Macquarie Profit Rises, ASX Edged Higher

123jump.com Staff
13 Nov, 2007
New York City

ASX 200 index in Aust 0.9% to close at 6,515.20. Macquarie Group today reported a 45% surge in first half profit to more than $1 billion, underpinned by buoyant global equity markets and a strong flow of investment banking deals. Gaming and media group Publishing and Broadcasting Ltd said that a bid by its joint venture for Gateway Casinos in Canada has been approved by gaming regulators. Economists predict further rate hikes by Reserve Bank of Australia.

[R]4:00AM New York, 8:00PM Sydney – The Australia index rose 0.9% as major stocks led by banks traded stronger.[/R]

ASX 200 index gained 0.9% or 59.9 to close at 6,515.20. Banks led the gainer with Westpac adding 1.3% and National Australia Bank increasing 1.6%.

Preliminary stock turnover was 850 million shares worth A$3.41 billion, with 511 stocks up, 560 down and 356 unchanged.

The most traded stock on the market was Republic Gold Ltd, with 44.5 million stocks changing hands at a value of A$8.74 million.

The precious metal explorer''s shares were 13.89% stronger to 20.5 cents.

Macquarie Group Limited today announced a record A$1.06 billion profit after tax attributable to ordinary shareholders for the half year ended 30 September 2007. This increase represents a 45% increase over the A$730 million profit for the half year ending on September 30, 2006.

The company said the 45% profit growth was driven by a 38% increase in total revenue, of which 55% was derived from international operations. Earnings per share for the six-month period increased 34% to A$4.02 from A$3.01 on the prior corresponding period.

But the bank said it is cautious about its outlook, forecasting its second half result to be in line with last year and further cautioned that it may be too early to forecast the results.

Macquarie Group Managing Director and Chief Executive Officer Allan Moss says equity market conditions may not continue to be as favorable, and noted that the first half had benefited from a large number of asset sales.

Moss said Macquarie Group Limited will pay interim dividend of A$1.45 per share, 16% increase form a year ago. Mcquarie targets to pay dividend between 50% and 60% of its profit.

Moss, said: """"This record half year result underscores the strength and diversity of our global business. He further added, """"The story of our strong growth beyond Australia continues and we are particularly pleased with the outstanding contribution from the Asia-Pacific region, which was largely unaffected by the credit market disruption.""""

Moss noted that Macquarie continued to hire quality staff, while maintaining a low expense-to-income ratio.

""""All operating groups have experienced continued international growth. For Macquarie Capital (formerly Investment Banking), Equity Markets, Treasury and Commodities, Real Estate and Funds Management Groups income from international activities was more than half of each group''s total operating income,"""" Mr Moss said.

Gaming and media group Publishing and Broadcasting Ltd (PBL) indicated today that Canadian gaming regulators have approved the bid by its 50/50 joint venture for Gateway Casinos in Canada.

The company said regulators in the provinces of British Columbia and Alberta have approved the bid by the PBL and Macquarie Group joint venture, New World Gaming Partners, for Gateway Casinos Income Fund.

The joint venture partners will pay $1.3 billion for the fund, which holds a network of nine casinos in Vancouver, Edmonton and Alberta.

The decision by Reserve Bank of Australia to revise its inflation forecast has heightened speculation among economists of further hikes in interest rates.

Economists predict that the Governor Glenn Stevens and his board will increase the overnight cash rate target by a quarter of a percentage point to 7% by March.

In reviewing its inflation forecast, the bank noted that global financial-market sentiment ``remains fragile'''' because of the U.S. sub-prime rout, indicating it may keep borrowing costs unchanged next month.

The bank indicated yesterday that core inflation would accelerate to 3.25% by December and remain there until June, more than a previous estimate of 3%. This would mean that annual price increases would exceed the 3% upper limit of the bank''s target range.

News Corporation will use its newly acquired Wall Street Journal brand to reach deep into the world''s developing economies with financial news.

Chairman Rupert Murdoch announced this at the company''s annual general meeting in Adelaide. Mr Murdoch revealed plans to replace about one million paying subscribers of the paper''s online edition, with 10-15 million who wouldn''t pay a thing.

Of importance in his plan was a long term plan to penetrate developing markets like China and India, where demand for financial news and services would explode in the decades ahead.

Mr Murdoch said the company needed to ride on the fact that about 50 and 100 million people a year are joining the world economy thereby creating an explosion of wealth and business opportunities and such people need up-to-the-minute information.

Murdoch believes that financial news supported on advertising revenue is likely to generate higher revenue than subscription revenue based business model. One million paying U.S. subscribers may not bring substantial revenue, but ten million visitors from China and India with no subscription revenue may not bring comparable revenue.

Murdoch paid approximately $5 billion to acquire Dow Jones and the deal has still not been approved by the regulators. The advertising driven revenue model may not generate enough revenue to justify the high price target.

The Australian dollar finished weaker today, dipping below $0.8800 during the local session.

At the close of trade the Australian dollar was trading at $0.8877/82, down from yesterday''s close of 0.8967/72.

During the day, the Australian dollar traded between a low of $0.8754 and a high of $0.8900.

Of the ASX 200 index shares, ABC Learning led the gainers with a rise of 11.1% followed by increases in IOOF Holdings Limited by 6.5%, in Hills Industries by 6.3%, in Aristocrat Leisure by 5.7%, and in STW Communication by 5.1%.

Of the ASX 200 index stocks Macquarie Group led the decliners with a fall of 3.7% followed by losses in Paladin Resource of 3.7%, Newcrest Mining by 4%, in AWB Limited by 4.2%, and 5.6% in Sino Gold Mining Ltd.

In other stocks Commonwealth Bank was lower at 1.8%, Australia and New Zealand bank put on 3.6% and Macquarie was down 3.8%. In the Resource sector BHP Billiton was up 0.2%, and Rio Tinto shares dropped 0.5%.

In the energy sector Woodside Petroleum was up by 0.7%, Oil Search put on 1.6%, and Santos was up 1.8%. In the gold sector Lihir was weaker at 1.5%.

Zinifex lost 2.8% after indicating that declining price of zinc coupled with a stronger Australian dollar will cut its revenue this year.

Monto Minerals Ltd. (MOO AU), added 16% after opening its new industrial minerals project in central Queensland State, yesterday.

The retailers traded higher Harvey Norman by 0.9%, Woolworths added 0.5%, Wesfarmers Limited edged higher 0.8% and David Jones gained 3.1%.

Media stocks were mixed, with PBL gained 2.5%, Fairfax lost 0.4%, News Corp was down 0.04%.