The Border Watch : December 17th 2013
BUSINESS Market slow ahead of US Reserve meeting MELBOURNE: The Australian share market has closed lower ahead of the US Federal Reserve’s last meeting for 2013. The US Fed’s Federal Open Market Committee is widely expected to approve the tapering of economic measures that were designed to stimulate the US economy on Thursday morning. Lonsec senior client adviser Michael Heffernan said there was little overseas or domestic news to drive the market yesterday. He said investors were waiting to see which way “the taper tiger” would jump on Thursday. “There has been no impetus today. We’re really on automatic pilot,” Mr Heffernan said. In the banking sector, Westpac lost 23c at $30.77, Commonwealth Bank fell 57c to $73.63, National Australia Bank dipped 15c to $33.20, and ANZ edged up 4c to $30.29. In the resources sector, global miner BHP Billiton reversed 19c to $35.66, Rio Tinto retreated 18c to $64.91, and Fortescue Metals scraped off 1c at $5.35. Meanwhile, the Australian dollar remains below US90c despite regaining some ground as investors await the US Federal Reserve’s decision on whether to begin tapering stimulus measures. At 5pm yesterday, the local unit was trading at US89.54c, up from 89.27c on Friday. The Australian dollar managed to rise despite the release of soft Chinese manufacturing activity data, showing expansion slowed this month. “The Chinese data didn’t prompt a big selloff in the Aussie and that’s not surprising because all eyes are really on the US this week, especially the Federal Reserve meeting on Thursday morning - that will be the driver,” Easy Forex senior dealer Francisco Solar said. Wesfarmers out of underwriting IAG buys insurance operations for $1.85 billion MELBOURNE: Diversified conglomerate Wesfarmers is selling its Australasian insurance underwriting operations to Insurance Australia Group for about $1.85 billion – its biggest ever divestment. Wesfarmers managing director Richard Goyder said the sale followed approaches by a number of parties interested in the underwriting business. Wesfarmers had spent a lot of money in recent years getting the Australian and New Zealand insurance underwriting business into much better shape. “But it hasn’t delivered satisfactory returns on average over the last five years to Wesfarmers,” Mr Goyder said. “And over a period of time, if any of our businesses don’t generate satisfactory returns, we’ll look and see what we do with it.” Mr Goyder said the sale of the insurance underwriting business also reduced some of the risk in Wesfarmers’ portfolio of industrial, mining, retail and financial businesses. There was inherent volatility in the insurance business because of catastrophic events like earthquakes in New Zealand, and Cyclone Yasi. The sale does not include Richard Goyder the insurance division’s broking operations in Australia, New Zealand and the UK and its Australian and New Zealand premium funding businesses, which will remain part of Wesfarmers. Wesfarmers expects a pre-tax profit of about $700 million to $750 million from the transaction, which will be included in the financial results for the second half of the 2014 financial year. Mr Goyder said Wesfarmers had not yet decided what to do with the proceeds from the sale. The sale is subject to regulatory approval, which is expected to take several months. The acquisition comprises Wesfarmers’ underwriting companies trading under the WFI and Lumley Insurance brands, and a 10-year distribution agreement with Coles. IAG expects the acquisition will lift earnings per share by a modest amount in the first full year of ownership and by at least five per cent in the second year. Shares in Wesfarmers were 20.5c higher at $41.51 at the market close yesterday. IAG shares are in a trading halt until the start of trading tomorrow. They last traded at $5.70. AAP Ex-owner says Brindabella can fly SYDNEY: The founder of troubled regional airline Brindabella says it’s a tricky operation, but it can be a viable business again. The airline has been placed in receivership after the Civil Aviation Safety Authority grounded its fleet last week. Jeff Boyd, who established the business in 1994, says it was in good shape when he sold it in 2011. He won’t speculate on what went wrong after that, but says his experience shows Brindabella can work. “There’s towns there that need a service, it can be a viable service,” he said yesterday. “I certainly hope there’s – AAP a buyer out there and I certainly hope the buyer sees there’s some staff there that would make it a good