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Macquarie Office Trust (MOF) said it has agreed to terms o sell its Frankfurt property for $61.7 million. The trust said the sale would contribute further to liquidity and, after the repayment of debt, is expected to return about $15 million in cash to the trust.

Macquarie Office said the transaction would also eliminate the potential need for it to inject $9.2 million into the loan facility for the property, which was expected to occur in February 2010.

CEO, Adrian Taylor, said the sale of the property on a cap rate of 6.5% represents progress on the Trust’s medium-term strategy to reweight the portfolio back to Australia.

“Asset sales since December 2008 now total more than $522 million, with this latest sale allowing the Trust to continue its strategy of repaying debt, and further strengthening its balance sheet,” Mr Taylor said.

“In addition, some of the proceeds from the sale may be invested in our high quality office portfolio.”

Macquarie Office anticipates the sale to reduce the Trust’s balance sheet gearing by approximately 1% to 35%. 

As at 1017 AEDT, MOF shares were up 0.5c to 32c.
 

Ratings agency Fitch released its Australian bank sector review saying the big four were emerging from the financial crisis in relatively good shape. However, the agency noted that they still face a number of challenges, with a key one being asset quality.

Tim Roche, Director in Fitch's Financial Institutions Group, said impaired assets rose significantly during 2009, at a time of considerable fiscal stimulus and emergency low monetary policy settings.

“As interest rates rise towards a more neutral setting and government stimulus measures are progressively wound back, asset quality may be further tested," Mr Roche cautioned.

Fitch notes however that, though elevated, gross impaired loans remain low relative to off-shore peers, at around 1% of gross loans.

Furthermore, pre-impairment operating profit has continued to rise which, when combined with loan-loss reserves, offers a substantial capacity to absorb further impairments before impacting capital.

From a funding perspective, Fitch said Australia's persistently high current account deficit is largely funded by the nation's banking system.

“This is reflected in the major banks' high reliance on off-shore wholesale markets, and highlights the importance of the government guarantee on wholesale funding introduced in 2008,” the ratings agency said.

Notably, the portion of short-term wholesale funding in the overall mix has diminished during the global financial crisis.

Fitch considers that this may be a precursor to more conservative funding mixes and maturity profiles, particularly in light of the more onerous regulatory capital and liquidity requirements currently under proposal.

Finally, the ratings agency said uncertainty and volatility continued to influence the major banks' operating environment.

Fitch notes a level of concentration risk evident in the banks' exposures to the Australian economy, which in turn is benefiting from growth in Asia, China in particular.

“While this contributed to a relatively stable bank performance throughout the global financial crisis, it constitutes a concentration risk nonetheless,” the ratings agency said.

RBS – Round Up – 140110

St Barbara Limited (SBM) reported that production was steady and in line with expectations over the last quarter. As a result the Aussie gold miner reaffirmed its guidance of achieving production of between 205,000 and 240,000 ounces at a cash operating cost of between $745 and $820 per ounce for the 2010 year.

The company said that in the fourth quarter the company produced 55,104 ounces of gold, with the gold being shipped at an average price of $1,210 per ounce.

Across its operations the company’s Leonora mine in Western Australia produced less gold at 25,043 vs 30,060 than its Southern Cross mine, though the gold was produced more cheaply.

The miner, which doesn’t have any gold or currency hedging, had reported cash of $167.6 million.

At the close, St Barbara shares were trading at 30c each.

US stocks gained modest ground Wednesday as the tech sector rallied and bank stocks recovered as bargain hunters moved in following several days of declines in the sector. Meanwhile, the US government’s beige book, a measure of economic and manufacturing conditions in key regions across the country, reaffirmed the sentiment that the economy was improving, albeit slowly.

The Dow Jones rose 55.25 points, or 0.52%, to 10,682.13, the S&P 500 gained 9.53 points, or 0.84%, to 1,145.73 and the tech-heavy NASDAQ added 25.59 points, or 1.12%, to 2,307.90.

The banking sector was strong, with nearly every stock in the sector gaining ground.

