Dull trading in Australia

Press, 27 February 1984, Page 14

Dull trading in Australia

The Bell Group bid to become the largest shareholder in BHP, and the rise in price of precious and base metals after the flareup in the Iran-Iraq war, provided the main interest in a dull week of trading on Australian stock exchanges. The Bell Group listed associate, Bell Resources, Ltd, offered to buy 16 million BHP shares, through a swap of seven Bell Resources shares for every four BHP shares, or five Bell Resources shares and five options for every four BHP shares. The market for BHP jumped above sAustl4 on Tuesday morning after the announcement, but fell away in the afternoon session as investors were left uninformed on whether Bell had filled its tender which opened at midday on Tuesday. With the announcement that just under half the shares had been tendered the BHP price firmed and closed the week around sAustl4 nationally. After the markets closed on Friday sources close to the Bell Group said that the partial bid would be closed — after five days trading — regardless of the outcome of BHP’s challenge to the bid in the Victorian Supreme Court. Apparently Bell expects to pick up some institutional parcels in London. Metals benefited from the rising gold price. Rises of 10-20 cents were common among the gold leaders, although GMK added almost 100 c. Speculative gold stocks were also in demand. Base metal stocks closed the week little changed as the jump was negated by price weakness on other days. Bougainville was little changed despite a five-fold

increase in annual profit. The oil-and-gas sector was out of favour, and price moves were marginal. Oil was recovered from the Pepita No. 1 well in the Cooper-Eromanga basin by the Delhi/Santos/WMC/ Vamgas/Australian Hydrocarbons Consortium, and from the Bellbird No. 1 in the Bowen basin by the consortium of WMC/Shell Australia/Placer Placific/ North Michigan Exploration/Sydney Oil, and Macquarie Oil.

The highlight of the week for a dull coal sector was the opening and instantaneous closing of the books for the floating of the Queensland Coal Trust.

The trust is being set up to part-own the Utah coal deposits in Queensland with existing Umal shareholders

being offered 310 units for every 100 Umal units. The Martin Report into reform of the Australian financial system was released on Wednesday.

The report recommended that four to six new banking licences be granted, and supported moves for interest rate deregulation.

Bank prices had eased in previous weeks as the market picked the recommendations.

The movements during the week were merely finetuning as investors calculated the costs and advantages. Although bank shares were volatile, they closed the week little changed. Developer’s share prices retreated on the interest rate deregulation. However, Hooker shares

closed the week with a rally as take-over speculation reemerged and Lend Lease, which denied it would make a bid, closed strongly after announcing a 25 per cent interim profit rise.

The transport sector was weak after Mayne Nickless announced a 29 per cent drop in interim profit, and retailers eased despite a 15 per cent profit rise by Woolworths. Insurers firmed after Mercantile Mutual announced a 163 per cent jump in profit and QBE reported a 36 per cent rise.

The improving rural outlook was reflected in the result of Elders-IXL, which increased profit 26 per cent while the Tasmanian pastoral house, Websters, reported a return to interim

profit and dividend. Adelaide Steamship announced another take-over, offering 900 c a share for the 71 per cent of North Australian Cement that it does not already own. Adsteam’s bid for the winemaker, B. Seppelt and Sons, Ltd, has met with opposition — with an unidentified buyer purchasing above the Adstream price of 220 c. Early this week CRA, the Melbourne-based mining house, is expected to report a huge turnaround in profit because of higher earnings by major subsidiary and associate companies.