Rio cuts Iran ties, flags sovereign risks

Original article by Peter Ker
The Australian Financial Review – Page: 15 : 27-Nov-18

Rio Tinto has advised that its 68.8 per cent stake in the Rossing uranium mine in Namibia will be sold to China National Uranium Corporation for between $US6.5 million and $US106.5 million. The Iranian Foreign Investments Company owns 15.29 per cent of Rossing; its ownership has caused discomfort for Rio, given that the US and other western nations have imposed sanctions on Iran in recent years. Rio CEO Jean-Sebastien Jacques says its investments in the developing world are still presenting challenges, including the Oyu Tolgoi copper mine in Mongolia.

CORPORATES
RIO TINTO LIMITED – ASX RIO, CHINA NATIONAL URANIUM CORPORATION, IRANIAN FOREIGN INVESTMENTS COMPANY

APA shares plunge after Canberra blocks CKI buy bid

Original article by Matt Chambers, Perry Williams
The Australian – Page: Online : 9-Nov-18

Shares in APA Group fell by 10 per cent on 8 November after Treasurer Josh Frydenberg indicated his "preliminary view" on Hong Kong-listed CK Infrastructure’s $13 billion bid for the pipeline operator. Frydenberg stated he did not consider the bid to be in the "national interest"; he is expected to make his final decision in around two weeks. Superannuation fund infrastructure investor IFM is seen as the local entity most likely to make an approach to APA with a bid if Frydenberg’s views remain unchanged; any Australian-based bid for APA is expected to be lower than CKI’s

CORPORATES
APA GROUP – ASX APA, CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED, AUSTRALIA. DEPT OF THE TREASURY, IFM INVESTORS PTY LTD, WOOD MACKENZIE, COOPER ENERGY LIMITED – ASX COE, DUET GROUP, MOODY’S ANALYTICS AUSTRALIA PTY LTD

Adani’s cut-price Carmichael coal

Original article by Peter Ker
The Australian Financial Review – Page: 13 & 28 : 6-Nov-18

Adani recently gave indications that thermal coal from its Carmichael mine in Queensland is likely to boast energy content of around 5,500 kilocalories per kilogram. Rory Simington of Wood Mackenzie estimates that if the coal were offered to buyers at current market prices, it would be likely to fetch between $US50 and $U55 per tonne. This compares with $US106 per tonne at present for higher-grade coal from the Hunter Valley. Simington expects Adani’s coal to have an energy content of 4,800 kilocalories per kilogram, although he adds that washing the coal could increase this to around 5,500 kilocalories.

CORPORATES
ADANI MINING PTY LTD, WOOD MACKENZIE, WHITEHAVEN COAL LIMITED – ASX WHC, BHP BILLITON LIMITED – ASX BHP, MACQUARIE GROUP LIMITED – ASX MQG

Mitsubishi in $4.1bn swoop for CBA arm

Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 1-Nov-18

Brett Le Mesurier of Shaw & Partners expects the Commonwealth Bank of Australia to return capital to shareholders following a deal to sell its global asset management business. Japan’s Mitsubishi UFJ Financial Group will pay $4.1bn for Colonial First State Global Asset Management, which CBA had previously intended to demerge with its financial planning and mortgage assets. CBA expects to generate a post-tax gain of around $1.5bn from the sale of CFSGAM, while the bank’s common-equity tier-one capital will be boosted by 60 basis points.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, MITSUBISHI UFJ FINANCIAL GROUP INCORPORATED, SHAW AND PARTNERS LIMITED, COUNT FINANCIAL LIMITED, FINANCIAL WISDOM LIMITED, AUSSIE HOME LOANS LIMITED, COLONIAL FIRST STATE GROUP LIMITED, MORTGAGE CHOICE LIMITED – ASX MOC, COUNTPLUS LIMITED – ASX CUP, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MLC LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, SOCIETYONE AUSTRALIA PTY LTD, SUNCORP GROUP LIMITED – ASX SUN, TRIBECA INVESTMENT PARTNERS PTY LTD, MITSUBISHI UFJ TRUST AND BANKING INCORPORATION

Adani close to action on scaled-back Carmichael mine

Original article by Mark Ludlow
The Australian Financial Review – Page: 2 : 1-Nov-18

Adani Mining CEO Lucas Dow has declined to comment on speculation that the company will make a final investment decision on the Carmichael thermal coal mine in coming weeks. However, Adani is believed to be planning for annual production of 10-15 million tonnes in the first stage of the project, at a cost of less $2bn. The mine is now expected to have maximum production capacity of about 27 million tonnes a year, compared with initial plans for 60 million tonnes. The project is forecast to generate 1,500 jobs.

CORPORATES
ADANI MINING PTY LTD, AUSTRALIAN LABOR PARTY, NORTHERN AUSTRALIA INFRASTRUCTURE FACILITY, BHP BILLITON LIMITED – ASX BHP

Aussie trades at fresh 32-month lows before recovering post US GDP – AFEX Monday Update – October 29, 2018

The AUD/USD chart resembled a roller coaster on Friday.  Initially the bears were in control, pushing new lows, however the bulls later gained the ascendancy in the US session helping the Aussie dollar recover from its initial losses and close the week relatively unchanged.

Earlier in the day the AUD hit fresh multi-year lows as risk-aversion swamped the markets.  Equities reversed early morning gains and currencies were swept up in the carnage.

