The market is down 164 at 11:30am vastly underperforming the 58 point drop predicted by the SFE Futures this morning. Financials down 4.0% — major banks doing the most damage with the NAB dropping the index by 14 points — is down 7.3% after their larger-than-expected heavily oversubscribed $3bn raising yesterday. CBA down 4.2%, WBC down 3.2% and ANZ down 0.8% as they contemplate the potential success of possible pre-Christmas capital raisings of their own. Resources are down 4.6% — BHP and RIO down 4.4% and 4.1% — despite the rise in commodities Monday in the US.
The Dow was down 73. Up 216 at best. Down 183 at worst. Main Points: Concerns over the financial position of US automakers burning through cash. One broker said GM is worth zero. The Chinese A$870bn stimulus package was quickly overlooked. Treasuries up. Gold up $12.30. Metals all up bar lead. BHP down 26c equivalent in the US despite rising 4.1% in ADR terms. A$ down 0.84% to 66.98c against the US dollar. Financials down 4.4% — AIG up 8.8% on an additional $40bn bailout. Retailers down 2% as Circuit City files for Chapter 11 bankruptcy.
The AFR has a 10 page study on Executive Salaries. Most highly paid executives from the top include Murdoch ($28.65m), Alan Moss at Macquarie ($24.75,) and Phil Green at Babcock & Brown ($22.1m). They also list the fall in value of shareholdings of key executives. Andrew Forrest has lost $9.3bn, Kerry Stokes $1.538bn, Gerry Harvey $1.462bn to name a few.
Making the news today…
- Incitec Pivot (IPL) is in a trading until Friday — it is preparing to raise capital.
- Asciano (AIO) is also in a trading halt after falling 59.8% to 69c on the back of Citi cutting its target price to 82c from 608c referring to “crisis of confidence”. They expect the company to make a loss for the next four years.
- Computershare (CPU) also struggling — reaching a two year low — after telling shareholders at its AGM that the strong US$ will erase its FY09 guidance. It expects underlying business growth of around 10%.
- Harvey Norman (HVN) said like-for-like sales fell 2.8% in the 28 days to November 9.
- Insurance Australia Group (IAG) says it is on track to meet earnings guidance and maintains a conservative exposure across is investment portfolio.
- Alumina’s (AWC) said it would cut production by another 350,000 tonnes a year after its JV partner Alcoa said it will cut production.
- According to the AFR, Foster’s Group (FGL) has decided against selling its wine unit at the bottom of the market.
- Coffey International (COF) has announced US$140m worth in international development contracts.
- Paladin Energy (PDN) has announced a 1Q loss after tax of $US4.7m.
- Becton Property Group (BEC) have seen increased redemptions and as a result have suspended both redemptions and applications for the Becton Diversified Property Fund (BDPF the Fund).
- CFX Retail Property (CFS) has given its September 2008 quarterly update and says it is confident of a FY09 distribution of 12.5c per unit.
Broker Stuff today…
- Plenty of broker research on the National Australia Bank (NAB) following their capital raising yesterday. GSJB Were were the only brokers to have a Buy recommendation, the rest are Underweight or Underperform.
- Orica announced their FY profit result yesterday — Deutsche Bank cut their target price to 2800c from 3000c and maintain their Buy recommendation. According to their numbers, it is a stock trading at a 34% discount to their revised valuation and at 9.6x FY09 earnings estimate.
- ABN AMRO cut their target price on Macmahon Holdings (MAH) to 100c from 187c despite maintaining their Buy recommendation after growth guidance was cut to 10-20%.
- The US Department of Agriculture cut its forecast overnight for Australian wheat production in 2008 to 20m metric tons from October’s 21.5m tons.
- The Dow Futures suggest a 32 point fall in on Wall Street tonight.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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