Australian Markets Track International Weakness

Darlington Musarurwa
25 Feb, 2010
New York City

Australian business investment gains 5.5% to A$27.7 billion in December. OZ minerals reported 2009 loss of A$517 million loss. REA Group profit rises 76% to A$23.1 million.

[R]3:00 AM New York, 7:00 PM Sydney- Australian business investment gains 5.5% to A$27.7 billion in December. OZ minerals reported 2009 loss of A$517 million loss. REA Group profit rises 76% to A$23.1 million.[/R]

Australian stocks fell despite a government report that the country’s business investment rose in December. Investors speculated that Greece may need a bailout to meet its debt obligation and trim its budget deficit to the requirements laid out by the EU.

Commodity stocks also dropped, with gold prices falling 0.6% to $1,096 per ounce and crude oil prices declined 0.5% to $79.6 per barrel.

The ASX 200 index in Australia decreased 54.40 or 1.17% to 4,594.10.

Of the ASX 200 index stocks, 31 rose, 156 fell, and 13 were unchanged. IOOF Holdings led gainers in the index shares with a rise of 7.5% followed by Transpacific Industries advancing 5.1%.

The Australian dollar decreased 0.6% to 88.79 U.S. cents.

Business Investment Gains 5.5% in Dec

Australian Bureau of Statistics reported today that the country’s total new capital expenditure increased 5.5% to A$27.7 billion in the three months to December from the previous quarter.

However, business investment decreased 2.3% from the comparable year ago period.

Business investment on buildings and structures fell 1.7% to A$12.6 billion from a quarter earlier and decreased 11.7% from a year ago.

Investment in plant, plant and machinery jumped 12.4% to A$15.1 billion in the three months to December from the previous quarter.

OZ Minerals in A$517 million Loss

OZ Minerals reported today that it realised a A$517 million loss in 2009 from a loss of A$2.5 billion a year earlier in line with forecasts for a loss between A$500 million and A$520 million.

The company is still in possession of its Prominent Hill project in South Australia after China Minmetals purchased the remained of the company for US$1.3 billion.

OZ did not declare a final dividend today. However, chief executive Terry Burgess noted that the Board will review its current position on dividend payment before the company’s interim results.

The miner projects that copper production will be in line with guidance between 100,000 tons and 110,000 tons in each of the next three years.

REA Group Net Profit Soars 76%

REA Group reported today that net profit from continuing operations advanced 76% to A$23.1 million in the six months ended December after selling properties in the United Arab Emirates and U.K.

Revenue jumped 13% to A$91.9 million in the period as it added 1,087 real estate agents in Italy to a total of 9,140 by December 31.

Subscribing agents rose to 9,329 while visitors to the website climbed to 5.4 million in December. The company’s cash balance surged 39% to A$57.8 million.

REA’s chief executive officer Greg Ellis said that it managed to grow profitability by exiting non-core businesses.

ASX Movers

Toll Holdings Limited led the decliners in the S&P ASX 200 index with a loss of 17.9% followed by losses in Kagara Ltd of 8.9%, in Riversdale Mining Limited of 6.7%, in Beach Energy Limited 5.4% and in Kingsgate Consolidated Limited 5.4%.

IOOF Holdings Limited led gainers in the S&P ASX 200 index with a rise of 7.5% followed by gains in Transpacific Industries Group Ltd 5.0%, in FKP Property Group of 4.3% and in Henderson Group Plc of 3.8%.

Other Movers

Goodman Fielder Limited decreased 4.2% to A$1.48 after it reported first half profit increased 25%.

IOOF Holdings Limited added 7.5% to A$6.00 after the pension-funds company posted first half net profit of A$36.9 million.

Iluka Resources Limited dropped 3.4% to A$3.62 after the zircon producer posted full year net loss for 2009 and says it remains vulnerable to weak demand in 2010.

Insurance Australia Group Limited rose 0.76% to A$3.98 after the insurer announced that an interim dividend at A$0.085 per ordinary share, will be paid on April 12, to shareholders registered as at March 10.

IRESS Market Technology Limited increased 3.1% to A$8.25 after the financial information provider was upgraded to “buy” from “hold” at Deutsche Bank AG.

Kagara Ltd dropped 8.9% to A$0.81 after the metals producer was downgraded to “sell” from “neutral” at UBS AG.

Transpacific Industries Group Ltd gained 5.0% to A$1.35 after the waste company was upgraded to “overweight” from “equal weight” at Morgan Stanley.