Australia Mortgage Approvals Rise

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

Stocks in Australia traded higher on rising home-loan approvals. BHP

[R]6:00 PM Sydney, Australia – Stocks in Australia traded higher on rising home-loan approvals. BHP’s Olympic Dam project maybe delayed due to environmental hurdles. India-based Adani Group gets approval to develop export terminals for coal at Dudgeon Point in Queensland. IUCN and Rio Tinto announce 3-year relationship.[/R]

Stocks in Australia rallied on the gains in Asia after home loan approvals gained in the month of May.

The ASX 200 Index gained 0.31% or 13.60 to close at 4,409.90 in Sydney today.

Home loan approvals in Australia rose in the month of May for the first time in eight months. The number of loans granted to build or buy apartments or houses rose in May by 1.9% to 48,818 from April, when they declined a revised 1.5%, the Statistics Bureau said in Sydney today. The total value of these loans were A$21.4 billion in May, a rise of 0.7% over the April.

However, first home buyers accounted only for 16.1% in May down from 16.3% in April and 28.5% in May 2009, the Statistics Bureau said. These were to some extent due to the withdrawal of grants given to first time home buyers in two stages from A$21,000 to A$7,000 on Jan 1.

The Australian Securities and Investment Commission decided to increase its scrutiny of the derivatives marketing for better disclosures to limit investor losses, the Australian Financial Review reported today.

A contracts for difference or CFD, is a financial instrument wherein investors bet on share price performance without owning the shares. Among the steps taken the ASIC will ask for better disclosures of the risk while targeting misleading advertisements and will seek a suitability test for investors, the newspaper said citing commissioner Greg Medcraft.

BHP Billiton’s A$20 million expansion at its Olympic Dam site could be delayed or even cut if the environmental assessment of the project gets protracted, the Australian Financial Review reported.

Spokesman Mitch Williams said BHP may not put a proposal to its board for approval for two years if this continues.

Fortescue Metals Group Ltd is planning to start building the $9 billion Solomon project in the first quarter next year. The mines and railroad may take two years to build with production starting in the first quarter of 2013, said the Perth-based resource company in its development application.

The company had placed the project on hold on May 19, after the then government proposed a super profit mining tax. At that time, the company had said that existing development studies would continue.

Adani Group, India’s biggest coal importer, has been selected to develop an export facility for coal in Queensland, a spokeswoman for the North Queensland Bulk Port Corporation said.

DBCT Management, which leases the Dalrymple Bay Coal Terminal and Adani will separately draw up plans for export terminals at Dudgeon Point located about 15 kilometers south of Mackay on the Queensland coast, said Mary Steele, a spokeswoman for the corporation from Brisbane today.

ASX Movers

Elders Limited led gainers in the S&P ASX 200 index with a rise of 16.2% followed by Kagara Ltd 7.7%, St Barbara Limited 6.1% and Lynas Corporation Limited 5.8%.

Orica Limited led decliners in the S&P ASX 200 index with a loss of 5.3% followed by Aristocrat Leisure Limited 3.0%, Brambles Limited 3.0%, Extract Resources Limited 2.8% and Abacus Property Group 2.5%.

Other Movers

Energy Resources of Australia Ltd rose 3.6% to A$14.78.

Rio Tinto Limited rose 1.4% to A$69.06 after the mining company and IUCN (The International Union for Conservation of Nature) today entered into a formal collaboration agreement, committing to work together over a three year period.

Paladin Energy Ltd rose 1.6% to A$3.72 after the board approved the appointment of Peter Donkin with effect from 1 July 2010 and Philip Baily with effect from 1 October 2010 as non-executive directors of Paladin Energy Ltd.

Santos Ltd rose 0.6% to A$14.09 after the company stock was upgraded to “buy” from “neutral” at UBS AG.

Sigma Pharmaceuticals Limited added 1.1% to A$0.46 after the drug company said the embattled and destabilized board and management of Sigma Pharmaceuticals might be on the hook as a result of the opportunistic approach from South Africa’s Aspen Pharmacare but today’s update to shareholders suggests they might have found some wriggle room.

Tabcorp Holdings Limited the gambling company rose 0.3% to A$6.49.