Australian Stocks Drop 2%; Telstra Sale

123jump.com Staff
21 Aug, 2009
New York City

Australian stocks edged lower on high volume after the liquidation of Future Fund holding of Telstra share and weak commodities sentiment. Australia proposed to eliminate tax on federal debt held by foreigners.

[R]8:00 PM Sydney – Australian stocks edged lower on high volume after the liquidation of Future Fund holding of Telstra share and weak commodities sentiment. Australia proposed to eliminate tax on federal debt held by foreigners.[/R]

Australian benchmark indexes closed down 2% after earnings worried and fall in freight rate index suggested that Chinas recent inventory buildup of commodities may be coming to an end.

Baltic Dry Index, a measure of ocean cargo freight rate has fallen nearly 8% from its peak two weeks ago.

Australia’s Treasurer Wayne Swan proposed to remove tax on federal government bonds held by foreigner. The current tax of 10% is levied on the federal bonds but corporate and state government debts are exempt from the taxes.

Australian parliament is likely to approve the tax exemption by the end of the year. According to the government data, nearly 60% of sovereign debt is held by foreign investors.

ASX 200 index in Australia decreased 86.90 or 1.99% to 4,290.60 in heavy volume on the sale of Telstra stock. The trading volume surged to 1 billion from the daily average of 43 million shares.

Gainers & Losers

APN News & Media decreased nearly 4% to $1.675 after first half profit declined 50% and did not reiterate its annual earnings outlook.

Billabong International decreased 5.1% to $9.67 after it reported full-year revenues declined 23.7% and net profit decreased 13.4%.

Banks edged lower after Westpac third quarter cash earnings were $1.1 billion on higher lending but provisions for bad loans were increased to $865 million from $811 million.

Westpac decreased 2.4% to $22.74, National Australia Bank fell 4.4% to $25.68 and ANZ declined 3% to $19.03.

Insurance Australia Group decreased 7% to $3.55 after it reported net income for the full-year of $181 million compared to a loss of $261 million and guided better performance in the current year.

Telstra decreased 4.9% to $3.47 after Future Fund conducted its liquidation of 684 million shares and agreed not to sell additional share for another six months. With the sale, Australian government stake will be lowered by one third to 10.9%. Recently appointed chief executive David Thodey is seeking closer relationship with the government and hopes to participate in the building of $43 billion nationwide high speed Internet protocol network.

Earnings Review

APN News & Media Ltd, the news paper publisher said first-half sales fell 17.6% to $514.5 million from $624.5 million a year ago. Net profit for the first-half fell 53.3% to $33.6 million or 6.5 cents per diluted share compared to net profit of $71.9 million or 14.2 cents per share a year ago.

APN News & Media Ltd, in the last one year traded as high as $3.52 September 2008 and as low as $0.95 in March 2009. Based on the yesterday’s closing price of $1.66 the company has market cap of $988.22 million.

Billabong International Limited, the surfwear maker said full-year revenues rose 23.7% to $1.67 billion from $1.35 billion a year ago. Net profit for the full-year fell 13.4% to $152.8 million or 68.7 cents per diluted share compared to net profit of $176.4 million or 81.2 cents per share a year ago.

Billabong International Limited, in the last one year traded as high as $13.80 October 2008 and as low as $6.32 in February 2009. Based on the yesterday’s closing price of $9.64 the company has market cap of $2.37 billion.

Insurance Australia Group Limited, the car and home insurer said full-year gross written premium rose 0.6% to $7.84 billion from $7.79 billion a year ago. Net profit for the full-year was $181 million compared to net loss of $261 million a year ago.

Insurance Australia Group Limited, in the last one year traded as high as $4.31 September 2008 and as low as $3.06 in March 2009. Based on the yesterday’s closing price of $3.55 the company has market cap of $7.37 billion.

Macquarie CountryWide Trust, said full-year net loss was A$1.44 billion compared to net profit of A$100.4 million a year ago.

Macquarie CountryWide Trust, in the last one year traded as high as A$1.16 September 2008 and as low as A$0.10 in February 2009. Based on the yesterday’s closing price of A$0.560 the company has market cap of A$776.21 million.

ASX 200 Index Movers

Macquarie Office Trust led the decliners in the ASX 200 index of 8.1% followed by losses in Emeco Holdings Ltd of 7.1%, in Insurance Australia Group Limited of 6.5%, in Commonwealth Property Office Fund of 6.3% and in ING Office Fund of 6.2%.

Lynas Corporation Limited led gainers in the ASX 200 index with a rise of 9.3% followed by gains in AWB Limited of 8.0%, in Sims Metal Management Ltd of 7.6% and in QBE Insurance Group Ltd of 4.8%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 145.21 or 1.40% to 10,238.20, Hang Seng index in Hong Kong decreased 129.84 or 0.64% to 20,199.02 and CSI 300 index in China higher 59.23 or 1.88% to 3,203.62. ASX 200 index in Australia decreased 86.90 or 1.99% to 4,290.60. The FTSE Bursa KL Composite index in Malaysia closed higher 0.36 or 0.03% to 1,163.79.

The Kospi Index in South Korea increased 4.59 or 0.29% to close at 1,580.98. SET index in Thailand closed higher 3.65 or 0.57% to 644.63 and JSE Index in Indonesia increased 5.26 or 0.23% to 2,333.90. The Sensex index in India increased 228.51 or 1.52% to 15,240.83.