company.” Grounded: Tony Abbott exits a Brindabella aircraft during the 2013 election campaign. – AAP Good chance Toyota will stay – Abbott ANGLESEA: Prime Minister Tony Abbott says there’s a good chance Toyota can be convinced to keep making cars in Australia – but it won’t involve government handouts. Toyota will be the last company manufacturing cars in Australia by 2017, when Holden closes up shop a year after Ford shuts down local manufacturing. Mr Abbott says he has met with Toyota head Max Yasuda in recent days and believes the company is in a very different position to Ford and Holden since it focuses heavily on exports. “That’s why I think we’ve got good prospects of keeping it,” he said yesterday. He said it was “tragic” to see Holden leave, but noted a package designed to improve the efficiency of the industry will be announced in the coming days. Mr Abbott said regions such as Geelong, which has relied on manufacturing in the past, can shift the focus to other industries such as tourism, higher education and biomedical research. “I want to see people transition from old jobs into better jobs,” he said. But he’s continuing to rule out any kind of direct assistance to the car industry. – AAP 10 - The Border Watch, Tuesday, December 17, 2013 Picture: AAP Shoppers set to splash out this Christmas SYDNEY: Aussie shoppers are expected to splurge more than $8.7 billion on gifts and festive trimmings in the last week before Christmas. The Australian National Retailers Association Christmas Retail Index reports in-store sales will make up $7.8 billion of the total, up 23 per cent from last week’s sales. About $900 million will be spent online, down 40 per cent on last week, chief Margy Osmond says. “We would expect a bulk of online shopping to be completed now, with shoppers crossing their fingers their online purchases are delivered in time,” she says. In the four weeks leading up to Christmas, Australians will have spent on average $1280 on gifts, food, alcohol and other festive trimmings, ANRA predicts. This week, each shopper is expected to part with $377. ANRA says Western Australian shoppers are expected to spend the most this week – an estimated $483 each. Ms Osmond says it’s mostly Gen-Y shoppers who will take advantage of extended trading hours. Almost 35 per cent of Gen-Y shoppers told ANRA they would be leaving their shopping until after December 14 – and right up to Christmas Eve. IN BRIEF No festive joy at petrol pumps SYDNEY: There will be no Christmas joy at the bowser for motorists, with national petrol prices expected to stay above $1.50 a litre for the festive period. Petrol prices averaged $1.51 a litre in the past week and CommSec economist Savanth Sebastian says a lower Australian dollar and higher Singapore gasoline prices will keep prices inflated over Christmas. “Motorists should expect to see fuel prices remain well above $1.50 a litre for the majority of the ChristmasNew Year period,” he said. Aurizon to reduce fleet, close project SYDNEY: Freight rail operator Aurizon says no extra jobs will be lost as it shrinks the size of its rail fleet and finalises the termination of a Queensland project. The company’s decision to sell locomotives and wagons will result in an asset impairment of $130 million to $150 million, which will be recognised as an expense in its accounts for the first half of the 2013-14 financial year. The changes will reduce the cost of maintenance and fuel costs, the company said. Aurizon shares were down 2c at $4.68 yesterday. Senex withdraws AWE takeover offer MELBOURNE: Senex Energy has withdrawn its $752 million takeover offer for fellow Australian oil and gas producer AWE. Senex made a non-binding takeover proposal last Wednesday, which AWE rejected on Sunday. A successful takeover would have merged Senex’s onshore oil and gas assets in central Australia’s Cooper Basin and coal seam gas assets in Queensland with AWE’s mostly offshore assets in Australia, New Zealand and Indonesia. AWE said the offer was not in the best interests of its shareholders. Jetstar opens direct NZ to Adelaide route – AAP ADELAIDE: Budget airline Jetstar has begun direct flights from Auckland to Adelaide. Yesterday’s flight was the first of its three times a week service, South Australia’s Tourism Minister Leon Bignell said. The airline has established a base in the state, creating another 120 jobs for pilots, cabin crew and operational staff and basing four A320 aircraft in Adelaide. The move will be a real boost to the state’s tourism industry, Mr Bignell said.
December 13th 2013
December 18th 2013