Australian Stocks Rally; Rudd

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
08 Jun, 2010
New York City

Prime Minister Kevin Rudd may rue his proposal to collect more tax from mining companies, after it has become a winning strategy for the opposition in the upcoming elections to be held within 10 months.

[R]6:00 PM Sydney, Australia – Stocks in Australia rallied led by gains in commodity prices and Asian stocks. The proposed resources tax has brought down Rudd’s popularity rating. BHP may raise iron or prices by 23%. Tenet terminates discussions with Healthscope.[/R]

ASX 200 index in Australia increased or 55.30 or 1.28% to 4,381.20 and of the stocks in the index, 150 increased, 34 declined and 16 were unchanged.

Prime Minister Kevin Rudd may rue his proposal to collect more tax from mining companies, after it has become a winning strategy for the opposition in the upcoming elections to be held within 10 months.

Rudd saw his popularity slide in April when a “carbon trading plan” to fight global warming was scrapped. Popularity dropped to 41% from 60%, after the proposed super profit mining tax was announced May 2, according to a Nielson opinion poll released yesterday.

The proposed tax was cited as the main reason for the drop in Australian Business Confidence in May. The index dropped to 5 in May from 13 in April, according to a survey by National Australia bank Ltd in the last week of May released in Sydney today.

Dallas-based Tenet Healthcare Corp withdrew its preliminary bid for Healthscope Ltd, after the offer drew criticism. Tenet was unable to convey the deal’s potential to its shareholders after the non-binding offer was prematurely disclosed.

“In order to eliminate a prolonged period of uncertainty and speculation in the market, it is best to withdraw the offer,” Tenet said in a statement.

New South Wales Treasurer Eric Roozendaal expects the state to have a surplus of A$101 million in the fiscal year ending June 30, compared with a deficit of A$ 1 billion forecast six months ago after stamp duties on increased property transactions boosted revenue.

“At a time when most economies around the world are struggling, our financial position is quite strong,” said Roozendall in Sydney today. He also expected the surplus to grow to A$ 773 million in the next fiscal year.

Australia supported India’s willingness to work jointly in energy, minerals and power generation sectors including tie-up for gas supply for new plants to be jointly set up in India.

Speaking at the first Australia-India Energy and Minerals Forum in Perth, India’s Power Minister Sushil Kumar Shinde said the two countries could develop together the uses of lignite, energy efficiency, efficiency of coal-based power plants and development of smart grids.

Australia was represented by its Minister of Foreign Affairs, Stephen Smith.

Valemus Ltd, the construction unit of Germany’s Bilfinger Berger AG in Australia, plans to sell 555 million shares in the price range of A$2.20 to AS 2.50 a share, it said in a statement.

Valemus, whose projects include the Sydney Opera House and Anzac Bridge, has set the IPO listing for the month of July.

ASX Movers

St Barbara Limited led gainers in the S&P ASX 200 index with a rise of 15.2% followed by Gunns Limited 10.8%, Avoca Resources Limited 6.3% and Ausenco Limited 6.2%.

iSOFT Group Limited led decliners in the S&P ASX 200 index with a loss of 12.5% followed by Elders Limited 9.9%, Sundance Resources Limited 3.7%, Aquila Resources Limited 3.1% and ResMed Inc 3.0%.

Other Movers

BHP Billiton plc rose 1.1% to A$36.96 after the mining company plans to raise iron ore prices from September by 23% according to media reports.

Healthscope Limited fell 1.2% to A$5.42 after the company announced it has withdrawn from preliminary discussions with the U.S. based Tenet Healthcare.

Karoon Gas Australia Ltd rose 1.6% to A$7.34 after the company announced that it has evaluated the independent DeGolyer & McNaughton report on the company’s South American assets of May 30 and believes that the value of its Brazilian and Peruvian assets is not properly reflected in the market.

Newcrest Mining Limited added 2.7% to A$33.15 after the company announced that it has completed the due diligence process as agreed under the merger implementation agreement with Lihir Gold Limited.

Rio Tinto Limited, the mining company, added 1.7% to A$66.69.