Westpac to Raise A$2.5 B, Australian Stocks Fall

123jump.com Staff
09 Dec, 2008
New York City

Westpac plans to raise A$2.5 billion to raise its capital. Australian business conditions decline in November. Industry group forecasts sharply lower economic growth in 2009 but not a recession.

[R]3:00AM New York, 7:00PM Sydney – Westpac plans to raise A$2.5 billion to raise its capital. Australian business conditions decline in November. Industry group forecasts sharply lower economic growth in 2009 but not a recession.[/R]

Australian stocks fell marginally as financial stocks dipped after Westpac Corp. announced that it plans to raise A$2.5 billion through institutional offering to boost its capital.

Westpac plans to sell shares at A$16 per share, a 10.5% discount to its last traded price of A$17.88 per share.

In Sydney trading ASX 200 fell 0.8% or 27.3 to 3,604.30.

Of the ASX 200 index stocks 87 rose, 99 declined, and 14 were unchanged. Sino Gold led advancers in the index shares with a rise of 13.3% after gold prices gained $17.10 to $769.3 per ounce.

Australian Business Confidence Falls to –30 points in November

National Australia Bank reported today in the monthly business survey of 350 small to large sized companies that business confidence dropped 1 point to –30 in November as retail, wholesale, manufacturing and financial services fell markedly.

Business conditions deteriorated the most since 1992 falling 6 points to –17 and trading and profits slid 5 points.

Employment dropped 7 points, while capacity utilisation declined 1.3 percentage points to 80.6%.

Survey results also showed that forward orders fell the most since 1991 and manufacturing and retail forward orders at recessionary levels.

NAB says the federal Government''s $10 billion-plus fiscal stimulus package and the central bank''s aggressive interest rate cuts have failed to improve confidence and conditions.

NAB group chief economist Alan Oster also says survey results suggest that inflation and non-farm gross domestic product will contract in the current quarter.

RBA is expected to slash interest rates by another 125 basis points to 3% in early 2009 and core inflation is likely to be back within the RBA''s target range of 2 to 3% by the end of next year.

Australian Economy to Ease in 09 and Rebound in 10

Australia Business Economists executive committee reported today that the country''s economic growth will drop in 2009 to a median estimate of 1%, and will rise to 2.2% in 2010. The economy will however not likely to contract next year.

ABE notes that there is a 40% chance of the economy slipping into a recession, while a few committee members said although the economy failed “to pass the technical definition of recession for many households and businesses, the current economic downturn would very much feel like recession.”

Dwelling and business investment is projected to remain flat.

The employment growth rate is expected to drop to 0.1% in 2009 from 2.3% projected this year and unemployment rate is projected to soar to 5.7% in 2009 and 6.4% in 2010 from a forecasted 4.5% in 2008.

Median forecast for annual consumer price index rate is expected to top 3.2% in 2009 and 2.7% in 2010, while the cash rate is likely to fall to a median 3.5% in 2009, from a current 4.25%.

However the cash rate is expected to return to 5% in 2010.

In addition, ABE executive committee forecasts that China''s median economic growth will range between 7% and 8% over the next two years.

“The reduction in the Chinese growth forecast from last year''s survey is an example of the speed with which the global financial crisis has infected some emerging markets and suggests the Chinese economy already has a period of relatively slower growth,” the survey said.

Gainers & Losers

Sino Gold led advancers in the ASX 200 index shares with a rise of 13.3% followed by rises in GPT Group of 11.8%, in OM Holdings Ltd. 9.1%, in Newscrest Mining of 7.9%, and Asciano Group of 7.8%.

Commodity stocks rose after gold prices soared $17.10 to $769.3 per ounce. Copper futures also advanced 9.l% to $43.71 per barrel and oil prices gained $2.90 to $43.7 per barrel.

Fortescue Metals rose 7.3%, Gloucester Coal advanced 5.1%, Macarthur Coal jumped 5%, and Platinum Australia climbed 6%.

Babcock & Brown led decliners in ASX 200 index stocks with a drop of 13.8% followed by losses in Aquila Residential Ltd. of 13.4%, in Energy World Corp. of 12.7%, in NRW Holdings of 10.6%, and Centro Retail Group of 10.5%.

Financial stocks fell after Westpac Corp. announced a A$2.5 billion share placement with institutional investors. Commonwealth Bank of Australia shed 10% and Babcock & Brown plunged 6.1%.