Australian Dollar at 8-month Low

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
20 May, 2010
New York City

The Australian dollar dops to an eight-month low against the US dollar. Western Australia expects to post A$290 million surplus. Healthscope receives a revised bid from a private equity consortium. Super-profit tax continues to be controversial in Australia.

[R]3:00 AM New York, 7:00 PM Sydney – The Australian dollar dops to an eight-month low against the US dollar. Western Australia expects to post A$290 million surplus. Healthscope receives a revised bid from a private equity consortium. Super-profit tax continues to be controversial in Australia.[/R]

The Australian dollar dropped to an eight-month low against the greenback amid concern euro-zone debt crisis will derail global economy and sap demand for higher yielding assets.

The Aussie also fell for the sixth day in a row against the yen, the longest losing streak in 16 months.

Australian stocks declined tracking losses in the dollar and weak outlook for the global economy.

Australia’s proposed 40% super tax on mining profits is having a contagion effect, as other countries are following suit to levy tax on mining produce.

Chile, the largest copper exporter is considering a temporary increase in mining taxes to defray the earthquake reconstruction expenses and this may cost companies like BHP, Xstrata, and Anglo American Plc nearly $1.2 billion in the next two years.

Brazil, the second largest iron ore exporter is considering taxing shipments of the commodities or raise royalties, the nation’s Energy and Mining Minister Edison Lobao has said.

Healthscope Ltd said today that the private equity fund revised the earlier offer on May 14 by 4.5% to A$1.82 billion or A$5.75 a share, a premium of 28% more than the closing price on May 14.

Petroliam Nasional Bhd, the Malaysian state-owned oil company is looking to further presence in LNG projects in Australia. ‘We are not here for a limited participation and our objective remains the same as before, which is to grow our business’, said Petronas Australia CEO, Majid Khalil in an interview in Brisbane yesterday.

Charter Hall Group, the Australian real estate company had agreed to pay A$108 million for two listed and one unlisted funds of the Macquarie Group Ltd’s property trusts to increase their assets under management to A410.2 billion.

The company is aiming to boost assets under its unlisted wholesale Core Plus Fund and Core Plus Industrial Fund as opportunities come up, said the firm’s Managing Director David Harrison.

“We see the current market as providing the highest prospective property returns that we have seen since the mid-1990s,” said Harrison in an interview in Sydney yesterday.

The state of Western Australia, which generates a third of the country’s exports, expects to post a budget surplus of A$290 million for the year to June, and the state’s total debt is expected to rise to A$20 billion by 2012-13, Premier and Treasurer Colin Barnett said today in a statement.

The Aussie dropped 2.2% to 82.82 US cents.

In Sydney trading ASX 200 Index stocks declined 1.6% or 70.6 to 4,316.50.

Of the ASX 200 index stocks, 39 rose, 151 fell, and 10 were unchanged. Straits Residential Ltd. led gainers in the index shares with a rise of 6.1% followed by Hills Industries climbing 5.1%.

Healthscope Receives Revised Bid

Healthscope reported today that its board is now considering a revised, non-binding proposal to acquire all of the company’s issued capital at a price of A$5.75 per share.

Initially the same private equity consortium had set its proposal at A$5.50 per share.

Healthscope has since engaged Goldman Sachs JBWere, Lazard and Minster Ellison as advisors.

“Further the Board believes the company is well placed to lift market share in pathology as a result of industry deregulation. Longer term growth is expected from the construction of new, large and very efficient hospitals,” said Healthscope.

Super Profit Tax Profit Needs More Analysis, Garnaut

The Australian reported that Lihir Gold chairman Ross Garnaut said today that the government has the right approach with the resource profit tax, but it still needs more analysis.

Garnaut however criticized the approach by both government and miners in recent weeks.

He noted that the idea of a tax on resource rent doesn’t distort any investment production decisions or trade decisions.

“But the initial response has been one of noise rather than analysis - I think it’s important for Australia to step back a bit and get back to analysis of actual effect,” said Garnaut.

ASX 200 Index Movers

Straits Residential Ltd. led advancers in the ASX 200 index stocks with a rise of 6.1% followed by Hills Industries 5.1%, Sundance Resources 4%, Australand Properties 3.8%, and Lynas Corp. 3.1%.

MacMahon Holdings led decliners in the ASX 200 index stocks with a drop of 12.1% followed by Whitehaven Coal 9.9%, Pacific Brands 9.9%, Emeco Holdings 9.1% and Gunns Ltd. 8.6%.

Other Movers

Commodity stocks were mixed as gold price decreased 0.8% to $1,183 per ounce and crude oil price edged up 0.1% to $70 per barrel.

Fortescue Metals fell 7.8% to A$3.57 and Mount Gibson Iron plunged 6.2% to A$1.28.

Oil Search slipped 1.1% to A$5.25.

Financial stocks also declined. Westpac Banking Corp. fell 4% to A$21.80, National Australia Bank decreased 2.3% to A$23.25 and Commonwealth Bank of Australia plunged 2.6% to A$50.07.