Australian Stocks Drop, Led by Banks on Rates, Credit Concerns
By Emma OBrien
Feb. 28 (Bloomberg) — Australias S%26amp;P/ASX 200 index snapped a
three-day rise, led by financial stocks after Suncorp Metway Ltd.
reported a slide in profit and Goldman Sachs JBWere Ltd. slashed
its share-price forecast for the nations financial shares.
Suncorp, Australias second-largest car and home insurer,
reported a 28 percent drop in first-half earnings after credit
costs crimped returns and it had to pay higher payouts after storms
in northern Queensland. Analysts at Goldman Sachs including James
Freeman lowered their forecast for Australian banks by as much as
26 percent, citing increasing concerns over their earnings.
Suncorp is “swimming in the same ocean as a sector that
hasnt seen a lot of positive news, said Hans Kunnen, who helps
manage the equivalent of $128 billion at Colonial First State
Global Asset Management in Sydney. “Higher interest rates and
slower growth in bank profits are really crunching the finance
stocks.
The benchmark S%26amp;P/ASX 200 index slid 116, or 2 percent, to
5,651.20 at the close in Sydney, as three stocks fell for each that
rose. It was the worst-performing index in Asia today.
Suncorp, tumbled A$1.22, or 7.9 percent, to A$14.31, set for
its weakest closing price since Jan. 22.
A sub-index of financial stocks slipped 3.4 percent, the worst
performing group on the index today. The measure has lost 21
percent so far this year as rising defaults from U.S. subprime, or
high risk, mortgages reduced the amount of credit available
worldwide and slashed U.S. company earnings.
National Australia Bank Ltd., the countrys biggest bank,
declined A$1.36, or 4.3 percent, to A$29.97, a three-day low.
Goldman Sachs JBWere shaved its estimate for the banks shares 19
percent to A$35.35.
Higher Rates
Australia %26amp; New Zealand Banking Group Ltd. slipped 3.6 percent,
Westpac Banking Corp. fell 3 percent and St. George Bank Ltd.
declined 5.6 percent. Goldman Sachs JBWere cut its price targets on
the three by 4.7 percent, 13 percent and 14 percent, respectively.
Macquarie Group Ltd., Australias largest securities firm,
snapped five rising days, losing A$3.04, or 5.1 percent, to A$57.04.
Australias central bank boosted its benchmark rate to an 11-
year-high of 7 percent this month in a bid to cool the fastest
inflation rate the country has seen in almost two decades. Odds the
bank will raise rates again at its March 4 meeting are at 90
percent, according to a Credit Suisse index of interest-rate swaps.
Higher interest rates deter customers from borrowing and increase
the cost of finance for banks.
The broader All Ordinaries index lost 1.7 percent to 5,746.10,
while the futures index maturing in March dropped 1.8 percent to
5,644.
The following shares rose or fell today. Stock symbols are in
parentheses after company names.
APN/UKA European Property Group (AEZ AU), slumped 15.5 cents,
or 21 percent, to 57.5 Australian cents after the manager of
European shopping centers reported a net loss of A$27.5 million.
The stock is the biggest loser in the index today.
Babcock %26amp; Brown Capital Ltd. (BCM AU), a fund managed by
Australias second-largest investment bank, added 12 cents, or 3
percent, to A$4.10, reversing an earlier 8.3 percent decline. The
company will seek to buy back up to 50 percent of its issued
capital to “reduce the discount to the underlying value of the
Company at which its shares are trading, it said in a statement
to the stock exchange.
Centro Retail Group (CER AU), a property trust whose parent
company is struggling to refinance A$4.9 billion of debt, jumped
9.5 cents, or 30 percent, to 41 Australian cents, making it the
best performing stock on the index today. The trust announced that
it can lose no more than $1.2 billion from its investment in Super
LLC, a venture that runs many of Centros U.S. malls.
Ceramic Fuel Cells Ltd. (CFU AU), an Australian developer of
fuel cells for small heat and power plants, added 37 cents, or 88
percent, to 79 Australian cents, its biggest rise since Bloomberg
started collecting data on the stock. Ceramic Fuel said it will
build a manufacturing plant in Heinsberg, Germany for 12.4 million
euros ($19 million).
Guinness Peat Group Plc. (GPG AU), a London-based investment
company, climbed 18 cents, or 14 percent, to A$1.435. Guinness Peat
said full-year earnings more than tripled after it sold its stake
in Australian Wealth Management and Premier Investments Ltd.
Henderson Group Plc. (HGI AU), a U.K. money manager spun off
from AMP Ltd., surged 31 cents, or 15 percent, to A$2.32, its
biggest gain ever. The stock was raised to “buy from “hold at
ABN Amro Holding NV, and to “buy from “neutral at UBS AG. The
company yesterday said full-year profit more than doubled after it
attracted more money into higher-fee investments such as hedge
funds.
Origin Energy Ltd. (ORG AU), Australias second-biggest energy
retailer, jumped for the first day in nine, adding 63 cents, or 8
percent, to A$8.55, its largest rise since May 2001. Origin
reported a 44 percent rise in first-half profit after it sold its
gas distribution business to APA Group for A$147.3 million.
Platinum Australia Ltd. (PLA AU), owner of platinum mines in
South Africa and Australia, dropped 8 cents, or 2.7 percent, to
A$2.87, its biggest fall since Jan. 29. The stock was cut to
“underperform from “sector perform by RBC Capital Markets
analyst Leon Esterhuizen, who set a 12-month price target of A$3.25
a share.
Spark Infrastructure Group (SKI AU), an Australian power
distributor that reported a doubling of full-year profit on Feb. 25,
slipped 12 cents, or 6.3 percent, to A$1.78, the 10th-worst
performer on the benchmark today. Spark was cut to “hold from
“buy on Feb. 26 by Goldman Sachs JBWere Ltd.
To contact the reporter for this story:
Emma OBrien in Wellington on
