Australian Stocks Slump 1%, Billabong Offering at 44% Discount

Marcus Jacob
21 Jun, 2012
New York City

Australian stocks declined after a private manufacturing survey in China indicated contraction for the eighth month to June. Retailer Billabong launched $225 million offering at 44% discount. Myer reiterated 15% decline in annual earnings.

[R]8:00 PM Sydney – Australian stocks declined after a private manufacturing survey in China indicated contraction for the eighth month to June. Retailer Billabong launched $225 million offering at 44% discount. Myer reiterated 15% decline in annual earnings.[/R]

Australian stocks fell sharply after China reported weak reading on its manufacturing sector and domestic retailer eased more.

Stocks in Sydney opened lower as investors searched for international clues to global economic revival after the U.S. Federal Reserve offered modest monetary policy stimulus, less than hoped my most economists.

In addition, the latest housing report from the researcher RP Data indicated that home owners are holding on to their properties longer. Average home owner stay put for nine years from 7.6 years in 2000.

The ASX 200 index slumped 44.80 or 1% to 4,087.60 and All Ordinaries index slid 43.14 or 1% to 4,133.67.

The Australian dollar halted a seven-day rally and edged lower to US$1.0187 but still traded above the parity with the U.S. dollar for the fifth day in a row.

In trading, stock turnover increased to 1.93 billion worth $6.6 billion with 362 stocks trading higher, 619 declining and 406 were unchanged.

A private survey conducted by HSBC showed industrial activity index in China declined to a seven month low to 48.1 in June from 48.4 in May. The survey reading in the month was below 50, which indicates a contraction, for the eight month in a row.

Export orders and prices were at their lowest since 2009. China has accelerated investment in areas once reserved for private sectors like railroads, hospitals and electricity generation and transmission and relaxed banking capital requirements in the recent months.

Stock Movers

Consolidated Media rose 0.6% or 2 cents to $3.40 after News Corp announced takeover proposal for $2 billion and buy the rest of the 50% of the company it does not own.

News Corp, the media conglomerate under investigation for hacking scandal in the UK increased 4 cents to $20.19. Ten Network increased 1 cent to 52.5 cents.

Acrux, a drug maker plunged 15% to $4.07 after the company faced more questions for its patent application from the U.S. agency.

BHP Billiton Limited dropped 40 cents to $32.20 and Rio Tinto Limited shrink 82 cents to $56.90. Fortescue Metals Group slipped 12 cents to $4.79.

Lynas Corporation Limited decreased 7 cents to 94.5 cents and Iluka Resources declined 53 cents to $11.80. Newcrest Mining dropped $1.02 to $23.75 and Kingsgate slid 15 cents to $5.38.

Oil Search Limited decreased 8 cents to $6.59 and Santos Limited slumped 53 cents to $11.57 and Orica declined 53 cents to $23.77.

David Jones Limited rose 2 cents to $2.26, Harvey Norman Holdings was closed unchanged to $1.88 and Woolworths added 1 cent to $26.35. Kathmandu fell 2 cents to $1.12.

Billabong was in a trading halt and the struggling retailer of surfwear launched a public offer to raise $225 million at 44% discount to its last traded price of $1.83. The public offer price is $1.02.

The retailer lowered its earnings outlook to between $130 million and $135 million for the year ending in June, excluding one-time restructuring costs. The retailer had earlier estimated annual earnings of $157 million.

Myer fell 5% to a record low of $1.69 after chief executive Bernie Brookes reaffirmed the earnings fall in the current year of 15%.

Commonwealth Bank of Australia declined 31 cents to $51.78 and Bank of Queensland slipped 11 cent to $6.72. ANZ decreased 17 cents to $21.58. National Australia Bank shrink 31 cents to $23.14 and Westpac Banking Corporation closed down 22 cents to $20.98. Macquarie Group dropped 50 cents to $25.50.

Perpetual Limited gained 6 cents to $23.69 as speculators expect another bid for the company at a higher price.

Fairfax Media was closed unchanged to 59 cents after billionaire investor Gina Rinehart said she will not increase her stake in the company beyond 18.7%.

Stockland fell 3 cents to $3.25, Leighton closed down at 10 cents to $17.17 and Toll Holdings decreased 5 cents to $4.10.

Qantas slid 2 cents to $1.14, Virgin Australia was unchanged at 39 cents and Flight Centre slipped 9 cents to $19.30.

QR National slumped 4 cents to $3.38.