Australia Forecasts Speedier Recovery

123jump.com Staff
08 May, 2009
New York City

The Reserve Bank of Australia estimated that the economy will shrink at 1.2% by the second quarter and regain its momentum by the end of the year. The bank cited strength of its exports and links to China and stable financial sector in the county. OZ Minerals urges investors to support China deal.

[R]3:00AM New York, 7:00PM – The Reserve Bank of Australia estimated that the economy will shrink at 1.2% by the second quarter and regain its momentum by the end of the year. The central bank cited strength of its exports and links to China and stable financial sector in the county. OZ Minerals urges investors to support asset sale to Minmetals.[/R]

Australian stocks gained a fractional 0.1% driven by banks and mining stocks.

In Sydney trading ASX 200 index rose 0.1% or 3 to 3,941.70.

Of the stocks traded on the ASX, 80 gained, 99 declined, and 21 were unchanged. Babcock & Brown led advancers in the index shares with a rise of 33.3% followed by Asciano Group with a gain of 26.6%.

Australian Economy to Shrink 1.2% by June

Reserve Bank of Australia reported today in its Monetary Policy Statement the country’s economy is forecasted to contract 1.2% by June this year and 1% for the year and rebound in the second quarter 2010.

Although the deteriorating global economic conditions have significantly impacted on output growth in Australia, the central bank notes that the economy will “Record better outcomes in 2009 and 2010 than those in most other advanced countries.”

Australian lenders have passed on the bulk of the 4.25 percentage point reduction in interest rate by the RBA since September last year.

The bank also decided to make smaller and less frequent adjustments to the key rate.

The RBA noted, “Factors that would suggest a less-severe recession here than in many other countries include the bigger decline in interest rates to end-borrowers, the healthier state of the financial sector, Australia''s export mix, the recent recovery in the Chinese economy and the exchange rate depreciation in the second-half of 2008.”

OZ Minerals Rallies Shareholders to Support Deal

OZ Minerals chairman Barry Cusack today called on shareholders to vote for the proposed US$1.2 billion asset sale to China Minmetals. He further indicated that if the deal collapses the company may face involuntary closure. Since the Chinese bid in February, no other buyers have emerged.

OZ Minerals has recommended its shareholders vote in favor of the deal with China Minmetals to save it from administration.

Minmetals initially wanted a full takeover for company, but the Treasurer Wayne Swan permitted only asset sale citing strategic national considerations.

Gainers & Losers

Babcock & Brown led advancers in the ASX 200 index shares with a rise of 33.3% followed by increases in Asciano Group of 26.6%, in Mount Gibson Iron of 10.6%, in PanAust Ltd. of 8.5%, and Worley Parsons of 7.6%.

Energy stocks gained. Carnarvon Petrol soared 5.8% and Roc Oil edged up 4.9%.

FKP Property led decliners in the ASX 200 index shares with a fall of 10.5% followed by losses in Sunland Group of 7.3%, in Henderson-CDI of 6.4%, in Bluescope Steel of 6.4%, and Pacific Brands of 6.1%.

Telstra Chairman Resigns

Telstra chairman Donald McGauchie has resigned following a fall out with the company’s biggest shareholder and state affiliated Future Fund over his aggressive stance towards the Government.

Board member Catherine Livingstone will assume the company’s chair, while David Thoday will replace outgoing chief executive Sol Trujillo when he returns to the United States on June 30.

“Telstra’s strength and ongoing performance are the paramount priority. It is my view that speculation on my tenure was a distraction to the business. Nothing should be allowed to get in the way of David and the management team getting on with the important job ahead of them,” commented Mr McGauchie.

Stephen Conroy, telecommunication minister of Australia sounded positive note and welcomed the new leadership and board of directors.

Australian government and Telstra conflict goes back three years ago when the government asked the telco to provide cheaper access to small business and required access for its last mile of connection to broadband providers. Telstra chief resisted the calls to provide cheap access to its copper and fiber optic network to new broadband connection providers.

Australia removed its ban on Telstra in participating a nationwide high-speed Internet infrastructure after Trujillo announced his resignation.