Australian Markets Drop 1.5%, Merger Activities Surge in 2013

Marcus Jacob
14 Jan, 2014
New York City

Australian market indexes came under pressure after investors worried about stretched valuations and rising uncertainties linked to commodities exports. Merger activities in Australia jumped 67% in 2013.

[R]4:30 PM Sydney – Australian market indexes came under pressure after investors worried about stretched valuations and rising uncertainties linked to commodities exports. Merger activities in Australia jumped 67% in 2013.[/R]

Australian stocks sharply declined on the rising worries linked to commodities demand from China and Asia.

Market indexes were also under pressure on the growing concerns that valuation may have stretched beyond supporting fundamentals.

Merger and acquisition activities in Australia jumped 67% from 2012 to $73.1 billion and 445 deals in 2013, Mergermarket reported.

Nearly $21 billion of deals were completed in resource and utilities sectors in the year.

Australian dollar rose to 90.34 U.S. cents and in stock market trading turnover climbed to 710 million shares worth $4.1 billion.

The ASX 200 index dropped 80.10 or 1.5% to close at 5,212 and the broader All Ordinaries declined 77 to 5,219.80.

Stocks in Review

Rio Tinto slid 16 cents to $63.35 and the mining company acquired 510,983,220 common shares of Canadian miner Turquoise Hill under rights offering at a total cost of $1.32 billion or C$2.53 per share and maintained its stake of 50.8%.

BHP eased 42 cents to $36.14.

Woodside Petroleum Limited fell 22 cents to $37.35 and the hydrocarbon explorer signed a sales and purchase agreement with Chubu Electric Power Co. Inc. for the supply of up to about 1.5 million tons of liquefied natural gas for a three-year period from April 2014.

Westpac decreased 21 cents to $32.01.

Austin Engineering Ltd rose 0.3% to $3.64 after the engineering services provider signed a three-year contract with Brazil-based Vale for undisclosed amount. The last contract with Vale was valued at $200 million.

Forge Group Limited tumbled 18% to $1.02 after the construction company said cost overruns of $28 million for Rio Tinto project had forced the company to borrow from lenders.

Newcrest Mining Limited slid 0.8% to $8.80 after the gold miner secured new $200 million loan facility.

REA Group Limited slipped 1.5% to $39.56 after the online real estate advertiser has acquired 1Form Online Pty Ltd, the rental application service site 1Form.com operator for $15 million in cash.