Retail banks Bank of America and Wells Fargo added 1.6% and 1.8%.

Investment banks Morgan Stanley and Goldman Sachs tacked on 0.4% and 0.7% respectively.

Citigroup bucked the trend, losing 0.6%.

Kraft lost 0.2% as the saga concerning its hostile takeover of Cadbury continued.

Meanwhile, Hershey fell 3% as reports surfaced suggesting it is preparing to make a lone bid for Cadbury.  

Microsoft added 0.9%, while Apple put on 1.4% with less than two weeks to go until the company is rumoured to be releasing a tablet-style laptop.

Google bucked the trend, losing 0.6%. The search engine behemoth drew both praise and criticism for its threat to withdraw from China on censorship and hacking concerns.

Smaller rival Yahoo! benefited, climbing 1.3%.

Pharmaceutical stocks were buoyed by a general upgrade to the sector from Credit Suisse. Merck tacked on 4%.

Oil and commodity stocks lost ground as the price of NYMEX light crude oil for February delivery fell US$1.06 to US$79.73 a barrel.

Exxon Mobil lost 0.4%, while Chevron eased 0.8% lower.

Meanwhile, bargain hunters moved in on Alcoa, which jumped 3%. The stock retreated over 11% yesterday. 

COMEX gold for February delivery rose US$7.80 to US$1,137.20 an ounce.

European Markets

German stocks rose despite the economy in that country contracting 5% last year as exports slumped, while it was a mixed day in other European markets. Banking stocks retreated as French heavyweight Societe Generale disappointed investors with its earnings results.

The UK benchmark FTSE 100 retreated 25.23 points, or 0.46% to 5,473.48. The German DAX put on 20.14, or 0.34% to 5,963.14. The French CAC40 added just 0.81 points, or 0.02% to 4,000.86.

English banks Barclays and HSBC retreated 0.9% and 1.5%.

In France, Societe Generale slumped 2.9% after saying it had incurred US$2 billion in writedowns, though would still post a slight profit for the last quarter.

BNP Paribas lost 0.7%, while Swiss giant UBS gave up 1.4%.

The traditionally defensive pharmaceutical stocks rose on the back of bullish comments from investment bank Credit Suisse.

Novartis, AstraZeneca and Roche added 1.2%, 1.1% and 0.6% respectively.

Aussie miner BHP Billiton lost 0.7%, with Rio Tinto off around 0.5%.

Energy stocks paced a decline in the price of crude oil. BP and Total lost 1.1% each, while Shell declined 1.8%.

Japanese Market

The Japanese stock exchange slumped as the yen strengthened, hurting exporters in the export sensitive economy. Commodity prices weakening and tighther lending restrictions in China also combined to weigh on the market.

The Nikkei 225 shed 144.11, or 1.32% to 10,735.03.

Among the banks, Mitsubishi UFJ slumped 1.8%, while Sumitomo Mitsui sank 2.4%.

The dominant stock on the exchange was Japan Airlines for the second day in a row. The airline lost 81% with over 820 million shares sold – a record for the Tokyo stock exchange.

Among the exporters, Canon lost 2.7%, however this was countered by 2.8% rise from Sony.

Panasonic advanced 0.8%.

Heavy machinery maker Komatsu slumped 2.9% on the concern of slowing sales in China.

Commodity trading house Mitsubishi Corp retreated 3.6%.

Meanwhile, oil exploration company Inpex gave up 2.1%.

Steel markers Nippon Steel and Kobe Steel closed down 3.3% and 2.2% respectively.

Hong Kong Markets

Hong Kong stocks had their largest single session fall in more than six weeks due to the country’s surprise decision to increase banks’ reserve ratio. Investors are concerned that the decision could cool growth.

The Hang Seng dropped 578.04, or 2.59% to 21,748.60.

Heavyweight banks ICBC and China Construction Bank fell 3.6% and 3.9% to close at three-month lows.

Bank of China weakened 3.6% to a three-week low, while China Citic Bank slumped 6.6%.

