Sydney Drops; Greens Plan to Block ASX Ltd Takeover

Chandrasekhar Atreya
26 Oct, 2010
New York City

Stocks in Sydney closed lower as financials and banks declined. The Greens intend to block the takeover of the ASX Ltd citing human rights record of Singapore. Competition commision approved the $1.8 billion takeover offer of CSR Sugr by Singapore based Wilmar International.

[R]6:00 PM Sydney, Australia – Stocks in Sydney closed lower as financials and banks declined. The Greens intend to block the takeover of the ASX Ltd citing human rights record of Singapore. Competition commision approved the $1.8 billion takeover offer of CSR Sugr by Singapore based Wilmar International. Australian dollar hovers near parity.[/R]

Stocks in Sydney pared some of the gains made Monday led by the drop in financial stocks and the impending hurdles for the deal to acquires the ASX Ltd.

The ASX 200 Index lost 0.47% or 22.2 points to close at 4,687.80. The Australian dollar lost a fraction and closed at 98.99 U.S cents. ASX Ltd declined more than 7.4%.

Australian dollar traded marginally lower at noon although it was range bound ahead of the release of inflation data on Wednesday.

The first major political challenge to the proposed $8.4 billion takeover of ASX by Singapore Exchange emerged Tuesday when the environmental party The Greens signaled that they will resist any change made to the law to approve the deal.

The Greens cited Singapore’s human rights record today and along with the coalition have demanded the Gillard government to prove the proposed takeover is in Australia’s national interest, considering the large share of the company owned by Singapore’s central bank.

The Australian Competition and Consumer Commission approved the $1.8 billion takeover of CSR Sugar by Singapore-listed Wilmar International. The approval came the same day as the announcement of SGX’s takeover bid for the Australian Stock Exchange.

Reserve Bank of Australia’s inflation target range of 2% to 3% helped anchor expectations for prices in an economy where one sector is booming while other sectors are lagging, Governor Glenn Stevens said in Canberra on Monday.

“We are talking about a target which has an adequate degree of flexibility to handle short-term shocks and which will still anchor the price level and expectations over time,” Stevens said.

Westpac Banking Corp said Tuesday it had a contribution of $685 million in the fiscal year 2010 to its statutory net profit from the acquisition of St George’s Bank. The additional ammount stems from the lower than expected tax assessment after the consolidation of two banks.

The New South Wales Farmer’s Association is calling for a moratorium on any new mining or coal seam gas development in the state because of environmental reasons. The executive council of the association passed unanimously support for the moratorium in Sydney on Tuesday.

“These industries are being allowed to flourish without proper concern for the threat they pose to farmland and water resources. We are not opposed to mining and coal seam gas development but want to see a balanced approach taken when decisions are made about where these developments can take place,” association chairperson for mining task Fiona Simon said.

Riversdale Mining said Tuesday it is seeking partners for a 50% stake in a major coking coal project in Mozambique. The mining company is preparing to sign a binding $800 million deal with a Chinese steelmaker for an adjacent project and is looking for a partner for this Tete East project with at least 5 billion tons of coking coal.

Resource News

Mermaid Marine Australia said it will undertake placement of new shares to institutional investors to raise about $30 million for its expansion plans.

Eleckra Mines said it found the highest gold intercept yet from its wholly-owned Yamarna gold project, some 140 kilometers east of Laverton in Western Australia.

Cortona Resources said Monday it intersected a broad zone of high-grade gold mineralization 150 kilometers north of Dargues Reef in New South Wales, Australia.

Kimberley Metals received positive results from its drilling at Mineral Hill in New South Wales.

Gainers & Losers

Macquarie Atlas Roads Group led gainers in the ASX with a rally of 4.66% to A$1.46 followed by Elders Ltd 4.51% to A$0.695, Medusa Mining Ltd 4.24% to A$5.65, Wotif.com Holdings Ltd 3.48% to A$4.76 and Iluka Resources Ltd 3.15% to A$7.20.

ASX Ltd led decliners in the index with a drop of 7.38% to A$38.67 followed by Karoon Gas Australia Ltd 6.67% to A$10.1, Lynas Corp Ltd 6.02% to A$1.56, Bow Energy Ltd 3.67% to A$1.18 and Worleyparsons Ltd 3.56% to A$22.36.