Australian Tax Worries; Woodside Drops

Darlington Musarurwa
22 Jan, 2010
New York City

Australian stocks closed sharply lower on the worries that mining companies may be asked to pay more taxes on future projects. The leaked report raised new uncertainties on the taxation regime. Lower world prices of metals and energy also weighed on the market sentiment.

[R]3:00 AM New York, 7:00 PM Sydney – Australian stocks closed sharply lower on the worries that mining companies may be asked to pay more taxes on future projects. The leaked report raised new uncertainties on the taxation regime. Lower world prices of metals and energy also weighed on the market sentiment.[/R]

Stocks in Australia were under pressure from domestic and international news. The leaker report from the government said that mining companies may be charged higher taxes as energy companies are charged after the projects to turn to profit.

Commodities prices weakened after China reported a surge in economic expansion prompting worries of tighter lending will slowdown growth.

Banks were also under pressure after the U.S. President said banks should be prevented from taking excessive risks with depositors money and they should be prevented from consolidating further so that the need a government bailout.

Resource stocks were also rattled by falling gold and crude oil prices, including a report from the Sydney Morning Herald claiming government is likely to increase taxes on mining companies.

In Sydney trading ASX 200 Index tumbled 1.6% or 76.6 to 4,750.60.

Of the ASX 200 Index stocks, 29 increased, 160 fell, and 11 were unchanged. OZ Minerals led gainers in the index shares with a rise of 3.5% followed by Carsales.com.au jumping 3.1%.

The Australian dollar edged up 0.3% to 92.40 U.S. cents.

Woodside Revenue Falls 27% to A$4.2 billion

Woodside fourth quarter revenues dropped 27% to A$4.3 billion from A$5.9 billion a year earlier on falling oil and gas prices and unplanned outages.

Revenues in the fourth quarter fell 23%.

According to the company, production volumes fell 2% to 20.2 MMboe from the previous quarter, while annual production shrank 0.5% to 80.9 MMboe on decreases in oil production from Vincent, Stybarrow, Enfield, Neptune and NWS Oil assets.

After tax profit in 2009 will rise to A$530 million on an impairment charge on Libyan assets and revaluation of net US dollar liabilities.

NAB Completes Due Diligence on Axa Asia Pacific

National Australia Bank has completed its due diligence of Axa Asia Pacific, which it intends to acquire for A$13.3 billion.

However, discussions will only commence after February 6 when AXA Asia Pacific completes its exclusivity agreement with AXA SA and AMP Ltd.

AMP has also made a bid to acquire the company and sell its Asian assets to the French parent while retaining its Australia and New Zealand business.

Macquarie Infrastructure Group to Split into Two

About 95% Macquarie Infrastructure Group shareholders agreed to a restructuring process that will see the group split into Intoll International Ltd and Macquarie Atlas Roads.

Under the plan, MIG will pay Macquarie A$104 million, including $50 million for its role in facilitating the restructure and Intoll will pay A$25.6 million Intoll will pay Macquarie subsidiary for its role in various projects.

MIG will formally begin trading as Intoll on February 2, while Mac Atlas will trade from Monday as MQA on a deferred settlement basis and commence trading on a normal basis on February 9.

The shareholders will receive one Intoll and 0.2 MQA securities for each MIG security held.

ASX Movers

Sundance Resources Limited led the decliners in the S&P ASX 200 index with a loss of 6.6% followed by losses in Australian Agricultural Company Limited of 6.4%, in Beach Energy Limited of 5.9%, in ING Office Fund 4.7% and in Virgin Blue Holdings Limited 4.6%.

OZ Minerals Limited led gainers in the S&P ASX 200 index with a rise of 3.4% followed by gains in Carsales.com Ltd 3.1%, in Envestra Limited of 3.0% and in SP AusNet of 2.2%.

Other Movers

Australian Agricultural Company Limited decreased 6.4% to A$1.31.

Beach Energy Limited declined 5.9% to A$0.87 an oil and gas explorer was downgraded to “hold” from “buy” at Wilson HTM.

BHP Billiton plc declined 2.2% to A$41.70 on the worries that government will levy higher taxes on new mining projects are after they are completed.

Newcrest Mining Limited the gold producer fell 2.3% to A$33.31.

OZ Minerals Limited gained 3.4% to A$1.20 after the operator of the Prominent Hill mine in Australia was upgraded to “overweight” from “neutral” at HSBC.

Rio Tinto Limited the mining company decreased 3.4% to A$72.94.

Santos Limited rose 0.5% to A$13.55 after the oil and gas producer was upgraded to “buy” from “neutral” at UBS AG.

Transpacific Industries Group Ltd fell 3.2% to A$1.33 after the stock was downgraded to “sell” from “neutral” at UBS AG.

Woodside Petroleum Ltd slipped 3.3% to A$44.37 after the oil and gas producer said revenues declined 27% in 2009 and 23% in the fourth quarter on the lower oil and gas prices and unplanned outages.