Australian Stocks Fall, PanAust Surges

123jump.com Staff
05 Jan, 2009
New York City

Australian stocks dropped on weak trading on media speculation that the Reserve Bank of Australia is not expected to lower interest rate at the next meeting in February. PanAust led advancers in the ASX 200 index shares with a surge of 106% after rolling over its US$80 million subordinated debt.

[R]3:00AM New York, 7:00PM Sydney- Australian stocks fall on profit taking.[/R]

Australian market averages fell marginally on profit taking after steady gains in the morning session. PanAust pared losses after the company announced today that it has agreed terms with Goldman Sachs to roll over its US$80 million debt facility.

In Sydney trading ASX 200 index fell 0.7% or 26.8 to 3,687.00.

Of the ASX 200 index stocks 88 rose, 103 declined, and 9 were unchanged. PanAust led advancers in the index shares with a surge of 105.9% after rolling over its US$80 million subordinated debt.

RBA Likely to Meet in February

The Australian reported today that the Reserve Bank of Australia is unlikely to meet before February 3 to make any rate decision as market conditions have not deteriorated further.

The central bank lowered the key interest rate substantially in its December meeting ahead of two month break for the next meeting in February.

U.S. Plans $310 billion Tax Cut

The U.S. President-elect Barack Obama and congressional Democrats are planning US$310 billion of tax cuts to individual and businesses to stimulate the economy and create jobs.

The tax cuts could be 40% of a $775 billion stimulus package.

A large portion of the tax relief will be targeted to people who pay income taxes or who claim the earned-income credit.

Obama plan will provide tax credit to offset Social Security and Medicare payroll taxes of US$500 per individual or US$1,000 per family.

The Obama plan may allow companies to write off losses incurred last year, as well as any losses in 2009, to retroactively reduce tax bills dating back five years.

In addition, the package offers a one-year tax credit for companies that hire new staff or reverse layoffs, which could be worth between US$40 billion and US$50 billion, while small businesses will be allowed to write off a range expenditures worth up to US$250,000 in 2009 and 2010 from the current limit of US$175,000.

Gainers & Losers

PanAust led advancers in the ASX 200 index shares with a surge of 105.9% followed increases in HFA Holdings of 42.6%, in Babcock & Brown of 31.6%, in Kagara Ltd. of 25.8%, and Valad Property of 18%.

Resource stocks also gained after oil prices rallied $1.74 to $46.3 per barrel as Israel continued its ground offensive in the Gaza Strip. Aquarius Platinum gained 13.7%, Sundance Resources jumped 14% and Panoramic soared 13%.

Babcock & Brown led decliners in the ASX 200 index shares with a fall of 8.7% followed by losses in Babcock & Brown of 8.7%, in Stockland of 8.2%, in Newscrest Mining of 7.9%, and Perpetual Ltd. of 7.1%.

Newscrest Mining fell after gold prices slipped $4.80 to $879.5 per ounce. Lihir Gold dropped 6.2% and Centennial Coal declined 6%.

PanAust Rolls over US$80 million Subordinated Debt

PanAust has agreed with Goldma Sachs to roll over its US$80 million debt facility by more than one year to March 31, 2010.

Managing director Gary Stafford said the company has already identified several potential funding sources to replace the US$80 million facility.

PanAust has also entered into a US$8.1 million revolving working facility for its Phu Kham project in Laos with three banks.