Sydney Stocks Lower, Centro Struggles

123jump.com Staff
19 Dec, 2007
New York City

ASX 200 index close at 6,216.40. Exxon Mobil Corporation approves $1.1 billion project. Centro Properties Group struggles to refinance $3.9 billion debt. The Australian Securities and Investments Commission started civil cases against six former directors and officers of AWB Ltd. Australian dollar edged higher.

[R]6:00AM New York, 10:00PM Sydney – ASX 200 Index in Australia declined by 0.3% on the weakness in financial stocks.[/R]

ASX 200 index declined 0.3% or 20.5 to close at 6,216.40. Preliminary market turnover was 1.78 billion worth $7.25 billion, with 676 stocks up, 578 down and 355 unchanged.

Commonwealth Bank of Australia closed down 2.5%, Australia and New Zealand Bank declined 1.4%, National Australian Bank declined 0.4% and Westpac Banking Corp shed 3.5%.

Exxon Mobil Corporation approved the development of a project at its Kipper natural gas field in Australia at estimated cost of $1.1 billion. The project in partnership with BHP Billiton and Santos is expected to start in 2011.

Energy and Resources Minister Peter Batchelor for the state of Victoria was reported to have indicated that construction of the field would start in the second half of 2008. The field would be the largest known undeveloped gas reservoir in southeastern Australia.

According to BHP the first phase, which would cost about $1.1 billion, involves work on onshore processing systems as well as the offshore field. BHP estimated its share of cost to be $500 million.

The field holds about 620 billion cubic feet of gas and 30 million barrels of condensates and gas liquids enough to power a city of one million people for 15 years.

Santos said today it was going to invest about $140 million (U.S$121 million) and will hold 35% stake in the field while BHP and Exxon would shoulder the majority of the cost related to construction of systems.

Demand for natural gas in the southern states has been on the increases following a drought through much of eastern Australia, which has led to shortage of water for hydropower plants, and for cooling at coal-fired stations.

Australia''s second-biggest shopping-mall owner, Centro Properties Group started trading today but indicated that it may have to sell some of its assets to pay-off its debts.

The Group lost more than 85% of its value this week after downgrading its full-year distribution guidance and said it would not pay a first-half distribution.

The Group has been struggling to refinance A$3.9 billion ($3.4 billion) of debt, but it managed to extend the date of repayment till February, 2008.

Centro, which owns 700 U.S. shopping centers, rose in Sydney trading today after saying external advisers examined its cash flow and the business remains viable. Centro was up 50% at the close of trading while its trust, Centro Retail Group gained 15%.

Civil cases against six former directors and officers of wheat exporter, AWB Ltd that are being instigated by the Australian Securities and Investments Commission have started in the Supreme Court of Victoria. Each director faces a maximum penalty of $200,000.

The dollar firmed today but still weighed down by the global credit crunch and liquidity concerns. At the close the Australian dollar was trading at $0.8624/28, up from yesterday''s close of $0.8587/93.

Of the ASX 200 index shares, Centro properties led the gainers with a rise of 49.7% followed by increases in Centro Retail Retail Group by 15.4%, in Macmahon Holdings by 12.9%, in Goodman Group by 11.4%, and in Wotif.Com Holding by 9%.

Of the ASX 200 index stocks Allco Finance led the decliners with a fall of 7.5% followed by losses in SP Ausnet by 4.4%, Macquarie Count by 4%, in Allesco Corporation Limited by 4%, and in Australand Properties by 3.8%.

Rio Tinto closed up 0.7%. In the banking sector St George Bank shed 2.6% despite reaffirming its earnings growth target for fiscal 2008 and saying its credit quality remains strong despite the fallout in global debt markets.

In the energy sector, Oil Search was lower at 0.2%, Woodside Petroleum dropped 1.9% and Santos shed 3.5%.

In the gold sector Newcrest Mining was up 0.6%, Lihir shed 0.6% and Copper and gold miner Oxiana lost 2.8% after the company approved the $310 million (A$361.2 million) development of the Martabe gold and silver mine in Indonesia.

The retailers were mixed with David Jones gaining 0.2%, Wesfarmers losing 0.2%, Woolworths falling 2.2% and Harvey Norman shedding 1.7%.