Australian Construction Growth Slows

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
07 Jul, 2010
New York City

Stocks in Australia traded lower after building industry growth slowed in Australia in June at the fastest pace in 10 months. Aspen makes a revised bid for Sigma Pharmaceuticals. Coal shipments from Newcastle port falls for the week.

[R]6:00 PM Sydney, Australia – Stocks in Australia traded lower after building industry growth slowed in Australia in June at the fastest pace in 10 months. Aspen makes a revised bid for Sigma Pharmaceuticals. Coal shipments from Newcastle port falls for the week.[/R]

Stocks in Australia traded lower, as did other major exchanges in Asia, after the building industry in the country shrank at the fastest pace in 10 months in June.

The ASX 200 Index fluctuated and lost 0.5% or 21.50 to close at 4,254.60 in Sydney today.

The RBA governor Glenn Stevens said yesterday that caution in the financial markets has been quite evident in the past couple of months, driven principally by concerns about sovereign and bank debts in Europe but also by some uncertainty about the pace of future global growth. He also said that inflation in Australia is likely to exceed 3% in the near term.

Australia’s building industry index shrank in the month of June to 46.4 from 53.2 in May, the fastest pace of contraction in 10 months, according to a survey by the Australian Industry Group and Housing Industry Association released in Sydney today.

Any reading below 50 indicates the industry is contracting, whereas the report showed that an index of engineering work rose 10.4 points to 52.9 and commercial work gained 1.3 points to 51.8 in June, both positive indicators.

Africa’s biggest drug-maker, Aspen Pharmacare Holdings Ltd, has lowered its bid by 8.3% for Sigma Pharmaceuticals by offering A$648 million with 11 conditions, after its due diligence of the books of Sigma.

The offer of 55 cents by Aspen is 39% higher than yesterday’s closing share price of 39.5 cents, the Melbourne-based Sigma said in a statement today. Buying Sigma would allow Durban-based Aspen to combine its Australian business with that nation’s biggest drug distributor by market share.

Coal Shipments from the port of Newcastle in Australia fell 13% for the week ending July 5 to 1.84 million tons from 2.11 million tons in the previous week.

“The volume exported fell 13% to 1.84 million tons, in the week ended 7 a.m. local time July 5, with 12 vessels waiting to load outside the harbor down from 61 a week earlier,” said Newcastle Port Corp on its Web site. 53 more vessels were traveling to the port to load coal, Newcastle Port said.

ASX Movers

Sigma Pharmaceuticals Limited led gainers in the S&P ASX 200 index with a rise of 13.9% followed by Ansell Limited 3.0%, International Flavors & Fragrances Inc 2.8% and Equinox Minerals Limited 2.5%.

CuDeco Limited led decliners in the S&P ASX 200 index with a loss of 13.7% followed by Infigen Energy 6.2%, iSOFT Group Limited 5.2%, Tower Australia Group Limited 5.0% and Abacus Property Group 4.9%.

Other Movers

Ansell Limited, the distributor of gloves and protective products in the occupational healthcare, rose 3.0% to A$12.88.

BHP Billiton plc rose 0.7% to A$37.43 after the mining company was upgraded by a couple of companies yesterday.

CuDeco Limited plunged 13.7% to A$4.21.

Qantas Airways Limited, the airline, rose 1.3% to A$2.21.

Rio Tinto Limited rose 1.1% to A$65.84 after the mining company said copper futures for September climbed 1.9% in New York yesterday and retreated 0.9% to $6,546.50 a metric ton today.

Sigma Pharmaceuticals Limited surged 13.9% to A$0.45, after Aspen made a revised offer for the company at a premium of 39%.