Australians Expect Home Prices to Rise; Index Declines

Chandrasekhar Atreya
15 Oct, 2010
New York City

Australian shares recovered early losses following a weak lead and close marginally lower but gained for the week 0.16%. Queensland government starts its own broadband network for Brisbane. Housing price index drops in October but more home owners expects prices to rise in a year.

[R]6:00 PM Sydney, Australia – Australian shares recovered early losses following a weak lead and close marginally lower but gained for the week 0.16%. Queensland government starts its own broadband network for Brisbane. Housing price index drops in October but more home owners expects prices to rise in a year.[/R]

Stocks in Australia recovered early losses to close marginally lower, while the local currency dropped back from a post-float record.

The ASX 200 Index lost 0.21% or 10.10 points to close at 4,689.00 and closed up 0.16% in the week.

After coming within a tenth of a U.S. cent of parity overnight, the Australian dollar fell back to about 99 cents on Friday, as investors cautiously waited a raft of U.S. economic data.

The Australian dollar traded at 99.15 U.S. cents at 4:05 p.m. in Sydney from 99.42 cents in New York yesterday and gained for the ninth week against the U.S. dollar.

Nearly two out of three customers expect a rise in home prices during the next 12 months, new data shows. The rising expectations are based on the expected economic recovery and sustained exports to China and other Asian markets.

The Westpac-Melbourne Institute consumer house price index dropped to 51.1 in October, compared to its previous reading of 58.8 in July, and well below the peak of 80.3 registered in January 2010.

The Auditor General’s report found that home insulation safety practices were ignored in the rush by the government’s environment department to meet stimulus objectives. The Auditor-General’s report into the $2.8 billion program released Friday, confirms that issues of safety and fraud became so widespread that the department was overwhelmed by claims.

But the report largely exonerates former Environment Minister Peter Garrett from the responsibility for the safety issues.

Heavy rain in Queensland caused an increase in metallurgical coal prices to about $220 a ton.

A News poll survey shows that more than half the Australians would support the system of first-past-the-post voting system that is vogue in the U.S. and the U.K. The survey commissioned by the Institute of Public Affairs, found 57% of voters in Australia supported the first-past-the-post voting system.

However, 37% favored the current preferential system.

The deadline for travel agents to claim against Qantas Airways as part of a successful fuel surcharge class action has been extended. Law firm Slater & Gordon said Friday it could cost Qantas up to $26 million to cover additional commissions owed to travel agents between 2004 and 2007. The Federal Court ruled Monday that travel agents had until November 15 to register their claims.

Australia Post’s full year net fell by 66% on the back of rising costs and declining global mail volumes due to e-mail. But the postal service said Friday its parcel service business is benefiting from the high Australian dollar and business direct mail volumes are returning to pre-crisis levels.

The company’s net profit was $89.5 million for the year ended June 30, down 65.6% from $260.5 million a year earlier.

Andean Resources said Friday a $3.62 billion takeover offer by Canada’s Goldcorp got approval from Australia’s review board. The miner said Goldcorp advised it that approval for the $C3.6 billion takeover had been granted by the Foreign Investment Review Board.

U.S. healthcare products company Henry Schein agreed to acquire Australian veterinary products provider Provet Holdings for $93.2 million. The deal offers to pay Provet shareholders $2.14 a share, a 35% premium from its last closing price before the deal was announced.

The deal which requires approval by Provet shareholders and the courts, is expected to close near the end of this year.

Fed up with waiting for the central government to bring its $43 billion National Broadband Network to Brisbane, the Queensland government negotiated its own network at no cost to the taxpayers, with a British-based company.

The network will be built over the next four years by fiber optic deployment specialist i3 Group, which uses sewer cable laying methods to build networks, as much as 75% cheaper than traditional methods, according to the company.

Santos Ltd, Australia’s third-largest oil and gas producer, priced an additional 300 million euros of hybrid notes to help the company fund its Gladstone LNG project.

These binds, following last month’s sale on 700 million euros of hybrid notes, were issued at an implied yield of about 8.05%, according to a statement from the lead manager UBS AG with Deutsche Bank AG.

Resource News

Kula Gold, by far the biggest gold float of Australia this year, is aiming to produce at least 100,000 ounces of gold per year within three years or so.

Eastern Star Gas lured a third major Japanese utility with the promise of an equity stake as it looks to progress with its proposed $2.5 billion LNG project at Newcastle port.

Cockatoo Coal said Friday it completed a capital raising in which it sought to garner $150.8 million through a book build by offering 33.4 million shares at 51 cents per share.

Crown Director David Gyngell bought 11,500 shares of the company for $100,165, according to a note released by the company to the Australian Stock Exchange on Friday.

Gainers & Losers

Linc Energy Ltd led gainers in the ASX with a rally of 12.02% to A$2.05 followed by Extract Resources Ltd 10.93% to A$6.9, Nufarm Ltd 4.94% to A$4.25, Transpacific Industries Group Ltd 3.94% to A$1.32 and Avoca Resources Ltd 3.77% to A$3.30.

Infigen Energy led decliners in the index with a drop of 6.06% to A$0.62 followed by Ardent Leisure Group 5.96% to A$1.105, St Barbara Ltd 5.62% to A$0.42, Isoft Group Ltd 4.55% to A$0.105 and Karoon Gas Australia Ltd 3.27% to A$9.75.