Australian Stocks Surge; Singapore Exchange Offers $8.4 B for ASX

Chandrasekhar Atreya
25 Oct, 2010
New York City

Australian shares surged on takeover activity and resurgent markets in Asia. Singapore Stock Exchange offers $8.4 billion for the Australian Stock Exchange. Australian dollar hovers just under parity

[R]6:00 PM Sydney, Australia – Australian shares surged on takeover activity and resurgent markets in Asia. Singapore Stock Exchange offers $8.4 billion for the Australian Stock Exchange. Australian dollar hovers just under parity.[/R]

Australia’s stock index surged more than 1.5% after a flurry of takeover activity. Stocks closed higher after G-20 leaders agreed to increase emerging nations’ clout in the International Monetary Fund.

The ASX 200 Index climbed 1.33% or 61.8 points to close at 4,710.0 after hitting a five-month high of 4,725.9.

Treasurer Wayne Swan told parliament Monday that Australia would benefit from an agreement among G-20 finance ministers to refrain from currency devaluation war. He was addressing the parliament after attending the weekend G-20 finance ministers meeting in South Korea.

The producer price index, the prices of goods and services at the factory or farm gate, increased at their fastest quarterly pace since December 2008, Australian Bureau of Statistics said Monday.

The PPI increased 1.3% in the quarter from a year ago quarter according to the ABS.

The Australian dollar traded higher breaking the 99 cents barrier after the release of better-than-expected PPI economic data. It closed the day trading at 99.60 U.S cents at Sydney today.

Singapore Stock Exchange confirmed Monday it offered A$48 a share to buy out Australia’s stock exchange in a $8.4 billion cash and stock that drove the ASX shares up 25% up on Monday.

ASX CEO Rob Elstone confirmed Monday that the companies were quite confident they could present compelling arguments for the merger, especially with reference to Foreign Investment Review Board approval.

The Queensland Resources Council said Saturday the approval by the government of two large coal seam gas projects in the state will create more than 12,000 jobs and generate billion of dollars of revenue.

The BG Group and a consortium involving Santos, Petronas and Total will capture seam gas from Bowen and Surat Basins to Gladstone in central Queensland. Michael Roche from the Resource Council said it is a massive achievement.

The Group of 20 nations on Saturday arrived at a hard-fought agreement on reforming the International Monetary Fund with emerging nations including China and India with a greater clout.

The shift in the balance of power was long sought after by the emerging countries including Brazil, India, China and Turkey. European nations will give up two board seats.

Perpetual board said Monday its initial view that the takeover offer by Kohlberg Kravis Roberts that values the company between $38 and $40 a share did not reflect the company’s true value. However, the company said it would hold explanatory discussions with KKR to better assess the proposal.

Leighton Holdings said it will seek protection for its minority shareholders by applying to the Takeovers Panel should ACS succeed in its takeover of Leighton Holding’s German parent Hochtief AG.

Equinox Minerals said Monday it had agreed to acquire Citadel Resource Group’s all issued and outstanding shares for $1.25 billion.

Resource News

WPG Resources confirmed it has retained Deutsche Bank to provide A$121.99 million fund package for development of its Peculiar Knob iron ore project in South Australia.

Earth Heat Resources, the geothermal development company, announced last week it signed an agreement to explore and develop a major geothermal resource in Africa’s Rift Valley.

Atlantic Gold said it will issue 40 million shares at 6 cents each to raise $2.4 million for its exploration plans.

Grange Resources sold 582,000 tons of iron pellets in the quarter ended September and also agreed to make supplies in this quarter at $150 a ton.

Robust Resources confirmed Friday it raised $30 million to fund exploration of its gold and base metal resources at its Indonesian project.

Gainers & Losers

ASX Ltd led gainers in the ASX 200 with a gain of 19.42% to A$41.75 followed by Infigen Energy 15.57% to A$0.705, St Barbara Ltd 7.79% to A$0.415, Isoft Group Ltd 7.69% to A$0.098 and Beach Energy Ltd 7.38% to A$0.655.

Asciano Group led decliners in the index with a drop of 2.08% to A$1.645 followed by Spotless Group Ltd 1.69% to A$2.32, Pacific Brands Ltd 1.33% to A$1.11, Gunns Ltd 1.31% to A$0.755 and Macarthur Coal Ltd 1.23% to A$12.85.