including the contribution of a recent property sale. The company had previously stated it expected EBIT to be around $340m for the period.
Residential alterations and additions activity, demand for detached new housing, and growth in demand for e-commerce warehouse and logistics facilities are all robust and US automotive industry demand is recovering strongly,” chief executive Mark Vassella said in a statement to the ASX.
“Demand strength, particularly in the Australian market, has continued to outpace our expectations. We now expect that Australian construction and manufacturing activity will remain strong, driving elevated domestic steel dispatches for the balance of 1H FY2021.”
Ben Wilmot 9.13am: SCA swoops on Auburn Central for $129.5m
Supermarket and shopping centre owner SCA Property Group has snapped up Auburn Central from listed real estate fund manager, Elanor Investors Group, for $129.5m.
In sign that the retail property investment market is recovering the deal was struck at a 5 per cent premium to its book value and realised a 24.5 per cent return over four years for the Elanor Retail Property Fund.
SCA, which mainly owns Woolworths, Coles and Aldi centres, flagged that it had the firepower to acquire assets at the release of its annual results in August.
Elanor repositioned Auburn Central for the changing retail environment and consumer demands, making it into a Sydney metropolitan triple-supermarket neighbourhood shopping centre.
Elanor replaced Big W with a new ALDI and a Tong Li supermarket to complement the existing Woolworths, while other discretionary focused retailers were replaced with everyday goods and services providers.
Elanor is continuing to ride this trend and recently picked up the Riverside Plaza shopping centre in Queanbeyan and will overhaul a vacant Target store into a new medical and health hub.
JLL’s Sam Hatcher and Nick Willis brokered the deal and pointed to the resilience in the supermarket sector and the return of big investors to the area.
“With the relative outperformance recorded in supermarket spending during the pandemic, the sale of these types of assets accounted for 48 per cent of total transaction volumes in the third quarter of 2020. The demand for these non-discretionary anchored assets that provide certainty of income will remain in high demand,” Mr Hatcher said.
Mr Willis said that recent on market shopping centre campaigns had been met with unprecedented levels of capital, with over $2bn of underbidder investor demand. “In addition, a key takeout is the increase in new entrant investors attracted to the relative returns in the retail sector at present,” he said.
9.12am: IAG in trading halt
IAG has entered a trading halt pending an announcement on the consequences of the Judgement handed down by New South Wales Court of Appeal yesterday.
The decision found in favour of two insured businesses that had seen income crunched as a result of the COVID-19 lockdowns.
Read more: COVID-19 business interruption test case ruling a shock to insurance sector
Ben Wilmot 9.06am: Charter Hall makes Sydney office play
Charter Hall could seed a major office development in the Sydney CBD as it is in the box seat to acquire the Telstra Exchange in Pitt St in the Sydney CBD in a $280m deal.
Telstra has an initial term on a sale and leaseback of ten years and analysts say the site could become a long term redevelopment opportunity with a secure income stream.
It is being sold for the telco by Knight Frank’s Paul Roberts, Jonathan Vaughan, Graeme Russell and Dominic Ong.
JPMorgan said the site was “awkward” and would be best redeveloped if Charter Hall could consolidate adjoining land. They estimated that in today’s market a new building with an end value of $600-800m could be developed on the site or potentially $1-1.5bn if the adjoining strata titled site could be consolidated.
“The transaction highlights Charter Hall’s ability to raise and deploy capital and the long term development potential embedded in many of its assets over a 10-30 year horizon,” JPMorgan said.
9.04am: New CEO for InvoCare
Funeral chain InvoCare has appointed former Wesfarmers and Ramsay Health executive Olivier Chretien as its new chief executive.
The appointment follows an announcement in June that managing director Martin Earp would not be seeking reappointment upon the conclusion of his six-year contract.
“Olivier’s record demonstrates strategic execution and financial acumen, combined with successful management of operational transformation and a clear grasp of trends driving business disruption across all sectors, particularly in digital and data,” chair Bart Vogel said.
“He also has an obvious passion for building talent and maintaining strong business ethics.
“This combination of strategic and management execution to create value, together with strong people skills is critical to InvoCare’s investment program and operations as we address changing customer expectations and further diversify earnings into adjacencies.”
8.59am: QBE counts cost of COVID claims
Insurer QBE says that including expected recoveries under its reinsurance protections, the net cost of any business interruption claims in Australia is likely to be limited to $5m per occurrence and not exceed its catastrophe treaty limit of $500m.
The NSW Court of Appeal ruled in favour of the insureds in a test case regarding the operation of an infectious disease cover restriction in business interruption policies.