The moves caught many off-guard due to the lack of volatility throughout the week.  Up until 2pm AEST on Friday the weekly range was a mere 72-points and tracking a similar weekly trade range to the week prior, which was the lowest weekly range since 2002.

However the weight of equity market turbulence took its toll, alongside a weakening Chinese yuan that touched it’s lowest level since January 2017.  This saw the AUD sell-off quite suddenly, pushing through the weekly lows at 0.7052 and quickly surpassing the monthly lows at 0.7040, taking out traders stop loss positions which exemplified the moves and test towards psychological support at 0.7000.

But after the release of US 3rd quarter GDP on Friday night the US dollar sold off across the board, enabling the Aussie to bounce off the low of 0.7021 and push all the way back above 0.7100 before closing the session at 0.7087.

Whilst the headline release of 3.5% growth versus 3.3% expected was quite strong, delving into the data traders saw that a considerable portion of growth came from increased inventories whilst exports declined, and thus took the position that the number was overstated and at risk of declining at the next read, and sold their USD holdings accordingly.

Looking ahead and the economic calendar is quite a lot busier than last week.  On Monday the US releases core PCE, the Fed’s preferred measure of inflation, followed by consumer confidence data on Tuesday.  This leads into Australian inflation data on Wednesday which is quickly followed by Chinese manufacturing and services data.  Later that night the US will publish quarterly wage price data, followed by Australian retail sales figures on Friday ahead of US employment numbers.

Given how close traders came to testing 0.7000 on Friday, any negativity in domestic data or strength in US data would likely see that figure tested again.  If it does break through 0.7000 the next key level of technical support coincides with the August 2015 low at 0.6907.  Thereafter and the January 2016 low of 0.6827 is the next key figure to watch.  Whilst the trajectory is for a lower AUD, a break back above 0.7160 could help the Aussie recover in the short-term, although I imagine any rallies will be met by sellers who appear in control at this time.  A sustained move towards 0.7300 could change this view, but the likelihood of this happening looks quite remote given current price action and most market participants still favour a lower AUD from here.

James King
Head of FX Dealing, AFEX
www.afex.com

Worley bulks up in $4.6bn US expansion

Original article by Matt Chambers
The Australian – Page: 16 & 28 : 23-Oct-18

WorleyParsons will acquire the resources arms of US engineering firm Jacobs in a transaction valued at $4.6 billion. WorleyParsons CEO Andrew Wood says the deal, which is hoped to be completed in the first half of 2019, will create the world’s biggest provider of professional engineering services to the mining, oil and gas sectors. The transaction will see Jacobs acquire a stake of around 11 per cent in WorleyParsons, while Wood says he does not expect the deal to result in any major job losses across the two businesses.

CORPORATES
WORLEYPARSONS LIMITED – ASX WOR, JACOBS ENGINEERING GROUP INCORPORATED, DAR GROUP

‘We’re in the eighth inning’: Oaktree chief wary of bull run

Original article by David Rogers
The Australian – Page: 17 & 28 : 23-Oct-18

Oaktree Capital Management’s co-founder Howard Marks says current financial market conditions favour a defensive investment style. Marks warns that although the bull market may continue for some time yet, the chances of a bear market are increasing. He describes quantitative easing in the wake of the global financial crisis as a "massive experiment" that succeeded, but he says the impact of quantitative tightening is uncertain.

CORPORATES
OAKTREE CAPITAL MANAGEMENT LLC, CITICORP, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, MSCI EMERGING MARKETS INDEX

Warburton looks for next challenge

Original article by Max Mason
The Australian Financial Review – Page: 20 : 19-Oct-18

APN Outdoor Group will be delisted after the Federal Court approved the scheme of arrangement for its $1.2bn acquisition by JCDecaux. James Warburton has resigned as CEO APN Outdoor after 10 months in the role, and he will leave the outdoor advertising group on 31 October. He intends to seek another executive role, and says he has already received several approaches. APN Outdoor shareholders will receive $6.70 per share, including a special dividend of $0.30 per share.

CORPORATES
APN OUTDOOR GROUP LIMITED – ASX APO, JC DECAUX SA, OOH!MEDIA LIMITED – ASX OML, ADSHEL PTY LTD, HT&E LIMITED – ASX HT1, FEDERAL COURT OF AUSTRALIA, SYDNEY TRAINS, NEW SOUTH WALES. ROADS AND MARITIME SERVICES, TRANSPORT FOR BRISBANE, SYDNEY AIRPORT – ASX SYD

Rio Tinto may cut rates on Mongolia loans in compromise move

Original article by Peter Ker
The Australian Financial Review – Page: 16 : 15-Oct-18

Recent media reports in Mongolia have suggested that Rio Tinto could be prepared to reduce the interest rates on the loans it provides to the government-owned company that has a 34 per cent stake in the Oyu Tolgo copper mine. According to the reports, Mongolian MP Gombojavyn Zandanshatar has indicated that Rio Tinto will reduce its loan interest rates as part of negotiations with the government regarding their agreement to expand the mine. The government is dependent on loans from Rio Tinto to finance its share of construction costs.

CORPORATES
RIO TINTO LIMITED – ASX RIO, OYU TOLGOI LLC, TURQUOISE HILL RESOURCES LIMITED, TORONTO STOCK EXCHANGE, BHP BILLITON LIMITED – ASX BHP, OZ MINERALS LIMITED – ASX OZL