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ASX higher on CSL, miners, tech surge; BNPL players shine

Gains for biotech CSL, and a positive start for mining giants Rio Tinto and BHP, helped the ASX 200 move higher on Wednesday.

The index was 0.7 per cent higher at 5936.3 by noon following a decent overnight lead from the US.

All sectors were higher but the big banks continue to underperform. Westpac, NAB, and ANZ were each down by between 0.3 per cent and 0.4 per cent. Commonwealth Bank was up 0.2 per cent at $65.19.

Tech stocks were the best local performer, mirroring the NASDAQ’s strong run. Afterpay was up 3.1 per cent to $77.31 to continue its rally from yesterday.

Buy now, pay later competitors were also on the rise on the All Ords. Zip Co jumped 4.5 per cent to $6.34, Sezzle was 7.5 per cent higher at $7.16, Tyro rose 3.8 per cent to $3.52, FlexiGroup jumped 2.1 per cent to $1.11, and Splitit rose 7.5 per cent to $1.57.

Xero climbed 1 per cent to $91.84, Wisetech was up 0.9 per cent to $27.75, and Computershare rose 0.7 per cent to $12.32.

BHP was 1.9 per cent up at $38.21, Rio Tinto 1.4 per cent ahead at $103.56, and CSL was 1.5 per cent higher at $291.46.

Gold stocks lost their lustre in early trade but have since improved. Newcrest is flat at $33, Northern Star is just 0.4 per cent lower, and Evolution is down 0.1 per cent.

Online jobs and education firm Seek leads gains on the ASX 200 today amid reports e-commerce titan Alibaba is considering investing in the company’s Chinese unit, Zhaopin.

Shares in the $6.8 billion Seek were up 9.5 per cent at $21.03 just before 1pm and earlier rose 13.7 per cent to its highest in a month at $21.74.

Tech news service The Information reported yesterday that Alibaba was in talks to invest hundreds of millions of dollars in Zhaopin.

“Alibaba, whose online marketplaces serve as a platform for millions of Chinese businesses, also operates China’s biggest cloud computing services platform,” writes The Information’s Juro Osawa.

“The possible new investment could lead to collaborations that combine the internet giant’s technology and vast customer base with Zhaopin’s data on companies and jobs, one of the people said.”

In 2017 Seek signed a deal with private equity firms FountainVest and Hillhouse to privatise Zhaopin and delist it from the New York Stock Exchange.

Apple’s big product reveal event overnight was filled with the usual glitzy product videos and new devices but, tellingly, it was the new services that could have more customers reaching for their credit cards.

The addition of a fitness subscription exemplifies Apple’s desire to become not only the maker of devices that facilitate content and services for all aspects of your life, but the direct provider and vanguard of those services too. On iPhone this means music, streaming video, news, online storage and video games, and on Watch of course it means keeping fit.

The Apple One bundles will provide customers with savings, and are set to give the company a larger share of the services revenue on Apple devices.

The Apple One bundles will provide customers with savings, and are set to give the company a larger share of the services revenue on Apple devices.

But at a time when Apple is already under scrutiny for its dual role as owner-operator of a massive digital marketplace and as a key competitor in that marketplace, its new Apple One subscription bundle could be seen as an aggressive move to grab a larger share of the services revenue on Apple devices, even if it can also be seen as a potential saving for Apple-loyal customers.

Read Tim Biggs’ full analysis here

Gains for biotech CSL, and a positive start for mining giants Rio Tinto and BHP, helped the ASX 200 move higher on Wednesday.

The index was 0.7 per cent higher at 5936.3 by noon following a decent overnight lead from the US.

All sectors were higher but the big banks continue to underperform. Westpac, NAB, and ANZ were each down by between 0.3 per cent and 0.4 per cent. Commonwealth Bank was up 0.2 per cent at $65.19.

Tech stocks were the best local performer, mirroring the NASDAQ’s strong run. Afterpay was up 3.1 per cent to $77.31 to continue its rally from yesterday.

Buy now, pay later competitors were also on the rise on the All Ords. Zip Co jumped 4.5 per cent to $6.34, Sezzle was 7.5 per cent higher at $7.16, Tyro rose 3.8 per cent to $3.52, FlexiGroup jumped 2.1 per cent to $1.11, and Splitit rose 7.5 per cent to $1.57.

Xero climbed 1 per cent to $91.84, Wisetech was up 0.9 per cent to $27.75, and Computershare rose 0.7 per cent to $12.32.

BHP was 1.9 per cent up at $38.21, Rio Tinto 1.4 per cent ahead at $103.56, and CSL was 1.5 per cent higher at $291.46.

Gold stocks lost their lustre in early trade but have since improved. Newcrest is flat at $33, Northern Star is just 0.4 per cent lower, and Evolution is down 0.1 per cent.

LegalSuper has appointed Pendal Group to manage a socially responsible investment fund after pressure from its members to align their super with environment, social and governance principles.

LegalSuper chief executive Andrew Proebstl said the fund’s 44,000 members wanted an option that “tackle issues such as climate change, modern slavery and governance”.

The new partnership is evidence of the rising popularity of ethical investing, with a March study by the Responsible Investment Association Australasia finding 85 per cent of Australians now expect their savings and super to be invested responsibly.

Pendal’s head of multi-asset investments team Michael Blayney said there is now an expectation that ESG issues are identified and taken into consideration when managing funds.

“Sustainability is a megatrend shaping political, economic and investment environments — and therefore risks and returns,” he said.

New Zealand telco provider Spark will start offering uncapped mobile broadband in New Zealand cities next week. Spark emerged from the incumbent Telecom when it was forced to split its retail, now Spark, and infrastructure divisions, now Chorus.