Bridget Carter 8.40am: HPI raising $48m
Hotel Property Investments is raising up to $48 million by way of a placement and share purchase plan through E&P and JPMorgan.
Shares are being sold at $3.04, which is a 3.5 per cent discount to the last closing share price.
The proceeds are being used for the acquisition of three freehold pub properties in Brisbane, Melbourne and Airlie Beach.
Woolworths pub landlord Hotel Property Investments is raising up to $48 million by way of a placement and share purchase plan through E&P and JPMorgan.
Shares are being sold at $3.04, which is a 3.5 per cent discount to the last closing share price.
The proceeds are being used for the acquisition of three freehold pub properties in Brisbane, Melbourne and Airlie Beach.
The company will raise $40m through a placement and the remainder through a SPP.
Hotel Property Investments owns a portfolio of freehold properties, comprising pubs along with associated speciality stores located on the pub sites.
Its tenants include Australian Leisure and Hospitality, a joint venture 75 per cent owned by the Woolworths Group, and the Kohlberg Kravis Roberts-owned Australian Venue Company, which last year purchased a portfolio of pubs from supermarket Coles.
AVC also acquired the pubs owned by Bruce Dixon’s Dixon Hospitality.
Bridget Carter 8.11am: Liberty prices IPO
DataRoom | Liberty Financial has priced its shares at $6 each for its initial public offering. The non bank lender will raise between $321m and $364m as part of its
hopes to list with a $1.8bn market value.
Liberty will offer a 5.1 per cent annual distribution yield to investors.
The $6 per share price equates to 11 times the company’s net profit.
The company will hold up to 40 meetings with prospective institutional investors, starting from Thursday and the institutional book build will be launched on Wednesday.
Working on the listing is Credit Suisse, along with retail brokers Evans and Partners and Shaw and Partners.
Market analysts expect much of the stock to be taken up by retail investors, although it is thought that a handful of institutional investors have agreed to take small cornerstone stakes in the company, with a 20 per cent interest in the business on offer.
Lilly Vitorovich 8.07am: Nine breached privacy rules: ACMA
Nine’s free-to-air television channel breached privacy rules during three news reports by revealing the home address of two police officers.
The Australian Communications and Media Authority found Channel 9 breached broadcasting the rules when three Nine News reports disclosed the residential address of two police officers last year in October.
The news reports described a vehicle crashing into a house and disclosed that the residents were police officers. The reports also identified the house number and street name, with one report also including the name of the suburb.
ACMA chair Nerida O’Loughlin said its investigation found Channel 9 breached privacy rules under the Television Industry Code of Practice.
Perry Williams 8.02am: Oil Search resets strategy
Oil Search has rekindled its $US3bn ($4.1bn) Alaskan oil project with a final investment decision due in late 2021 and a plan to sell down 15 per cent of the project restarted after the oil price rout saw the project put on hold earlier this year.
The Sydney-based company, best known for its Papua New Guinea LNG export plant, plans to produce 80,000 barrels of oil from Pikka by 2025 in a first phase development with a break-even target of less than $US40 a barrel.
Oil Search said it had boosted its proven and probable resources in Alaska’s North Slope by 33 per cent to 968m barrels of oil, with 494m barrels net to Oil Search, from an overall 728m barrel figure previously.
The planned sale of 15 per cent of its 51 per cent stake in its Alaskan assets was suspended in April after an oil rout forced the producer to launch an emergency $US700m capital raising and slash jobs. All work on developing an early production system for its Pikka oil unit in Alaska has also been placed on hold.
However, Oil Search said on Thursday it was now focused on moving ahead with the project.
“We are excited about the opportunities for Oil Search in Alaska and are preparing to move forward into the FEED phase for the world class Pikka Unit Development,” Oil Search managing director Kieran Wulff said.
“The 2019/20 construction program in Alaska has well positioned us to progress this development quickly and efficiently as market conditions improve. Along with the strong Joint Venture alignment we will launch the proposed divestment that is planned to be completed prior to a final investment decision.”
Still, a grander expansion of its PNG gas projects remains more complicated with a Papua LNG final investment decision still several years away.
Oil Search said in August the expansion will be delayed by two years, reflecting stalled talks with the PNG government and its expectation that new supplies will not being required from buyers until later this decade.
The Sydney-based company has for several years been focused on pushing ahead with the expansion which will double its LNG output in order to meet an expected demand spike around 2024. However, the producer said that scenario has now changed due to this year’s oil market ructions which had damaged demand and seen major LNG investment curtailed by others in the industry.
