The Border Watch : November 12th 2013
BUSINESS James Packer Packer pitches casino in Sri Lanka CANBERRA: Billionaire James Packer will visit Colombo this week to lobby the Sri Lankan government over his plans for a five-star resort. The Crown chairman is expected to meet key government officials and potential joint venture partners tomorrow. He will also be a keynote speaker at the Commonwealth Business Forum in Colombo ahead of the opening of the Commonwealth Heads of Government Meeting, which Prime Minister Tony Abbott will attend. Crown announced in mid-October it was in “detailed discussions” with the Sri Lankan government and potential partners regarding a $481 million five-star resort and casino. The 450-room Crown Sri Lanka would be located on Beira Lake in the Colombo resort district. The Sri Lankan parliament and board of investment is considering whether to grant investment approvals and tax concessions for the project, which is also subject to final agreement between joint venture parties. Concerns have been voiced by local Buddhist leaders that a casino could lead to social problems. Opposition members of parliament have raised concerns about the level of tax breaks being offered to foreign investors. New buyers miss mortgage rush CANBERRA: First-home buyers have gone missing in the latest housing market upswing, despite low interest rates. New figures show the proportion of firsthome buyers taking out a mortgage in any one month shrank to an all-time low of 12.5 per cent in September. “First-home buyers are competing with cashed-up investors and upgraders who have significant equity in their property,” director at mortgage provider Loan Market Mark de Martino said. He said market entrants must build up a sizeable deposit to give them the best chance to compete and it was only a matter of time before they returned in numbers. Macquarie research economist Gabby Hajj said this would have implications for consumer spending because younger home buyers tend to undertake more spending setting up home than investors. Overall, yesterday’s data showed 51,928 loans were granted to owner occupiers in September, the largest number since October 2009, and 4.4 per cent higher than a month earlier. The value of these loans was $15.8 billon and 5.3 per cent higher than a month earlier. Loans taken out by investors amounted to $9.4 billon, a 5.2 per cent rise. – AAP ANZ Bank, taking into account this weekend’s home auctions, said there was a further strengthening in house prices in the past week, rising by an average 0.3 per cent among capital cities to be 8.3 per cent up on the year. Sydney prices are more “Housing is best placed to take over the leadership role from mining as the nation’s key economic driver.” IN BRIEF American jobs data hits dollar BRISBANE: Surprisingly good US jobs data is continuing to weaken the Australian dollar. At the close yesterday, the Australian dollar was trading at US93.8c, down from 94.65c on Friday. The addition of 204,000 US jobs last month, against market forecasts of a 120,000 increase, weakened the local currency on Friday night. Elders warns of $510m net loss SYDNEY: Rural services company Elders expects to report a loss of more than $500 million for its recently concluded fiscal year. The company is due to release its full-year results on November 18 but has warned it expects to post a net loss in the order of $510 million for the year to September 30. Transurban buys Sydney tunnel debt In demand: First-home buyers have decreased despite the housing sector rising. Picture: AAP Home loan approvals jump SYDNEY: Home loan approvals jumped by 4.4 per cent in September as low interest rates worked their magic. The increase came a month after the Reserve Bank of Australia cut its interest rate to a record low of 2.5 per cent. than 12 per cent higher, followed by Melbourne at just more than 8 per cent and Perth at just under 7 per cent. Commonwealth Securities economist Fortescue tackles $US12 billion debt MELBOURNE: Fortescue Metals has continued its debt-busting ways as it lowered interest payments on $5.34 billion to tackle what is viewed as its main weakness – $US12 billion in borrowings. Fortescue said it would save $US50 million a year after the senior secured debt’s underwriters, Credit Suisse and JP Morgan, repriced its interest rate margin from 4.25 per cent to 3.25 per cent. Repayments were delayed from 2017 to the first half of 2019 for the world’s fourth-largest iron ore miner. However, doubts persist about its ability to withstand a sudden slump in the iron ore price to $US100 a tonne, as happened last year, sparking a debt refinancing amid fears Fortescue could breach its covenants. Further debt and Nev Power gearing reductions would enable another interest rate fall and Fortescue could still repay the debt early, the company said. “The result again demonstrates the market’s confidence in our strategy of ramping up production and then progressively repaying the debt that has funded our expansion,” chief executive Nev Power said. Chief financial officer Stephen Pearce said the company had reduced production costs and had nearly completed its $US9 billion Pilbara expansion. 8 - The Border Watch, Tuesday, November 12, 2013 – AAP “Interest rate cuts do take time to work their way through the economy so that’s what we’re seeing,” Commonwealth Bank associate economist Diana Mousina said. “Even though we might get some volatility month by month, the overall Savanth Sebastian believes the housing sector is fast becoming the shining light of the Australian economy. “With interest rates low, population rising and trend has been quite a sustained upturn in housing activity.” The RBA appeared to be finished with cutting rates, Ms Mousina said. But JP Morgan economist Ben Jarman said a further cut was on the cards in 2014. housing affordability still attractive, housing is best placed to take over the leadership role from mining as the nation’s key economic driver,” Mr Savanth said. – AAP SYDNEY: Transurban is buying $475 million of debt held by Sydney’s Cross City Tunnel as it looks to take control of the troubled toll road. The 2.1km tunnel, which connects the west side of Sydney’s CBD to Rushcutters Bay in the east, has had a troubled financial run since its opening in 2005, and the tunnel was placed into receivership for the second time in September in the wake of a legal dispute with the NSW government over stamp duty. RBA has dig at US monetary problems – AAP Orica expects coal to make profits explode MELBOURNE: Explosives and chemicals supplier Orica expects higher profits next year as key North American coal markets improve, and the company sells more sophisticated explosives and blasting systems. The North American coal sector – one of Orica’s biggest markets for explosives – built up stockpiles of coal over 2012, but those stockpiles had since diminished, chief executive Ian Smith said. “What we’re seeing in North America is coal volumes starting to come back, and we’ll see a progression, hopefully, over the 2014 year to normal levels,” Mr Smith said. Orica would benefit, should prices for thermal coal rise. Mr Smith said it would be hard for Orica to maintain its sales volumes should the Australian dollar remain too high, and if prices of thermal coal were to drop. But he said by the end of 2014, Orica could be a position to return more cash to shareholders via capital management initiatives. There were also signs of improvement in the quarrying and construction markets in Europe, Mr Smith said. Orica expects net profit in 2013-14, before material items, to exceed the $602 million it made in the 12 months to September 30. But it said market conditions were still volatile. Shares in Orica yesterday hit their highest level since early June, gaining $2.27, or 11.6 per cent, to $21.81. SYDNEY: The Reserve Bank of Australia has taken a swipe at the US for the problems its ultra-loose monetary policy causes countries such as Australia. RBA assistant governor Guy Debelle’s comments form part of a critique of a paper published on the RBA’s website yesterday. Dr Debelle said near-zero interest rates and dramatic expansion in banking system reserves might be justified from one country’s perspective, but it affects the rest of the world. Banks lead share market lower – AAP MELBOURNE: The Australian share market closed lower yesterday as investors put aside a positive lead from US markets and took a breather from a strong run upwards in recent months. IG market strategist Evan Lucas said the major banks led the Australian market lower, now three of them had paid dividends and investors in the banks were now reassessing their position.
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