Sydney Gains Marginally; Beach Energy, Itochu in a Gas Deal

Chandrasekhar Atreya
25 Nov, 2010
New York City

Australian shares gained moderately in a slow trading in Asia. Beach Energy and Japan

[R]6:00 PM Sydney, Australia – Australian shares gained moderately in a slow trading in Asia. Beach Energy and Japan’s Itochu Corp sign a deal to put up an export facility in South Australia for LPG. Business investment in the third quarter rose more than anticipated.[/R]

The benchmark index in Sydney closed up a fraction in a slow trading in the region and in Sydney. Business investment in third quarter rose more than anticipated.

The ASX 200 Index added 0.19% or 8.70 to close at 4,593.40 and the Aussie dollar closed at 98.09 U.S. cents in Sydney today.

Business investment in Australia rose twice at better than expected rate in the third quarter, with growth in offices, warehouses and factories more than offsetting the slump in other areas.

The investment increased 6.2% from the previous quarter, a Bureau of Statistics report released today in Sydney showed.

Russia said it started adding Canadian dollar to its international reserves and may also include other currencies including the Australian dollar in the coming months, according to Alexei Ulyukayev, First Deputy Chairman of Russia’s central bank.

The Queensland government abandoned the sale of the toll road business Queensland Motorways and will instead transfer it to the Queensland Investment Corp.

RiverCity Motorway Group, the operator of the Clem 7 toll road, has struggled with traffic through the tunnel falling far short of forecasts and had consequently borrowed money from its investor Royal Bank of Scotland. The company board warned that the company may collapse if an agreement with bankers had not been reached by the year’s end.

One of the largest stockholders, a bank, sold all of its 64.5 million shares for A$1 to a trustee - AET Structured Financial Services - who will have the power to nominate charities as beneficiaries, according to a notice sent to the stock exchange on Wednesday night.

Tower Australia Group said a sudden spurt in premium revenue brought in an 88% surge in net profit for the 12 month period ending September 30 to A$87.4 million. Total revenue increased 15% from a year ago to A$791 million.

Beach Energy signed an agreement with Itochu Corp of Japan to construct a gas export facility in South Australia. The company estimated that the facility would cost about A$1 billion to build and would produce 1 million tons of liquefied natural gas per year.

South Australia has no gas export facilities as of now and gas from this facility will be exported to Asian markets including Japan, Beach Energy said.

Goodman Fielder, the consumer foods group in Australia, today reaffirmed its guidance for mid to high single-digit growth this year despite rising commodity costs and currency volatility.

“We reaffirm our full-year guidance to achieve mid to high single digit growth over normalized 2010 profits. There are also other issues around input cost recovery and there is no doubt that you’re seeing a very volatile period in commodity costs,” said Chief Executive Peter Margin after the AGM.

Gunns Ltd’s Chairman said today the planned A$2.3 billion pulp mill project at Bell Bay is on track and financing should be completed early next year.

Australia and New Zealand Bank said today it will not respond to the offer made by Hana Financial Group for Lone Star Fund’s majority stake in Korea Exchange Bank.

“While ANZ continues to believe that KEB is an attractive institution which would represent a logical fit with ANZ’s super regional strategy, the due diligence findings on KEB does not support our making a competitive offer for the KEB shareholding at the level announced by Hana,” ANZ said in a statement.

Hana said Wednesday that its board approved a plan to acquire the majority stake in KEB for $4.1 billion to $4.2 billion.

Fortescue Metal Group’s second-largest shareholder, China’s Hunan Valin Iron and Steel Group sold on Tuesday 29 million shares in the market. The company holds now 16.26% of the shares of the company, down from 17.3%, according to a filing today.

Stock Movers

Shares in Lynas Corp surged for the second day today following a strategic deal with Japanese firm Sojitz Corp that will underpin expansion of its Mt Weld project in Western Australia and Malaysia. The shares gained 7.18% to close at A$1.64.

Fortescue Metal Group shares closed up 2.8% to A$6.63 and recovered from the decline on Tuesday after China based Hunan Valin sold 29 million shares.

Telstra Corp gained for the fifth day in a row as the new legislation increases the company prospects in the build out of the national broadband network. Telstra gained 3.6% to close at A$2.88.

Tower Australia gained 4.08% to A$2.55 after reporting a 88% surge in annual profit.

Most of the banking stocks fell with the lone exception of ANZ which rose 0.85% to A$22.47 after it put on hold the counter offer to Hana’s bid for Korea Exchange Bank.

National Australia Bank fell 15 cents to A$23.3 and Westpac Bank shed 20 cents to close at A$21.20.

BHP Billiton added 14 cents to close at A$43.09 and Rio Tinto also gained 56 cents to close at A$83.05.

GrainCorp lost 9.57% or 74 cents to close at A$6.99 despite reporting a 27% rise in its annual net profit.