Aluminium Corp of China added to the previous day’s losses by shedding 7%.

China Overseas Land & Investment and Hang Lung Properties lost 4.7% and 4.1%.

Tencent rose 1.4% on the belief inflation will help drive revenue and profit for companies such as China’s largest internet provider.

China Shineway Pharmaceutical Group sank 12% after the company revealed major shareholder Matkon was set to sell its 13.5% stake in the Chinese medicine manufacturer.

Substantial Shareholder Changes 
13 January 10

Symbol	Shareholder	+/-	Prior	Now
ABC	Perpetual Limited		11.47	12.51
BLY	UBS Nominees Pty Ltd		8.50	7.07
BLY	Pala Investments Holdings		7.56	-
CEY	UBS Nominees Pty Ltd		-	5.05

All movements are percentage changes.

The Australian share market closed lower for the third consecutive day Wednesday. A weak lead from Wall Street saw the market remain in the red from the open with commodity stocks leading the slide.

In economic news, the Australian Bureau of Statistics said Australia’s GDP grew 0.2%, seasonally adjusted, in the September quarter.

At the bell, the All Ords was down 31.5 to 4,900.1, while the ASX/200 shed 31.4 to 4,868.1. About 1.9 billion shares worth around $4.2 billion had changed hands.

BHP Billiton lost 37c, or 0.9% to $43.12 and Rio Tinto dropped $1.25, or 1.6% to $77.12.
 
The broader Materials and Resources sector was down 1.3%.

Losses were widespread among the second-tier stocks. Alumina’s share price continued to be battered by Alcoa’s decline in the US, with the local joint venture partner down another 6c, or 3.1% to $1.90.

Bluescope Steel sank 3.8% to $3.06 after Fitch Ratings downgraded its long-term foreign currency Issuer Default Rating on the steelmaker.

Fortescue lost 10c, or 1.9% to $5.11, though investors would still be pleased with the 15% hike in the share price this year.

Local gold miners paced a decline in the price of gold overnight, with Newcrest down 44c, or 1.2% to $36.84. Lihir lost 8c, or 2.3% to $3.34.

Most of the housing and construction material manufacturers were trading close to the gain line, though fertiliser and explosives manufacturer Incitec Pivot fell 3.2% to $3.58.

The Energy sector retreated 1.6%, despite the sectors largest stock, Woodside, holding ground.

The major loser was WorleyParsons, whose shares were $3.36 cheaper at $25.99 each after the oilfield engineering company downgraded its profit guidance by around 10% to between $280 million and $320 million due to softness in the US market.

Santos slumped 42c, or 2.9% to $14.00, while Whitehaven Coal, whose shares have risen 34% in the last two months, retreated 23c, or 4.2% to $5.23.

Rio Tinto controlled ERA shed 64c, or 2.8% to $22.27 after the uranium miner reported a 30% drop in oxide produced in the last quarter versus the same period in the prior year.

All of the big four banks were trading within 1% either side of the gain line and with gains elsewhere, including a 1.1% jump in the price of bourse operator ASX’s shares, the Banks and Financials dipped just 0.3%.

Among the insurers Suncorp-Metway weakened 13c, or 1.5% to $8.70.

The Property Trusts outperformed much of the market, adding 0.2%.

Shares were led higher by Westfield, which rose 7c, to $12.50. Stockland, the second largest property company in Australia, added 1c to $3.94.

Elsewhere Harvey Norman led the retailers higher, up 10c, or 2.6% to $3.93.

Wotif.com, JB Hi-Fi and David Jones closed between 2.4% and 3% higher for the day.

Consumer Discretionary rose 0.5%, with Newscorp standing out among the declining stocks shedding 34c, or 1.9% to $17.40.

The Consumer Staples sector was just 0.2% below the line. A gain of 12c, or 0.4% to $27.91 from Woolworths was more than countered by Wesfarmers, which fell 30c, or 1% to $31.10.

Industrials were mostly lower with the sector weakening 1.2%.