In March, Oil Search slashed its spending by 40 per cent in a bid to conserve cash after warning of “unprecedented times” in markets.
7.21am: Apple to pay $113m settlement
Apple Inc. has agreed to pay $113 million to settle a multistate lawsuit that claims the company slowed down the performance of older iPhones due to battery issues and concealed that fact from consumers.
The suit, which was brought by North Carolina Attorney-General Josh Stein and 33 other state attorney generals, claims that Apple knew battery issues were causing unexpected shutdowns in iPhones, but chose not to disclose the issues or replace the batteries of its iPhones. Instead, the company hid the issue from consumers with a software update in December 2016 that slowed down the iPhone’s performance in order to keep the phones from unexpectedly turning off, the attorney generals said.
The move to throttle the performance of consumers’ iPhones also led to Apple profiting from selling more iPhones, the attorney generals said.
Apple has denied any wrongdoing and agreed to a settlement to avoid “significant expense, inconvenience and uncertainty,” according to court records. An Apple representative declined to comment.
The settlement requires Apple to provide iPhone battery health, performance and power management information to consumers through its website, updates, and on the iPhone interface.
Dow Jones
6.41am: IAG halted in NZ after test case loss
Insurer IAG has gone into a trading halt on New Zealand’s NZX exchange, pending “an announcement by IAG regarding the consequences of a decision from the Supreme Court of New South Wales Court of Appeal for IAG and finalisation of any proposed response”.
The insurance industry could be on the hook for hundreds of millions in Covid-linked payouts after suffering a stunning loss of its own test case that was designed to fortify their position on rejecting claims made through the pandemic.
The decision, released late on Wednesday in the NSW Court of Appeal, found in favour of two insured businesses, that had seen income crunched as a result of the lockdowns.
Read more: COVID-19 business interruption test case ruling a shock to insurance sector
6.37am: Bitcoin fund surges
Shares of the Grayscale Bitcoin Trust (GBTC) surged 3.2% Thursday as the price of the cryptocurrency moved higher. Grayscale’s fund is the closest investors can get to making trading bets on Bitcoin, since regulators have declined to allow the currency itself to be packaged into an ETF. GBTC tracks price movements in the digital currency, which has recently made a run at a fresh record. Among other things, Bitcoin’s popularity increases along with easy-money policies in traditional money markets. Its all-time high was close to $20,000 three years ago. In the year to date, GBTC has gained nearly 120%.
Dow Jones
6.25am: Wall St gives up earlier gains
US stocks were wobbling on Wednesday, giving up earlier gains that brought the Dow Jones Industrial Average within striking distance of a record.
The blue-chip index was down 39 points, or 0.1%, to 29744. The S&P 500 fell 0.1% and the Nasdaq Composite advanced 0.1%.
Stocks have generally risen over the past month, buoyed by optimism that scientists are getting closer to producing and distributing coronavirus vaccines effective enough to curtail infection levels. Drugmaker Pfizer said Wednesday that final results from its joint clinical trial with BioNTech showed its coronavirus inoculation was 95% effective.
A vaccine would improve the outlook among business-owners and consumers by signalling that the economy will return to pre-Covid levels, analysts said.
“Given the nature of this crisis, the only way to get out of this cycle of first wave, second wave, third wave [of infections] is to start circulating a vaccine, and that’s going to begin relatively shortly,” said James McCormick, a strategist at NatWest Markets. “If you can convince the consumer to both re-engage in the economy, and also that they’ll have a job in the next six months, that unleashes a major sector of the economy.” Shares of banks, manufacturers and other economically sensitive companies were among the bigger gainers Wednesday.
Boeing rose 0.2% after the U.S. cleared the plane maker’s 737 MAX for passenger flights, helping to resolve the plane maker’s biggest pre-pandemic crisis.
Dow Jones
5.40am: Pfizer says vaccine is 95% effective
Pfizer Inc. said Wednesday it will ask health regulators to authorise its experimental COVID-19 vaccine within days, after reporting the shot was 95% effective in its pivotal study and showing signs of being safe.
The company’s plans mean the shot is on track to go into distribution by the end of the year, if the regulators permit.
Out of 170 adult volunteers in the nearly 44,000-subject trial who developed COVID-19 with at least one symptom, 162 received a placebo, while eight got the vaccine, according to Pfizer and its partner BioNTech.
The resulting 95% effectiveness rate puts the shot’s performance on par with shingles and measles vaccines. It is also consistent with the vaccine’s showing in a peek last week at how it did in an analysis of the first 94 subjects to fall sick.
