Macquarie Leads Financial Stocks Surge

123jump.com Staff
02 Apr, 2008
New York City

Financial stocks surged in Australia after a rally in the U.S. and European markets. Enthusiastic investors showed appetite for risk when Lehman and UBS offered to raise $19 billion. Macquarie Group surged 10% and National Australia Bank Ltd added 5.2% while Commonwealth Bank of Australia gained 4%. ANZ added 5% and Westpac was up 6.5%. Gindalbie Metals largest investor placed injunction on the sale of stock to cover margin call at a failed broker.

[R]3:00AM New York, 7:00PM Sydney – Australian stocks gained as financial sector surged on investors’ willingness to support Lehman and UBS capital offering.[/R]

Market Sentiments

ASX 200 index gained 2.6% or 141.7 to close at 5,502.90.

The Preliminary market turnover was 1.95 billion, worth $6.84 billion, with 688 stocks up, 513 down and 315 unchanged. The most traded stock was Newsat with 116 million shares worth $351,539 changed hands.

Market Driver

Financial stocks rallied after U.S. financial and brokerage stocks recovered and banks in Europe traded higher. Investors appear to be relieved after two troubled banks Lehman and UBS appear to attract investment but previous rallies on the back of investments in Merrill Lynch, Citigroup, and UBS has failed to sustain.

Australia''s largest investment bank, Macquarie Group Ltd surged 10% after Lehman Brothers and UBS announced their plans to raise $4 billion and $15 billion respectively.

Australia''s biggest bank by assets, National Australia Bank Ltd added 5.2% following a 23% loss this year while Commonwealth Bank of Australia gained 4.4% and the ASX 200''s financial index rose 4.5%. ANZ added 5% and Westpac was up 6.5%.

Gainers and losers

Of the ASX 200 index stocks, Allco Finance Group led the gainers with a rise of 17.4% followed by increases in Arrow Energy Ltd of 11.4%, in Macquarie DDR TR of 10.2%, in Macquarie Group of 10% and in Western Areas NL of 8.5%.

Of the ASX 200 index stocks, Sino Gold Mining led the decliners with a fall of 6.9% followed by losses in Great Southern of 5.5%, in Equinox Mine CDI of 5.3%, in Mincor Resources of 5.2% and in Newcrest Mining of 4.9%.

Melewar announce injunction on ANZ Nominees

Australian iron ore company, Gindalbie Metals Limited today announced that its biggest shareholder, Malaysian-based Melewar Steel ventures Ltd''s lawyers, Slater & Gordon have confirmed that an injunction has been placed on ANZ Nominees Limited, Australia and New Zealand Banking Group Limited and Opes Prime Stock Broking Limited restricting the sale of approximately 32 million shares the subject of dispute with Melewar.

The injunction is in place until 4.00pm on 10 April 2008. The matter would be heard again in the Supreme Court on the April 10. Melewar was under pressure to sell more than a third of its stake after the collapse of a broker.

Melewar was being forced to sell 32 million shares, or 6.2% of Gindalbie, which it had pledged against an outstanding loan from the broker, by the receiver of Opes Prime Stockbroking Ltd.

Melewar also wants to keep its remaining 7.6% stake, which isn''t subject to any pledge, while ownership of a further 0.6% stake is unclear.

The Australian Securities and Investments Commission has appointed Deloitte Touche Tohmatsu as receivers and Ferrier Hodgson as external manager to institute an inquiry into Opes Prime last week.

Opes Prime directors called in Ferrier Hodgson after they became aware of cash and stock movement irregularities, Deloitte said in a statement on March 28. Gindalbie rose 8.4%.

De Grey''s surges on iron ore license

Australian minerals explorer, De Grey Mining Limited''s stock gained 36% today after winning an iron ore exploration license in Western Australia''s Pilbara region.

De Grey was chosen from eight applicants for the rights to the ground located near two existing iron ore deposits. The highly sought after 15.5 square km area lies 104 km south of Port Hedland and covers a 1,600m-strike length of a known channel iron deposit that straddles the Great Northern Highway.

The application is also strategically placed between other channel iron deposits 17km to the east, 2.5km to the west and 4.5km to the north. Considering the high level of activity in iron exploration and mining in the Pilbara and the proximity to infrastructure this iron
mineralisation represents significant value to De Grey.

Managing Director Gary Brabham said, ""This ground was picked up as a result of our diligent monitoring of tenements in the Pilbara. We will immediately assess the known iron deposits to evaluate their potential value and determine how De Grey may best realise that value"".

Newcrest decline as gold price tumble

The region''s largest producer by market value, Newcrest Mining Ltd''s share shed 5.3% today after the gold traded below $900 an ounce.

Asia''s third- largest bullion mining company by value, Zhongjin Gold Corp also fell 10% to its lowest in eight months in Shanghai in line with the decline in region''s producers. Lihir Gold Ltd fell 4.5%.

Gold for immediate delivery gained 0.2% to $884.54 an ounce in the afternoon after it fell below $900 an ounce yesterday for the first time in more than six weeks as the dollar rose 1.1%.

Australian companies revisit bond market

Australia''s biggest companies are taking advantage of cheaper borrowing cost by selling their securities in Europe and the U.S. as they made a return to the corporate bond market for the first time in more than a year.

Telstra raised 500 million euros in its bond offering in a year and may raise more if the rates decline more. Bloomberg news reported that Wesfarmers is likely to offer U.S. dollar denominated bonds to refinance its debt of $4 billion to takeover Coles Group six months ago.

Wesfarmers'' share gained 1.8% and Telstra was up 1.8%. Woolworths gained 3.6%, David Jones added 1.9% and Harvey Norman was up 4.5%.

Virgin Blue to undercut Qantas share on US route

Analysts today hinted that the National carrier Qantas might lose as much as $200 million in earnings after smaller rival Virgin Blue''s new international carrier V Australia becomes fully operational.

The route has been served by Qantas and United Airlines and V Australia’s entry in the market with a new Boeing 777-300ER will increase competition.

At $1,899 for a return ticket from Sydney to Los Angeles, Virgin Blues price is at least 16% less than Qantas'' best fare on the route. Qantas shares rose 4.9%.