Sydney Drops 1%; QR National IPO Struggles

Chandrasekhar Atreya
23 Nov, 2010
New York City

Australian shares dropped more than 1% after uncertainty over fiscal policy in China and EU sovereign debt dampened investor sentiment. Metcash pledges to pursue its takeover of Franklins despite regulator resistance. QR National struggles on the first day of trading.

[R]6:00 PM Sydney, Australia – Australian shares dropped more than 1% after uncertainty over fiscal policy in China and EU sovereign debt dampened investor sentiment. Metcash pledges to pursue its takeover of Franklins despite regulator resistance. QR National struggles on the first day of trading.[/R]

Shares in Sydney dropped more than 1% as uncertainty over European sovereign debt and China’s fiscal policies led to market weakness and in the absence of local economic news.

The ASX 200 Index dropped 1.17% or 54.40 to close at 4,589.10 and the Australian dollar closed at 98.02 U.S. cents in Sydney today.

Sydney-based Metcash said it intends to pursue its attempted takeover of Franklins despite the hurdle posed by the competition regulator. The regulator had said last week it would oppose the bid for Franklins because it would effectively give Metcash a monopoly on grocery wholesaling to independent supermarkets in New South Wales.

After debuting below the IPO price of A$2.55 a share for institutional investors, QR National made a moderate recovery on the Australian Securities Exchange and traded as high as A$2.64. The former wholly-owned rail freight company of Queensland listed Monday on the ASX.

AGL Energy Ltd, an Australian company developing solar power plants, said Monday its proposed 100 megawatts project in NSW is expected to cost around A$350 million to build.

The company filed a note with the state’s planning department stating that it plans to build five projects using photo-voltaic panels that convert sunlight to power.

Business borrowing by large companies is set to rebound in 2011 and benefit firms like Westpac, a survey found.

A survey of business customer satisfaction by DBM Consultants rated Westpac as the number one among all segments surveyed as they found large companies are expected to grow revenue and hire more people.

Qantas Airways Ltd said it will resume Airbus SAS A380 services from November 27, after grounding this fleet on November 4 following a mid-flight explosion.

CEO Alan Joyce said he will be on the flight that will go to London from Sydney via Singapore, while addressing the media today.

Toronto-based NorthWest Value Partners Inc made an offer to acquire all shares of ING Real Estate Healthcare Fund for A$67.1 million at 94 cents per share. The offer is highly conditional and values the fund at a discount to its net tangible assets of 98 cents per share, ING said in a statement to the Australian Stock Exchange.

The ING Board has advised its shareholders to take no action at this time.

BHP Billiton said rain affected its coal mining operations in Queensland state and loading at it Hay Point terminal has been affected by high winds and seas.

The two berths at the port have been closed till further notice because of adverse weather, according to a statement on the Web site of Inchcape Shipping Services Pty, the shipping company that arranges for ship dockings at the port.

Medium-sized mining companies in Australia have doubled their cash holdings to about A$7.29 billion according to a survey done by PricewaterhouseCoopers LLP. The survey looked at the top 50 mining companies with a market cap of less than A$5 billion and found that these firms had a 32% increase in their revenue to A$11.3 billion in the year to June 2010 because of higher prices for some metals.

“The mid-tier 50 are well poised for growth and many are planning to invest their cash reserves into expansion and project development activities, as well as mergers and acquisitions,” Tim Goldsmith, the surveyor’s Australian and global mining leader, said in that report.

Stock Movers

Telstra closed up 3.4% to $2.74.

Resource stocks were generally hard hit in the market today. BHP Billiton lost 1.69% or 74 cents to $43.14. Rio Tinto dropped 1.4% or $1.19 to $83.53.

Fortescue Metals hauled before the Federal Court in Perth today by the Australian Securities and Investment Commission fell 22 cents or 3.32% to close at $6.40.

The four big banks in Australia also dropped and brought the index down.

Commonwealth Bank dropped 1.13% or 55 cents to close at $48.18, while Westpac fell 41 cents or 1.89% to $21.31. National Bank of Australia dropped 44 cents or 1.83% to $23.56 and ANZ Banking Group lost 14 cents to drop to $22.34.

Grocery and hardware wholesaler Metcash traded steady at $4.37 after saying it intends to pursue its proposed takeover of Franklins, despite the opposition to the move by the competition regulator.