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Opinion
You have to hand it to Crown Resorts’ former chairperson Helen Coonan. As she walked out of the James Packer-backed casino empire she left behind a very interesting grenade - Ziggy Switkowski.
You would have to wonder whether Switkowski and Crown’s new chief executive, Steve McCann, will have their respective bookmarks on the same page.
McCann’s agenda appears to be very focused on holding the Crown ship together and finding a path back to licence suitability.
Strong iron ore prices and a bulky dividend from Fortescue Metals helped the mining sector support an otherwise weak ASX on Monday.
The benchmark S&P/ASX 200 closed 0.2 per cent higher at 7504.5, a rise of 16.2 points. The local market enjoyed strong leads from Wall Street, but failed to find strong momentum and traded sideways for most of the afternoon.
Burman Invest’s chief investments officer, Julia Lee, said Monday’s session was “really about the big bounce back in iron ore majors”.
Iron ore prices improved over the weekend to be above $US150 per tonne again.
Mining sector gains - driven by improved commodity prices and a bumper full-year result for Fortescue Metals - kept the Australian sharemarket narrowly in front in the first trading session of the week.
The benchmark S&P/ASX 200 added 0.2 per cent to close Monday at 7504.5, with the iron ore, gold miners, lithium producers and energy companies doing the bulk of the work.
Most of the other blue-chip firms sagged, even as Wall Street set the platform for a strong early rise.
US stocks closed at record highs on Friday as US Fed chair Jerome Powell gave a market-pleasing address at the Jackson Hole symposium.
A Nickel exploration company that counts Twiggy Forrest as its second-largest shareholder was overwhelmed by interest in its share placement, and will have to refund over half the applications.
Poseidon Nickel was trying to raise $3 million in a share purchase plan priced at 11 cents from shareholders, but received $13.5 million worth of applications.
The board has decided to accept $6 million, issuing a total of 54.5 million new shares, with the rest to be refunded.
“We acknowledge that shareholders who subscribed may be disappointed by the scale back,″ managing director Peter Harold said.
Analysis
Australia’s biggest companies are shelling out billions of dollars buying back their own shares, and no sector is doing it more enthusiastically than the banks.
Commonwealth Bank, National Australia Bank and ANZ Bank have announced $10 billion combined buybacks, which is two thirds of the $15 billion in recently-announced buybacks, figures from Bell Potter stockbroker Richard Coppelson show.
And this is probably only the beginning of the trend. Westpac is widely tipped to announce a buyback later this year, and some analysts expect the major banks will outlay a further $25 billion hoovering up their shares in years to come.
But although the wave of cash has buoyed share prices, it also highlights a fundamental point: the banks appear to have limited growth prospects outside the resurgent mortgage market.
Weapons and space technology firm Electro Optic Systems says a rocky geopolitical landscape should keep spending high among Australia’s military allies, with fears over drone and ‘hypersonic attacks’ driving a stronger emphasis on superior defence technology.
EOS - a $615 million company listed on the ASX - on Monday said its strategically placed production centres in Asia, the US, South America, and the Middle East had also shielded it somewhat from COVID-driven disruptions that have hurt a brittle global supply chain.
As a result, EOS said it was experiencing unprecedented demand for its technologies and capabilities, which include a range of weapons and communications systems.
This morning EOS announced it had narrowed its first-half loss to $11.7 million from $14.3 million a year ago, with revenue up 30 per cent to $97.8 million.
Electricity generator and retailer, AGL, is trading at all-time lows today after doing ex-dividend last week.
The 34¢ payment due on 29 September for total dividends of 75¢ in 2020-21, including a special 10¢ payment. It has not franked its dividends for 12 months.
Shares dropped 22¢ the day it went ex-dividend and are down a further 26¢ today to an all-time low of $6.55. The decline in share price mirrors falling dividends, which were about $1.50 per year in 2018 and 2019.
In its full results a couple of weeks ago AGL delivered earnings of $1.66 billion, broadly in line with its own guidance.
However, its 2021-22 guidance is for earnings between $1.2 billion and $1.4 billion, about 5 per cent below what the market was expecting to hear. Profit guidance is 12 per cent below the markets expectations at between $220 million and $340 million, according to Credit Suisse analyst Peter Wilson.
Dicker Data’s value has fallen by more than $500 million in two sessions after its co-founder, chief executive, and chairman David Dicker, cashed in a $42.2 million parcel of shares on Thursday’s bumper earnings result.
Mr Dicker offloaded 2.74 million shares at a discounted $15.40 on Thursday night with the sale “for personal projects” representing a 1.6 per cent portion of the company.
The software, hardware and cloud computing firm had closed at a record high $15.99 on Thursday - lifting its value to $2.75 billion - after strong pandemic trade boosted first-half revenue 6.3 per cent to $1.07 billion.
However, news of Mr Dicker’s Thursday night sell-down knocked the firm 8.1 per cent lower on Friday and lower again on Monday.
Most of the focus on Jerome Powell’s Jackson Hole speech last Friday has been on what it said about the prospect of a tapering of the US Federal Reserve Board’s asset purchases this year. There were, however, sections of the speech that canvassed more interesting questions.
In his address, the Fed’s chairman said that he has now joined the ranks of the members of the Open Market Committee who favour reducing, or “tapering” the rate of its $US120 billion ($164 billion) a month of bond and mortgages purchases – if the US economic recovery evolved “broadly as anticipated.”
That’s a “maybe” rather than a commitment and one built, it was apparent from other elements of the speech, on an assumption that, post-recovery, the economy and its macro settings will look reasonably similar to those which pre-dated the emergence of COVID-19.
The pandemic ravaged the US (and other) economies, briefly.