Downer EDI slumped 35c, or 3.8% to $8.92, while yesterday’s stand out performer CSR retreated 2.7% following yesterday’s expression of interest from a Chinese buyer for its sugar operations.

Leighton lost 51c, or 1.3% to $40.00, while Brambles eased 1.7% lower to $6.96.

Toll Holdings dropped 29c, or 3.2% to $8.80.

Qantas shares rose 1c to $2.95 despite the financial woes facing its Japanese peer Japan Airlines, whose shares plunged nearly 45% yesterday and another 81% today.

Telstra added the most points to the market, with a rise of 3c to $3.34.

The broader Telecommunications sector advanced 0.7%.

The Utilities sector was also in favour with investors, rising 0.3%. Sector heavyweight AGL gained 10c to $14.23, while SP Ausnet and Duet Group put on 2.3% and 2.2% to 90c and $1.865 respectively.

Around the region, the Nikkei 225 lost 82.6 to 10,796.5, while the Straits Times Index shed 16.4 to 2,899.8. Meanwhile, the NZSE50 fell 14.1 to 3,276.2. The Hang Seng dropped 501.2 to 21,825.5.

Spot gold was trading at US$1,129.35 per ounce, and the Aussie was buying US$0.9236.

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WorleyParsons downgrades guidance
WorleyParsons shares opened 11.4% lower after the oilfield-engineering firm downgraded its FY10 profit guidance due to weakness in its US operations. The company advised that its current NPAT expectations for the year are in a range of $280m to $320m. The company advised that its current NPAT expectations for the year are in a range of $280 million to $320 million.

At the close, WorleyParsons shares were trading down $3.36 to $25.99.

ERA mining down over 20% in Q4
Energy Resources Australia this morning released it quarterly report for December last year, showing a 22% and 20% slump in the amount of material mined against Q4 2008 and Q3 2009 respectively. The uranium specialist attributed the decline to maintenance and safety work carried out on the south wall of the Ranger mine.

At the end of the day, ERA shares were trading down 64c to $22.27 per share.

Transurban quarterly toll revenue up 5.3%
Transurban Group reported a 5.3% increase in proportional toll revenue for the December quarter to $209.2m, compared to the previous corresponding period. The group said excluding the impact of the CityLink revenue protection provision was $206.6 million, an increase of 6.5% on the pcp.

By the finish, Transurban shares were down 1c to $5.50.

Constellation Brands profit slumps 47%
US-based, ASX-listed beverage company Constellation Brands (CBR) posted a reported $44m net income for the third quarter 2010, down 47% from the previous corresponding period. Net sales for the company dipped 4% to just under US$1 billion for the quarter, with the slump in reported profit coming from the divesture of its value spirits business and a drop in operating income from international business.

At the close, Constellation Brand securities were unchanged at $1.65.

Navitas signs two new US deals
Navitas said its has executed educational affiliation agreements with the University of Massachusetts Lowell and the University of Massachusetts Dartmouth. The global education services provider said the collaboration would provide undergraduate pathway and pre-masters programs at UMass Lowell and UMass Dartmouth in the United States.

At the final whistle, Navitas shares were up 6c to $4.16. 

 

Economics at Cazaly project look robust
Cazaly Resources said a Pre-Feasibility Study (“PFS”) into the development of its Parker Range Iron Ore Project located in Western Australia indicates very robust economics for the project. The company said the project benefits from its close location to existing and accessible infrastructure, allowing it a relatively rapid development and ramp up to full production of 4 million tonnes per annum within 1.5 years.

By the end of trading, Cazaly shares were up 8c to 35c.

ROC Oil Company Limited (ROC) expects an average production rate of approximately 10,000 barrels of oil equivalent a day in 2009. The company said production at its 24.5% owned Zhao Dong operation in December averaged approximately 9,130 barrels of oil a day after being affected by intensive well maintenance activities and ongoing repairs to a failed sub-sea power cable. ROC said ongoing severe weather experienced since late December continues to impact production, with interruptions to crude oil shipments constraining production in January 2010. The company said production rates at Zhao Dong are anticipated to return to about 20,000 BOPD by the end of January 2010. ROC said current field production at its 30% owned BMG Oil and Gas Field is approximately 6,000 BOPD, while at the its 37.5% owned Cliff Head Oil Field the production rate has improved to approximately 5,000 BOPD.

