Australian Stocks Drop, Funding for ABC

123jump.com Staff
07 Nov, 2008
New York City

Australian stocks fell 2.3% after the IMF lowered the growth estimate for the country to 1.8%. Australia offered emergency funding of A$22 million to ABC Learning Centers, the child care company in voluntary administration.

[R]3:00AM New York, 7:00PM Sydney - IMF cuts Australia's GDP forecast for fiscal 2009 to 1.8%. Stocks fell more than 2% on the worries that unemployment will rise and exports will fall in the next six months.[/R]

Stocks in Australia fell 2.3% on recession fears after the International Monetary Fund lowered the country’s economic growth forecast to 1.8%.

The Fund also lowered its outlook for global economic growth to 3.7% for 2008 and 2.2% for 2009.

Stocks market in the last two days has lost A$73 billion.

In Sydney trading ASX 200 index declined 2.4% or 98.4 to 4,051.30. Aussie dollar declined to 67 cents against the dollar.

Of the ASX 200 index stocks 68 rose, 122 declined, and 10 were unchanged. Challenger Financial led gainers in the index shares with a rise of 12.4% followed by Dexus Group increasing 10%.

IMF Cuts Australia''s GDP for Fiscal 2009 to 1.8%

The International Monetary Fund said in a briefing on the world economic outlook update that Australia''s gross domestic product will probably ease to 1.8% in fiscal 2009.

As the economies in China and other Asian nations, raw materials exports from Australia are expected to decline.

IMF has also slashed the world economic growth outlook by 0.2% to 3.7% in 2008 and cut global growth by 0.8% to 2.2% for 2009.

U.S. economy is forecasted to decline from a growth of 1.4% this year to a decline of 0.7% in 2009, while advanced and emerging economies are expected to fall from 1.4% rise to a fall of 0.3% and from 6.6% to 5.1% respectively.

The Fund defines recession as economic growth below 2.5%.

According to the report, though global interventions to forestall systemic risk in the financial markets have continued, financial stress in likely to be “deeper and more protracted” than the October world economic outlook report.

Financial markets have entered a vicious cycle of deleveraging of assets, price declines and investor redemptions that have affected emerging markets.

The outlook report has forecasted that the baseline petroleum price for 2009 will slow from the October projection of $100 to $68 per barrel.

Australia Provides ABC Learning With Funding

Australia extended A$22 million to keep ABC Learning centers open by December after the company was placed under voluntary administration yesterday.

Education Minister Julia Gillard said, “The A$22 million represents the possible cost of supporting the continued operation of these centres for two months and will allow parents to have the certainty that child care will be provided as usual in that period and will also provide stability for employees of ABC Learning,”

Separately the Commonwealth of Australia reported today that its exposure to childcare group ABC Learning Centres stands at A$690 million, including A$240 million in senior debt and about A$450 million in hybrid notes after higher revised write downs on the hybrids.

Gainers & Losers

Challenger Financial led advancers in the ASX 200 index shares with a rise of 12.4% followed by increases in Dexus Property Group of 10%, in Nexus Energy of 7.6%, in Caltex Australia of 7.3%, and Arrow Energy of 6.1%.

MacMahon Holdings led decliners in the ASX 200 index shares with a drop of 25.5% followed by losses in Transfield Service of 23.9%, in NRW Holdings of 21.9%, in OM Holdings of 14.3%, and Felix Resources of 14%.

Commodity stocks increased as oil prices soared $4.53 to $60.8 per barrel and gold advanced $10.20 to $732.2 per ounce. Minara Resources fell 9.5%, Macarthur Coal declined 11.2%, and Centennial Coal slid 8.9%.