China, Rio Tinto Contoversy; Syndey Stocks Down

Mayank Mehta
13 Jul, 2009
New York City

Australian stocks closed lower as the ongoing controversy between China and Australia heats up. China has arrested Rio Tinto staff under the charges of espionage and bribery related to iron ore price negotiations. Rio Tinto dropped 3.6%. Virgin Blue denied that it is planning to raise A$400 million.

[R]6:00 PM Sydney – Australian stocks closed lower as the ongoing controversy between China and Australia heats up. China has arrested Rio Tinto staff under the charges of espionage and bribery related to iron ore price negotiations. Rio Tinto dropped 3.6%. Australia is also mired with the attacks on Indian students in Melbourne and Sydney.[/R]

The ongoing controversy between China and Australia involving Rio Tinto personnel dominated trading sentiment.

Australia in recent months has been in world headlines as more than 1,400 Indian students have been attacked Melbourne and Sydney in the last one year. Sporadic attacks are still registered against Indian students in Australia.

Rio Tinto staff is alleged of spying and bribery during the negotiations between Chinese steelmakers and Australian iron ore miners.

ASX 200 index in Australia decreased 56.60 or 1.49% to 3,737.50. The stocks opened lower and drifted down in the trading session and reached its low of the day near the close.

Gainers & Losers

Rio Tinto declined 3.6% to $46.63 and BHP Billiton decreased 1.4% to $32.20.

Fortescue Metals increased 9 cents to $3.49 after it reported better than expected mining rates in the quarter ending June and for the fiscal year.

Virgin Blue decreased 2 cents to 29 cents after it denied that the company board has authorized the capital raising exercise and is not seeking to raise capital at this time.

The Australian Bureau of Statistics reported that loans to businesses, individuals and for homes increased 3.9% in May after adjusting for seasonality. The loans declined 6.9% in April and surged 14.2% in March. The total loans issued have been rising in the last six months with a steady increase in home lending.

The share of fixed rate mortgage of all home loans in May were 6.5%. Separately, in an interview with the AAP, Mortgage Choice said that fixed rate loan share in June increased to 7.6%.

Commonwealth Bank decreased 73 cents to $36.72, Westpac dropped 24 cents to $18.91 and National Australia Bank fell 44 cents to $21.94.

ASX 200 Index Movers

Murchison Metals Limited led the decliners in the ASX 200 index of 9.2% followed by losses in Equinox Minerals Ltd of 9.0%, in Boart Longyear Group of 7.8%, in ING Industrial Fund of 7.6% and in SEEK Limited of 6.3%.

Pacific Brands Ltd led gainers in the ASX 200 index with a rise of 6.7% followed by gains in Karoon Gas Australia Ltd of 6.3%, in Platinum Australia Limited of 5.7% and Kingsgate Consolidated Ltd of 4.2%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 236.95 or 2.55% to 9,050.33, Hang Seng index in Hong Kong decreased 453.79 or 2.56% to 17,254.63 and CSI 300 index in China decreased 37.30 or 1.10% to 3,361.01. ASX 200 index in Australia decreased 56.60 or 1.49% to 3,737.50. The FTSE Bursa KL Composite index in Malaysia closed lower 4.10 or 0.38% to 1,063.66.

The Kospi Index in South Korea decreased 50.50 or 3.53% to close at 1,378.12. SET index in Thailand closed lower 3.48 or 0.61% to 562.55 and JSE Index in Indonesia decreased 42.96 or 2.08% to 2,020.14. The Sensex index in India decreased 103.90 or 0.77% to 13,400.32.