Aussie shares were trading lower Wednesday following a weak lead from Wall Street, where poor earnings from Alcoa sent the market lower. Mid-cap miners and energy stocks were the most heavily sold on lower base metal prices and the Alcoa result, while losses were capped by gains in the property and retail stocks.

In economic news, the Australian Bureau of Statistics said Australia’s GDP grew 0.2%, seasonally adjusted, in the September quarter.

At midday, the All Ords was down 29.7 to 4,901.9, while the ASX/200 shed 29.1 to 4,870.4. About 800 million shares worth around $1.6 billion had changed hands.

BHP Billiton shares were trading 32c, or 0.7% to $43.17. Rio Tinto lost 71c, or 0.9% to $77.66.

The broader Materials and Resources sector was down 1%.

Losses were widespread among the second-tier stocks. Alumina’s share price continued to be battered by Alcoa’s decline in the US, with the local joint venture partner down another 8.5c, or 4.3% to $1.875.

Local gold miners paced a decline in the price of gold overnight, with Newcrest down 73c, or 2% to $36.55. Lihir Gold lost 10c, or 2.9% to $3.32.

Most of the housing and construction material manufacturers were trading close to the gain line, though chemical manufacturers Orica and Incitec Pivot lost 1.9% and 3% to $25.41 and $3.59 respectively.

Fortescue lost 10c, or 1.9% to $5.10, though investors would still be happy with the 15% hike in the share price this year.

The Energy sector retreated 1.8%, despite the sectors largest stock, Woodside, holding ground.

The major loser was WorleyParsons, whose shares were $3 cheaper each at $26.35 after the oilfield engineering company downgraded its profit guidance by around 10% to between $280 million and $320 million thanks to softness in the US market.

Santos slumped 40c, or 2.8% to $14.02, while Whitehaven Coal, whose shares have risen 34% in the last two months, retreated 10c, or 1.8% to $5.36 per share.

Rio Tinto controlled ERA slumped 61c, or 2.7% after the uranium miner reported a 30% drop in oxide produced in the last quarter versus the same period in the prior year.

All of the big four banks were trading within 1% below the gain line and with gains elsewhere, including a 0.8% jump in the price of bourse operator ASX’s shares, the Banks and Financials dipped just 0.4%.

Among the insurers IAG was down 5c, or 1.2% to $4.00. QBE was the best performing insurer, though still down 0.2% to $24.41.

The Property Trusts outperformed much of the market, adding 0.7% to lunch.

Shares were led higher by Westfield, which rose 11c, or nearly 1% to $12.54. Mirvac advanced 2.5c, or 1.5% to $1.655. Stockland, the second largest property company in Australia, rallied 4c, or 1% to $3.97.

Elsewhere David Jones led the retailers higher, up 10c, or 2% to $5.12.

Wotif.com, JB Hi-Fi and Harvey Norman all posted similar percentage gains.

Despite this, the Consumer Discretionary still lost 0.2%, with Newscorp standing out among the declining stocks shedding 40c, or 2.3% to $17.34.

The Consumer Staples sector was just 0.1% higher. A gain of 25c, or 0.9% to $28.04 from Woolworths was countered by Wesfarmers trading 23c, or 0.7% lower at $31.17.

Industrials were mostly lower with the sector down 0.9%.

Downer EDI slumped 36c, or 3.9% to $8.91, while yesterday’s stand out performer CSR retreated 0.5% following yesterday’s expression of interest from a Chinese buyer for its sugar operations.

Leighton lost 41c, or 1% to $40.10, while Brambles eased 0.45 lower to $7.05.

Qantas shares were flat despite the financial woes facing its Japanese peer, whose shares plunged nearly 45% yesterday and a further massive 81% in early trade this morning.