Researchers haven’t found any serious safety issues, the companies said. The vaccine appeared to be well tolerated following a review of data from 8,000 study subjects, the companies said.
A severe side effect was fatigue, reported by 3.8% of the subjects, the companies said. Also, 2% of subjects reported headaches.
The companies said they have collected the two months of safety data on about 19,000 study subjects requested by the U.S. Food and Drug Administration but are still reviewing all those results.
Dow Jones
5.30am: Apple cuts app store fees
Apple said Wednesday it would cut in half its App Store fees for small developers, moving in the face of lawsuits over its 30 per cent commission and increased antitrust scrutiny of the online marketplace.
The iPhone manufacturer said that developers who make less than $1 million from selling apps on its store will see Apple’s revenue bite cut to 15 per cent.
The announcement, however, will have no effect on developers that generate huge amounts of cash from wildly popular apps from the likes of music giant Spotify and video game sensation Epic Games.
Apple said the “vast majority” of developers will benefit from its program launched to give companies a boost during the pandemic, which will become effective January 1.
“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world,” Apple chief executive Tim Cook said.
“We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love.” According to research firm Sensor Tower, the move by Apple affects apps generating less than five per cent of its revenue from the App Store.
Apple says its marketplace has some 1.8 million apps, most of them free. The App Store in 2019 generated some $519bn in commerce in 2019, with about 85 per cent flowing to the developers, according to the company.
AFP
5.26am: 737 MAX gets green light
US regulatory agency FAA on Wednesday authorised Boeing’s 737 MAX to return to the skies following its grounding after two deadly crashes, but it will still be weeks before the plane is put back into service.
Boeing meanwhile faces a long road ahead to overcome a crisis worsened by the pandemic.
Here are a series of questions and answers on the aircraft, and what lies ahead:
– When will the MAX fly again? –
The FAA authorisation marks the official end of its 20-month grounding in the United States.
But airlines who already have the planes as part of their fleet must carry out modifications required by the FAA.
Those modifications involve updating software and repositioning cables. They must also train their pilots on the new system, which must be validated by the regulator, and it is expected to involve time in a simulator.
There are currently about 50 simulators worldwide, and they must also be used with stricter sanitary measures due to the coronavirus pandemic.
American Airlines has already announced plans for a 737 MAX passenger flight between Miami and New York beginning December 29.
Southwest, which operates the largest number of MAX planes in the world, has indicated that it will likely not return them to the skies before the second quarter of 2021 to allow time for its 9,000 pilots to be trained.
Elsewhere in the world, aviation authorities will have to decide if and how the planes will be returned to service.
Transport Canada and the European Aviation Safety Agency have already carried out test flights on the 737 MAX.
The European agency will publish an airworthiness directive by the end of the month that will be opened to comment for 28 days. It will take a final decision late this year or early next.
AFP
5.26am: Mixed start for US markets
Wall Street stocks were mixed early Wednesday despite big gains by Boeing and Pfizer as the market weighs rising coronavirus cases and lofty equity valuations.
Boeing won US government approval to return its 737 MAX to the skies after two deadly crashes, while Pfizer said it planned to apply for emergency use authorisation of a coronavirus vaccine “within days” following clinical trials.
Boeing and Pfizer – which are both in the Dow – both rose about three per cent, lifting that index 0.4 per cent to 29,909.74.
About 20 minutes into trading, the broadbased S&P 500 was up 0.1 per cent at 3,613.26, while the tech-rich Nasdaq Composite Index fell 0.1 per cent to 11,888.43.
Despite the positive news for Boeing and Pfizer, markets are contending with spiking COVID-19 cases in the United States that are prompting new restrictions.
Stocks have already risen significantly in November in anticipation of positive coronavirus vaccine developments and in the aftermath of the US presidential election.
AFP
ASX treads water before US jobs data; CBA and Westpac hit highs
ASX ends flat as markets await key US jobs numbers. CBA and Westpac hit record highs and NAB an 18-year high. Domino's jumps 21 per cent, as Collins Foods and Nick Scali also gain. Amazon falls after earnings disappoint.
ASX ends up 0.5pc; Brookfield enters Insignia battle; former Star CEO cops ban
ASX 200 gains 0.5 per cent, led by resources, tech, property, industrials and communications. Macquarie weighs on financial sector. Google owner Alphabet's earnings disappoint. Brookfield lobs new offer to takeover target Insignia. Amcor lifts on reaffirmed guidance, estimates win. Former Star CFO cops ban.