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Friday, 25 September 2009

Tougher FIRB laws

by Marcus Padley

The market is down 47. The SFE Futures were down 50 this morning.

Wall St. finished down 41 overnight. Dow was up 57 at best and down 83 at worst. Metals were weaker and the Oil price fell $2.91 to $65.79. The Gold price tumbled $15.50 to $999 and the Aussie dollar fell to 86.53c versus 86.84c yesterday morning.

TOUGHER FIRB LAWS - The federal government has altered the laws relating to foreign investment. The government wants the foreign share of greenfields developments in the resources sector to be below 50%, and around 15% for major miners. In the past year and a half, the FIRB has reviewed 90 separate Chinese investment proposals valued at around $34bn. It didn’t take long for the new laws to make an impact.

In the news today…

  • ANZ Bank (ANZ) still in its trading halt  — It will buy out ING life insurance and wealth management JV for around $1.87bn. The market was expecting an Asian based acquisition. ANZ has $4bn sitting on its balance sheet after its recent capital raising. ANZ last traded at 2349c.
  • Talk of BHP Billiton undertaking a $17bn share buyback rather than making a huge acquisition. BHP down 83c to 3690c. Chinese steelmakers have apparently conceded defeat and have given up trying to obtain a better iron ore deal.
  • Brokers seemed to like David Jones’s results yesterday. Most lifted their target price and described the result as solid considering the difficult environment.
  • Ten Network (TEN)  — Out of a Trading Halt — Its majority shareholder CanWest has completed the sell down of its 50.06% stake at 130c to institutional and sophisticated investors. TEN up 1c to 137.5c.
  • Rio Tinto CEO says the strength and durability of a global economic recovery remains uncertain. RIO down 2.8% to 59.20c.
  • Lynas Corp (LYC)  — Trading Halt — pending an announcement on a potential funding transaction. Last traded at 90c. It announced that China Nonferrous Metal Mining pulled out of a rare earths project after the FIRB changed foreign investment laws yesterday.
  • Emeco Holdings (EHL) says an incomplete takeover offer received by the company in August has now been withdrawn. At this stage, talks have been terminated. EHL down 15% to 79c.
  • ConnectEast (CEU) in a trading halt. Last traded at 36.5c.
  • AWB Ltd (AWB) raised $220m from institutional investors. AWB up 2.6% to 125.5c.
  • Stocks hitting a fresh yearly high: ARB Corp (ARP), GUD Holdings (GUD) and OrotonGroup (ORL).

The Dow Futures are down 12 at 11:45am.

MARCUS PADLEY is the author of the MARCUS TODAY Daily Stockmarket Newsletter.

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