Telstra added more than 2 points to the market, with a rise of 5c, or 1.5% to $3.36.

The broader Telecommunications sector climbed 1.5%.

The Utilities sector was also in favour with investors, rising 0.6%. Gains of 1.1% and 1.7% from AGL and SP Ausnet helped the sector.

Around the region, the Nikkei 225 was down 59.7 to 10,819.4. Meanwhile, the NZSE50 lost 10.8 to 3,279.5.  

Spot gold was trading at US$1,129.80 per ounce, and the Aussie was buying US$0.9211.

---

WorleyParsons downgrades guidance
WorleyParsons shares opened 11.4% lower after the oilfield-engineering firm downgraded its FY10 profit guidance due to weakness in its US operations. The company advised that its current NPAT expectations for the year are in a range of $280m to $320m. The company advised that its current NPAT expectations for the year are in a range of $280 million to $320 million.

At midday, WorleyParsons shares were trading down $3.10 to $26.25.

ERA mining down over 20% in Q4
Energy Resources Australia this morning released it quarterly report for December last year, showing a 22% and 20% slump in the amount of material mined against Q4 2008 and Q3 2009 respectively. The uranium specialist attributed the decline to maintenance and safety work carried out on the south wall of the Ranger mine.

At lunch, ERA shares were trading down 59c to $22.32 per share.

Transurban quarterly toll revenue up 5.3%
Transurban Group reported a 5.3% increase in proportional toll revenue for the December quarter to $209.2m, compared to the previous corresponding period. The group said excluding the impact of the CityLink revenue protection provision was $206.6 million, an increase of 6.5% on the pcp.

At noon, Transurban shares were up 1c to $5.52.

Constellation Brands profit slumps 47%
US-based, ASX-listed beverage company Constellation Brands (CBR) posted a reported $44m net income for the third quarter 2010, down 47% from the previous corresponding period. Net sales for the company dipped 4% to just under US$1 billion for the quarter, with the slump in reported profit coming from the divesture of its value spirits business and a drop in operating income from international business.

At lunchtime, Constellation Brand securities were unchanged at $1.65.

Economics at Cazaly project look robust
Cazaly Resources said a Pre-Feasibility Study into the development of its Parker Range Iron Ore Project located in Western Australia indicates very robust economics for the project. The company said the project benefits from its close location to existing and accessible infrastructure, allowing it a relatively rapid development and ramp up to full production of 4 million tonnes per annum within 1.5 years.

At midday, Cazaly shares were up 6c to 33c.

Navitas signs two new US deals
Navitas said its has executed educational affiliation agreements with the University of Massachusetts Lowell and the University of Massachusetts Dartmouth. The global education services provider said the collaboration would provide undergraduate pathway and pre-masters programs at UMass Lowell and UMass Dartmouth in the United States.

At noon, Navitas shares were up 4c to $4.14.  

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Market Watch by egoli

Cazaly Resources Limited (CAZ) said a Pre-Feasibility Study (“PFS”) into the development of its Parker Range Iron Ore Project located in Western Australia indicates very robust economics for the project. The company said the project benefits from its close location to existing and accessible infrastructure, allowing it a relatively rapid development and ramp up to full production of 4 million tonnes per annum within 1.5 years.

Cazaly said the study has shown that it is on track to become the second major iron ore producer in the Yilgarn region behind Koolyanobbing Operations.

The company said the PFS was based upon the existing October 2009 global resource for the Mount Caudan iron ore deposit of 40.4 million tonnes at 53.8% iron ore.

Cazaly said the positive results now allow for the commencement of a Definitive Feasibility Study (“DFS”) into the project.

The company anticipates the DFS to be completed in the third quarter of this year and expects that approximately 12 months would be required to design, procure, construct and commission the processing plant and associated infrastructure and services for the project.

”Following this, and subject to achieving the necessary statutory approvals and financing, operations can commence with a target date for production being Q3/2011,” Cazaly said.

As at 1126 AEDT, Cazaly shares were up 3.5c to 30.5c.