Australian PPI Up 0.1%, CSR Rights Offering

Darlington Musarurwa
26 Oct, 2009
New York City

Australian producer prices increased at 0.1% in September, smaller rise than expected. The prospects of interest rate increase at the next RBA meeting remain high. The largest sugar refiner, CSR Ltd. plans a rights offering of A$375 million.

[R]3:00AM New York, 7:00PM Sydney- Australian producer prices increased at 0.1% in September, smaller rise than expected. The prospects of interest rate increase at the next RBA meeting remain high. The largest sugar refiner, CSR Ltd. plans a rights offering of A$375 million.[/R]

Stocks in Australia dropped after the producer prices increased less than expected for September. Traders were quick to support the smaller increase in interest rate to be decided at the RBA meeting next week.

Investors, however, locked in gains after last week’s rally. Financial and commodity stocks declined.

In Sydney trading ASX 200 Index fell 0.6% or 29.1 to 4,830.30.

Of the ASX 200 index stocks 46 gained, 135 dropped, and 19 were unchanged. Energy World Corp. rose 10.8% followed by Linc Energy gaining 9%.

The Aussie edged up 0.2% to 92.40 against the dollar.

Producer Prices Rises 0.1% in September

Australian Bureau of Statistics reported today the country’s producer prices increased 0.1% in the three months to September from the previous quarter and rose 0.2% from the same period a year earlier.

Economists expected a 0.3% rise from the second quarter and a 0.6% gain from a year earlier.

Prices were spurred by advances in electricity, gas and water charges by 12.1%, bakery product manufacturing by 10.4% and petroleum refining by 6.0%.

However, price declines were noted in computer services of 7.1% and industrial machinery and equipment manufacturing of 5.0%.

The statistics bureau also noted that producer prices for intermediate commodities fell 0.6% from the previous quarter and dropped 4.9% from a year ago on decreases in coal mining 19.4%, property operators and developers 2.9%, iron and steel manufacturing 6.7% and computer services 5.5%.

Increases were also recorded in oil and gas extraction by 19%, petroleum refining by 6% and electricity, gas and water supply by 4.5%.

In addition, producer prices of preliminary commodities fell 0.5% in the September quarter from the previous three months and dropped 7.5% from the comparable year ago period.

CSR to raise A$375 million

Australia’s biggest sugar refiner, CSR announced in a statement today the company will raise A$375 million by selling shares to existing shareholders to fund future expansion.

CSR noted that the 7-for-40 rights offer will be priced at A$1.66 a share, a 15% discount to last week’s closing price of A$1.98. The offer to retail investors will close on or before November 2.

The company intends to split into two divisions: Sugar and Renewable Energy and CSR, which will comprise of building products and aluminum assets. Both the divisions will trade on the Australian Securities Exchange.

According to the statement, CSR will acquire the remaining 25% stake for A$100 million from joint venture Sugar Refining business from Mackay Sugar Ltd, while the latter will get 8.77% equity in the CSR sugar and renewable energy business.

Gainers & Losers

Sundance Resources dropped 5.9% and Nexus Energy shed 2.7% on falling metal and energy prices. Gold prices plunged 0.2% to $1,056 an ounce and crude oil prices dipped 0.9% to $80.5 per barrel.

Financial stocks declined on profit taking after last week’s gains. Commonwealth Bank of Australia slipped 0.5% and National Australian Bank fell 0.5%.

ASX Movers

Sundance Resources Limited led the decliners in the S&P ASX 200 index with a loss of 5.8% followed by losses in Elders Limited of 4.8%, in GPT Group of 4.6%, in iSOFT Group Limited 4.4% and in Billabong International Limited 4.3%.

Energy World Corporation Limited led gainers in the S&P ASX 200 index with a rise of 10.7% followed by gains in Linc Energy Ltd 8.9%, in JB Hi-Fi Limited of 5.6% and in Australand Property Group of 4.5%.

Other Movers

Billabong International Limited declined 4.3% to A$10.95 after the surfwear maker was downgraded to “hold” from “buy” at Goldman Sachs JBWere.

Elders Limited dropped 4.8% to A$0.19 after the rural and regional company said its A$150 million share purchase plan has been oversubscribed.

Energy World Corporation Limited an exploration company surged 10.7% to A$0.51.

GPT Group slipped 4.6% to A$0.61 after the real estate investment trust sold the Four Points by Sheraton Hotel in Sydney for A$185 million to an unnamed offshore investor and the remaining hotel and tourism assets sale is in process.

iSOFT Group Limited the health information technology company decreased 4.4% to A$0.85.

JB Hi-Fi Limited the retailing of home consumer products rose 5.6% to A$21.71. Linc Energy Ltd the exploration for coal resources advanced 8.9% to A$1.76.

Sundance Resources Limited the exploration of iron ore fell 5.8% to A$0.16.

Woodside Petroleum Ltd decreased 1.8% to A$50.85 after the hydrocarbon explorer said Kufpec and Apache Energy will link their Julimar-Brunello gas fields with the Wheatstone LNG project planned by Chevron in return for a 25% equity stake.