Australian Deficit; Troubled BHP,Chinalco Deal

Darlington Musarurwa
04 Jun, 2009
New York City

Australia recorded a surprise trade deficit in April. The largest Australian deal between Rio Tinto and China based Chinalco of $19.5 billion appear to have collapsed. Rio Tinto is expected to raise $15 billion in public offering or a deal with BHP Billiton.

[R]7:00 PM Sydney, 5:00 AM New York – Australia recorded a surprise trade deficit in April. The largest Australian deal between Rio Tinto and China based Chinalco of $19.5 billion appear to have collapsed. Rio Tinto is expected to raise $15 billion in public offering or a deal with BHP Billiton.[/R]

The deal between Chinalco and Rio Tinto appear to have collapsed after a stiff resistance from the Australian lawmakers. The deal $19.5 billion between the two companies would have been the largest in the Australian history.

Rio Tinto is expected to strike a deal with BHP Billiton and also raise capital from its existing shareholders of at least $15 billion.

Australia posted deficit of A$91 million in April after revised surplus of A$2.39 billion in March. The Australian Bureau of Statistics also noted that exports in the month declined 11% to A$21.7 billion and imports decreased 2% to A$21.8 billion.

The ASX 200 index in Australia decreased 82.60 or 2.06% closed to 3,934.60 and Australian dollar declined to 80.15 U.S. cents.

Gainers & Losers

Prices of base and precious metals declined in London and in Asia. BHP Billiton declined 5.2% to A$35.11 and Rio Tinto Ltd decreased 6.6% to A$66.90.

OZ Minerals Limited declined 3.3% to 87 cents after it reiterated that offer from Minmetals is the best offer for company assets.

Santos Limited declined 3% to A$14.47 and Woodside Petroleum Limited decreased 3.6% to A$43.20.

Paperlinx Ltd surged 8% to 54.50 cents after it sold properties in the Netherlands and estimated cash of A$57 million. The properties were initially expected to be sold in the first half of current fiscal year.

ASX 200 Index Movers

PanAust Limited led the decliners in the ASX 200 index of 10.1% followed by losses in Macquarie CountryWide Trust of 8.7%, in Centennial Coal Company Limited of 8.0%, in Panoramic Resources Limited of 7.7% and in Minara Resources Limited of 7.5%.

Goodman Group led gainers in the ASX 200 index with a rise of 18.3% followed by gains in PaperlinX Limited of 7.9%, in APN News & Media Ltd of 4.3% and Macquarie Office Trust of 4.0%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 72.71 or 0.75% to 9,668.96, Hang Seng index in Hong Kong decreased 73.70 or 0.40% closed to 18,502.77, CSI 300 index in China higher 14.36 or 0.49% closed to 2,953.75. The ASX 200 index in Australia decreased 82.60 or 2.06% closed to 3,934.60. The KL Composite index in Malaysia higher 8.57 or 0.81% closed to 1,063.97.

The Kospi Index in South Korea decreased 36.75 or 2.60% to close at 1,378.14. SET index in Thailand closed higher 11.35 or 1.95% to 593.60 and JSE Index in Indonesia increased 21.80 or 1.08% closed to 2,032.72. The Sensex index in India increased 137.78 or 0.93% closed to 15,008.68.