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| Subject: Views are mixed on what the next 12 months hold, although some hope that the US economy really might be on the mend has led some to suggest that stocks with international exposure (ERG, Brambles, CSL and, for only a short while longer, AMP) could be winners for fiscal 2004. | |
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Author: July 1 2003 |
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Date Posted: Monday, July 07, 11:24:01am In reply to: Newspapers reporting result--March 7 2003 SMH 's message, "Noteholders have tickets to ride" on Thursday, March 06, 08:38:56am http://www.smh.com.au/articles/2003/06/30/1056825335408.html FKP buying puts icing on index July 1 2003 A fair bit of bull in the Gulf . . . AA is back on the right side of the issue price, at last. Nobody knows why - yet. Photo: Robert Rough As long as it's sweet and not on the wings. Still, the Queensland builder might come down to Earth, Jan Eakin writes. Fund managers who track the sharemarket indices don't get many chances to outperform. But yesterday, the last day of the financial year and the end of the quarter, threw up one of those rare opportunities. Shares in Brisbane builder FKP - the old Forrester-Kurts - which enters the ASX 200 today, soared 29 per cent, from $2.33 to $3 in the end-of-day matching session. It's no secret the index funds have been buying in the past few weeks to get their FKP holdings up to index weight. Yesterday they went a step further. As the stock isn't yet a bona fide member of the ASX 200, it means the funds were taking an "active" position. Strictly speaking, because they bought early, their portfolios weren't an exact image of the ASX 200. But their performance gets the benefit of yesterday's runaway share price when they tot up the returns for the period to June 30. advertisement advertisement After the market closed, some trades went through around $2.40, so FKP is in for a sharp drop as it moves into the ASX 200. In an absolute sense the index funds will lose when the shares fall, but in a relative sense they're okay. After all, their sole goal is just to track the ASX 200. Blue chip stinkers When asked how to define the performance of equities over the past 12 months, one fundie said: "Well, it certainly wasn't the year of the blue chip." Quite. Look at the list of winners and losers in the ASX 200: biotechs head the winners, Novogen and Ventracor benefiting from goodish news. And the losers? Poor old ERG has been joined by AMP, Brambles and CSL. Views are mixed on what the next 12 months hold, although some hope that the US economy really might be on the mend has led some to suggest that stocks with international exposure (ERG, Brambles, CSL and, for only a short while longer, AMP) could be winners for fiscal 2004. Horrors of history Is last week's profit warning at Rio Tinto's Hunter Valley miner, Coal & Allied, the last nasty surprise for shareholders? Perhaps not, when you consider Rio's Comalco alumina operation, an important "growth avenue" to use analyst parlance, which accounts for 16 per cent of group earnings. According to ABN Amro's numbers, about 68 per cent of costs at an aluminium smelter are fixed, so the big returns come from increasing volumes. Rio will be harder pressed to expand production and ABN believes the company's aluminium operations are also more sensitive to US dollar weakness than the likes of BHP Billiton. Credit Suisse First Boston noted late last week that Rio "does not have a history of 'profit warnings"'. However, in an interesting coincidence, the broker went on to say: "If memory serves us correctly, the most recent examples occurred in 1996 to both the Coal & Allied and Comalco business units." Looking at the resources sector in general, CSFB tips that the "looming reporting season" should prove a reality check. "We expect that words such as benign and anaemic will be used extensively," it said. Back on the hoof Peter Holmes a Court's Australian Agricultural Co has been set alight like a fine cut of Angus sirloin on the char grill. Since Friday, AA Co shares have climbed 10 per cent to $1.08, the biggest two-day run and highest closing price since the cattle concern went public in August 2001. In fact, leaving aside the day AA Co listed, it's the first time the float has cut the mustard for the original investors. Yesterday's trading sparked all sort of rumours about AACo's bid for Stanbroke Pastoral but it is apparently still early days in the race for the AMP's bovine jewel. A successful Stanbroke bidder is not expected to be announced until August or September and AA Co - Holmes a Court is in the US at the moment - is said to be as surprised as anyone about the newfound enthusiasm for listed steak. Analysts suggested AA Co's full year results, due in a month or so, should be solid and pointed to recent ABARE numbers of reduced cattle supplies which may push beef prices up by 9 per cent next year. Many grazing companies sold down stock during the drought - AACo says it held on to most of its herd - and cattle prices are on the rise this year. This, with a possible Stanbroke deal in the wings, suggest the AACo might become a lot more interesting. 'Clear' new dynamic Predictions of a 50 basis point interest rate cut by the Reserve Bank has led UBS to upgrade the banks from "underweight" to "neutral". The main concern had been the sector looking too expensive but if rates are cut then earnings will be given another boost from mortgage lending and deposit growth, the broker says. Following in the footsteps of their colleagues in London, the analyst team says its order of preference remains Westpac, CBA, NAB and ANZ. "The biggest sector-positive is a clear new dynamic of monetary easings in most markets," Jeff Emmanuel says. "A second positive is a convictionless market and economy. A third key positive is that banks are benefiting from a strong construction and housing cycle, implying credit-growth-driven earnings upgrades relative to most sectors . . . Bank cycles usually only end with moves to a monetary tightening cycle." [ Next Thread | Previous Thread | Next Message | Previous Message ] |
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| changes made to the project design at a late stage blew out the budget of OneLink's Melbourne public transport ticketing system rollout | June 24 2003 | Tuesday, July 08, 09:40:12am |