Australian Stocks Fell 2.5%

123jump.com Staff
29 Jan, 2008
New York City

ASX 200 index declined 2.5% or 168.1 to close at 5,716.50. The Preliminary market turnover was 1.84 billion shares worth $6.73 billion, with 515 shares moving up, 723 moving down and 308 unchanged. Building, automotive and plastic products maker, Nylex share shed 17.5% today after an interested private equity firm withdrew its takeover proposal.

[R]3:00AM New York, 7:00PM Sydney - ASX 200 index fell 2.5% despite a rise in commodity prices.[/R]

ASX 200 index declined 2.5% or 168.1 to close at 5,716.50.

The Preliminary market turnover was 1.84 billion shares worth $6.73 billion, with 515 shares moving up, 723 moving down and 308 unchanged.

The most traded stock was Great Gold Mines with 261.09 million shares worth $11.43 million and rose 2.6%.

Building, automotive and plastic products maker, Nylex share shed 17.5% today after an interested private equity firm withdrew its takeover proposal. Executive chairman Peter George said the Nylex board was not surprised the proposal had been withdrawn, given the recent turbulence in global financial markets.

George said Nylex was still positioned to grow its businesses and build on the benefits of a restructuring program. Nylex said today that it was no longer in talks with CHAMP Private Equity.

The latest development follows last Friday''s statement in which Nylex, CHAMP would not be making a firm offer after its indicative offer of $2.65 a share in November. The non-binding proposal had valued Nylex at $112.06 million, compared to a market value today of $69.77 million. CHAMP had until last Friday to bid for the firm.

Nylex''s board had intended to unanimously recommend the offer to shareholders in the absence of a superior proposal or an adverse opinion from an independent expert.

St. George Bank Ltd''s largest offering of new local dollar-denominated debt in more than two years raised $800 million (US$709 million).

Capital markets analyst told reporters that the August 2009 floating-rate debt was priced to yield 0.39% more than the three-month bank bill swap rate.

The analysts said the Australian currency-denominated sale was St. George''s largest new offering since July 2005, when it sold $1 billion of debt.

In October, the bank increased its July 2010 bonds, selling $200 million of 5.75% of fixed-rate securities and $300 million of floating-rate notes at 0.37% more than the three-month bank bill swap rate.

St. George today announced plans to raise $300 million selling debt. The bank would be the lead manager on the bond sale and RBC Capital Markets and UBS AG were co-managers.

The bonds have the fifth-highest investment grade rating of A+ from Standard & Poor''s and Fitch Ratings and are rated two levels higher by Moody''s Investors Service at Aa2.

Rio Tinto subsidiary Coal & Allied reported a disappointing 47% drop in profits for 2007 to $109.8 million which it blamed flooding and higher shipping costs.

The company said it suffered from higher costs of shipping from Newcastle ports, flooding in its coalmines in the Hunter Valley in New South Wales and lower domestic sales.

Australia''s biggest bank, National Australia Bank''s said in its business survey the need for interest rates to be raised, despite the economy appearing to slow-down.

The bank said conditions had remained very strong, although they were starting to trend lower. Business confidence continues to decline.

The bank has lowered its economic growth forecast to 3% for 2008, from its estimate of 4% for 2007.

NAB chief economist Alan Oster has predicted inflation to keep rising and peak at 3.8% mid-year. Oster said the Reserve Bank may have to take out additional insurance by raising interest rates again, possibly as soon as next week.

The takeover battle for Herald Resources Ltd took a new twist today with an as yet unidentified buyer snapping up an almost 8% stake in the gold and base metals explorer.

This was after unknown buyer acquired 15.43 million shares at $2.50 each in a $38.58 million deal.

Analysts said the trading activity was unusual but were unable to identify which party might be trying to rival the $2.25 a share offer for Herald by a subsidiary of Indonesia''s PT Bumi subsidiary, Calipso.

Herald accepted Calipso''s bid on January 30, which valued the target at $444.8 million, but said it aimed to attract a higher offer from possible third parties. The company''s share price rose 14.2%. Perilya Ltd last month pulled out of the running for Herald, selling its 8.9%shareholding.

Allco Finance Group Ltd shrugged off the effect of margin calls and was the largest gainer on Australia''s 48-member financials index after the asset manager''s largest shareholder agreed with lenders to halt further forced share sales.

Past and present company executives who control Allco Principals Investments Pty, an investment vehicle used their stake in Allco Finance as collateral for loans, agreed with two lenders to halt margin calls for at least seven months. Allco gained 6.5% while its value stood at $1.33 billion. The company''s value had peaked at $4.87 billion on February 9.

The company experienced a 29% slump in its share following margin calls and concerns about the company''s debt. Two other lenders last week forced the sale of 22.1 million shares, about 6% of Allco''s issued capital.

The dollar closed firmer today, but struggled to sail above US$0.8900, as record low US new home sales data boosted expectations of another American interest rate cut. At the close dollar was trading at US$0.8880/84, up from Friday''s close of US0.8837/43.

Of the ASX 200 index shares, Straits Resources Limited led the gainers with a rise of 14.4% followed by increases in Macarthur Coal of 10.8%, in Centennial Coal of 8.2%, in Sims Group Limited of 6.8%, and in Allco Finance Group of 6.5%.

Of the ASX 200 index stocks, Roc oil Company led the decliners with a fall of 13.9% followed by losses in Autraland Properties of 9.4%, in Babcock and Brown of 9.1%, in Aquarius Platinum of 8.9% and in City Pacific of 8.6%.