Category — Miscellaneous Stocks

We’ll be honest. This falling stock market has us licking our lips.

The S&P/ASX 200 has dropped 6.2% in two weeks.

And yesterday the index had its first 100-point fall since 3 October last year.

The ASX Emerging Companies index has done even worse. It has dropped 17.1% in seven weeks.

Australia has had quite a few crises fly past our economic windscreen since ‘the recession we had to have’ in the 1990s. The East-Asian crisis, the tech wreck, September 11, the global financial crisis, the European sovereign debt crisis and any we’ve forgotten. But Australia chugs on as ever.

So is it safe to invest your money and to keep what’s already committed working hard for your retirement? And what are the risks?

Do we, for example, have resource curse and Dutch Disease? Both those terms refer to what your local newspaper editor might call a ‘two speed economy’. Resources can dominate all other parts of the economy and cause the exchange rate to appreciate beyond what the rest of the economy can handle.

This happened to the Netherlands in 1959, hence the name Dutch Disease, when they discovered a vast natural gas field. Just like Australia has in the Cooper basin, for example. [Read more →]

April 30th 2012 – Australasian Investment Review – (AIR)

We can expect to see more earnings downgrades this week with two of the major banks, the ANZ and Westpac, centre stage.

The ANZ is expected to lift earnings 5% to around $2.9 billion, Westpac will earn around flat profit around $3.2 billion, according to analysts.

But what will be of greater interest to investors is the outlooks both banks will offer.

Both are expected to be guarded on how they describe the next six months or so, but given the flow of downgrades we have already seen, many analysts would not be surprised to see some evidence of earnings growth erosion in their reports.

Certainly home lending has been weak; while business credit has hardly grown (we get an update on that later today from the private credit data from the Reserve Bank). [Read more →]

The price action you’re watching in the Aussie stock market is a continuation of the pattern of the last few years.

Stocks rally on hopes of recovery, growth, low interest rates, and stimulus…and then they falter when the reality of the debt overhang reasserts itself. Shares bounce back and forth in a range, with public statements and policy changes being the catalyst for quick, tradable rallies.

What a miserable market.
The sell-off you witnessed in stocks, oil and gold at the start of April were driven by three factors.

First, Spain’s $3.35 billion bond auction on April 5 was underwhelming. This reminded everyone that Europe’s governments have more debt than they can ever repay or grow out of. Strike one. [Read more →]

April 26th 2012 – Australasian Investment Review – (AIR)

April 23rd 2012 – Australasian Investment Review – (AIR)

Further evidence that Woolworths has lost its way could come tomorrow when rival Coles’ third quarter sales figures are released by parent Wesfarmers.

Analysts reckon Coles will show sales growth of 4% on a headline basis and same store growth of around 2-3% in its key supermarkets business.

That will be ahead of Woolies which surprised the market on Friday with topline sales growth of 2.9% for its supermarkets business, but no growth at all on a same store basis.

That was the weakest quarterly growth for 7 years, and when liquor is taken out, same store sales actually fell under the pressure of lower prices for fruit and vegetables. [Read more →]

April 17th 2012 – Australasian Investment Review – (AIR)
Australia’s largest independent coal company will be created shortly when the final stage of the friendly takeover of Aston Resources by Whitehaven Coal is completed.

Aston shareholders yesterday said ‘yes’ to the $5.1 billion takeover by Whitehaven Coal at a meeting in Brisbane.

Newcastle billionaire Nathan Tinkler holds a 32% stake in Aston, which the takeover values at about $720 million.

Shareholders also approved Whitehaven’s acquisition of Mr Tinkler’s unlisted company Boardwalk Resources.

That part of the deal will see Boardwalk investors receive Whitehaven shares worth approximately $720 million.

The transaction remains subject to approval of the Federal Court of Australia at a hearing tomorrow. [Read more →]

April 11th 2012 – Australasian Investment Review – (AIR)

The Rio Tinto subsidiary, Energy Resources of Australia (ERA) has increased its hoped for level of production of uranium oxide for 2012 to between 3200 and 3700 tonnes.

The revised forecast issued came as the uranium producer announced its March quarter operations review yesterday.

ERA had previously forecast annual uranium oxide production of 3000 to 3700 tonnes. [Read more →]

April 05th 2012 – Australasian Investment Review – (AIR)

Are the gods of insurance (weather, the earth and financial markets) finally smiling on QBE and two tough years?

Judging by the company’s AGM in Sydney yesterday, the answer to that question would have to be a qualified ‘yes’.

The first quarter of 2012 has seen an absence of major disasters against the first three months of 2011 when we had the Brisbane floods, as well as wet weather elsewhere, cyclone Yasi and the second and more destructive quake in Christchurch.

And financial markets are steadier than they were at the end of last year, although they did start 2011 on a similar note to those now being enjoyed by QBE and others. [Read more →]

April 04th 2012 – Australasian Investment Review – (AIR)

The weak retail sales data from the ABS helps explain why Metcash, the big grocery retailer and hardware and liquor distributor and retailer announced a big restructuring yesterday of its basic grocery distribution businesses and the write down of an investment in retailing in Queensland.

The cost will be nearly 480 jobs and around $133 million in impairment write-downs and actual financial charges.

The owner of Franklins, IGA and Mitre 10 chains said it would close 15 regional Campbells Cash and Carry branches, with 315 jobs to be cut.

A further 183 jobs would go from the corporate side of the group.

The company, which supplies groceries to over 1,400 IGA supermarket stores, said the restructure would cost between $34 and $43 million.

Metcash said it had also sold its specialist food business Foodlink to Bidvest Australia.

It said Bidvest would offer employment to 90 Foodlink employees. [Read more →]