Business Investments Fall in Australia

Darlington Musarurwa
26 Nov, 2009
New York City

The business investment in the three months to September fell 3.9% in Australia surprising economists. Default rate on home loans declined as unemployment rate drops and mortgage rates decline in Australia. BHP Billiton reiterates its intention to strike a joint venture agreement with Rio Tinto.

[R]3:00AM New York, 7:00PM Sydney- The business investment in the three months to September fell 3.9% in Australia surprising economists. Default rate on home loans declined as unemployment rate drops and mortgage rates decline in Australia. BHP Billiton reiterates its intention to strike a joint venture agreement with Rio Tinto.[/R]

Australian stocks dropped on a sell-off on financial stocks. BHP Billiton pared losses after investors’ speculated that the company may not make a bid for Rio Tinto. The company denied the rumours.

Commodity stocks were mixed.

In Sydney trading ASX 200 Index fell 0.3% or 13.6 to 4,708.60. Of the ASX 200 index stocks, 70 rose, 111 declined, and 19 were unchanged.

Independence Group led gainers in the index shares with a rise of 5.6% followed by Beach Petroleum increasing 4.6% as crude oil prices jumped 2.4% to $77.9 per barrel.

The Australian dollar fell 0.8% to U.S. 92.46 cents.

Australian Business Investment Fall 3.9% in September

Australian Bureau of Statistics reported today the country’s total new capital expenditure declined 3.9% to A$26.6 billion in the three months ended September from the previous quarter. The latest data surprised economists who were mostly looking for an increase of 1% to 1.5% in the period.

Business investment also dropped 1.3% from the same period a year earlier.

Third quarter buildings and new structures plunged 4.8% to A$13.3 billion from the previous quarter, but increased 6.5% from the same period a year earlier.

According to the bureau, equipment, plant and machinery dropped 2.9% to A$13.3 billion from the June quarter and fell 8.1% from the comparable year ago period.

Murdoch Buys 50% in DMG Radio for A$110 million

The Australian reported today Lachlan Murdoch has paid A$110 million for a 50% stake in DMG Radio Australia, which owns Nova and Vega FM Networks.

Murdoch paid A$50 million in equity and A$60 million in debt for the holding through his private investment vehicle Illyria.

According to the report, the purchase price is below the A$400 million DMGT paid for FM radio licences in Australia.

Prime Mortgage Delinquencies Fall 1.1% in January

Moody’s Australia reported today prime mortgage delinquencies greater than 30 days fell to 1.14% from 1.63% in January, while non- conforming mortgage delinquencies greater than 30 days declined to 11.5% from 17.4 % in January.

Gainers & Losers

Independence Group led advancers in the ASX 200 index shares with a rise of 5.6% followed by increases in Beach Petroleum of 4.6%, in St Barbara Ltd. of 4.4%, in Aquila Resources Ltd. of 4.2%, and Amcor Ltd. of 3.9%.

Commodity stocks gained as gold prices gained 1.7% to $1,188 per ounce and crude oil prices edged up 2.4% to $77.09 per barrel.

Aquarius Platinum advanced 3% to A$6.51 and Newscrest Mining jumped 2.8% to A$38.

Tower Australia led decliners in the ASX 200 index shares with a fall of 8.5% followed by losses of Cudeco Ltd. of 6.4%, in Macquarie Media of 3.9%, in Macquarie Countrywide of 3.5%, and QBE Insurance of 3.3%.

Other energy stocks fell. Nexus Energy dropped 2.9% to A$0.34, Carnarvon Petrol declined 2.8% to A$0.52 and Fortescue Metals dipped 2.6% to A$4.14.

Other Movers

Aquila Resources Limited rose 4.1% to A$10.20 and China based Baosteel agreed to pay A$286 million for its acquisition of up to 15% shares in the company. Both parties also agreed to work together on resources projects.

Beach Petroleum Limited rose 4.6% to A$0.90 said is proposing to change its name to more accurately include its emerging role in low-emissions energy technologies and solutions, in addition to its mainstream oil and gas production in Australia''s hydrocarbon provinces.

BHP Billiton plc added 1.4% to $41.80 after the mining company said dismissed talk that Rio Tinto was balking at a proposed A$116 billion joint venture in iron ore, insisting the two were close to form an agreement.

CuDeco Limited the mineral explorer dropped 6.4% to A$5.41. Independence Group NL a nickel miner increased 5.9% to Rs 4.78.

Macquarie Media Group slipped 3.9% to A$1.95.

Newcrest Mining Limited added 2.7% to A$38.00 as the gold prices hover near a record of $1,195 per ounce.

St Barbara Limited the gold miner increased 4.4% to A$0.35.

Tower Australia Group Limited fell 8.5% to A$3.00 after the life insurance services provider proposed a final dividend on ordinary shares of A$18.960 million representing A$0.0525 per share.