Spark announced a new three year plan this morning to be a “primarily wireless, digitally native and a leading cloud custodian, with 5G and Internet of Things deployed nation-wide, unconstrained capacity, and a top-decile culture defined by its engagement and inclusivity’’.

Spark aims to keep dividends at NZ25c in the next financial year and aspires to a $NZ500 million free cash flow by 2022-23.

Spark aims to keep dividends at NZ25c in the next financial year and aspires to a $NZ500 million free cash flow by 2022-23. Credit:Joseph Johnson/Fairfax NZ

Shares in the dual-listed company were up 1.2 per cent to $4.38 on the ASX, but are flat on the NZX at $NZ4.76.
The company also revealed it expects to take a $NZ75 million hit to earnings due to COVID-19 disruptions.

However, it aims to keep dividends at NZ25c in the next financial year and aspires to a $NZ500 million free cash flow by 2022-23.

Today’s presentation aims at many things, including being “mostly ex-copper by 2020’’, meaning most New Zealanders would be on wireless or fibre-optic internet connections.

One third of the country’s copper-based Public Switch Telephone Network has now been decommissioned with Spark aiming to fully decommission the PSTN by 2023, saving energy costs and leading to property sales.

It expects to have 5G rolled out nationwide by 2023 and up to 40 per cent of broadband delivered wirelessly, with a 200 per cent network capacity increase.

New home sales across the country jumped 19.1 per cent in August as buyers took advantage of record low interest rates and increased savings to jump into the property market.

Data from the Housing Industry Association released on Wednesday showed the surge last month was driven by NSW and Western Australia with sales up by 11.7 per cent and 11.4 per cent respectively. Sales in Queensland jumped by 19.1 per cent.

New home sales across the country jumped 19.1 per cent in August.

New home sales across the country jumped 19.1 per cent in August. Credit:Peter Rae

But Victoria’s lockdown, which lasted the entire month, contributed to a 14.4 per cent drop in the nation’s second most populous state.

Over the past six months, new home sales are up by an eye-watering 91.1 per cent in WA compared to the same period last year.

Apart from benefiting from falls in mortgage rates and the federal government’s HomeBuilder program, the state government has introduced a program that provides $20,000 grants to people building a new house.

By contrast, NSW’s sales were flat over the same period while in Victoria sales were down by 12 per cent. Sales in South Australia fell by 8.6 per cent over the period.

HIA chief economist Tim Reardon said the HomeBuilder program would help support building activity through the December quarter.

“New home sales in the three months to August are 61.3 per cent higher than the previous quarter, when confidence in the market was depleted and new home sales reached the lowest level on record,” he said.

“Without intervention, a significant contraction of work on the ground would have occurred in the second half of 2020 which meant up to half a million jobs were at risk.”

The HIA expects the Victorian lockdown to result in a further fall in sales through September even if restrictions are eased quickly. It believes this will affect new home starts in early 2021.

NSW has recorded 10 new cases in the latest 24-hour reporting period from more than 20,000 tests, a jump after health authorities expressed concern about declining test numbers.

Premier Gladys Berejiklian told reporters on Wednesday all ten of the cases had known sources: six in hotel quarantine and four from known community clusters. She added that a case reported on Tuesday with no known source had been “ruled out”.

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Meanwhile, no new cases of COVID-19 have been diagnosed in Queensland in the past 24 hours after 6424 tests were conducted.

Deputy Premier and Health Minister Steven Miles said the state had recorded “just five cases over the last seven days, which is very promising”.

“While we also see other states, particularly NSW and Victoria, continuing to make progress, sadly more people lost their lives to COVID-19 in Victoria in the last 24 hours than have in the entire year here in Queensland.

“Tragically eight deaths in Victoria in the last 24 hours compared to six in Queensland all up.”

Earlier it was reported that Queensland is considering lowering the bar to reopen the border with NSW by halving the required number of days with no community transmission to 14, according to government and industry sources.

Gold Road Resources says it is likely to start paying dividends at the end of this year, providing it has at least $100 million cash on hand. It will pay between 15 per cent and 30 per cent of its free cash flow above the $100 million level.

It expects to pay its first dividend after the current six-month period.

Gold Road Resources says it expects to pay a dividend at the end of the year.

Gold Road Resources says it expects to pay a dividend at the end of the year. Credit:Bendigo Advertiser

“In less than a year since we declared commercial production at Gruyere, I am pleased to be in a position to announce a dividend policy,’’ chairman Tim Netscher said to shareholders this morning.

“The company is debt free and building a strong cash balance. The dividend policy seeks to share our strong cash flow generation with our shareholders whilst still allowing us to prioritise ongoing operations and growth opportunities’’.

Shares were last down 0.9 per cent at $1.64. Gold miners across the board were subdued on Wednesday.

Cannabis grower THC Global has vigorously defended itself to the ASX after being issued with 13 tough questions about its half year accounts and ability to continue as a listed company.

The Australian biotech has a licence to produce cannabis from its facility in Southport, Queensland as well as owning a hydroponics equipment wholesaler overseas.

THC Global shares are down more than 12 per cent in early trade on Wednesday.

THC Global shares are down more than 12 per cent in early trade on Wednesday.Credit:Rohan Thomson

The ASX wrote to the company last week demanding answers after the company’s financial results for its half year accounts contained a note from its auditor that it contained a “qualified opinion” of the company’s financial position because the auditor had a disagreement with management over the application of accounting standards.

This was because the auditor said it could not verify future sales forecasts for its medicinal cannabis totalling more than $22 million.

THC has said it stands by its accounts and calculated the figures using a range of metrics including “significant inbound interest” for new orders.

The company also pointed to a recent strategic review, which saw a complete restructure of its leadership team and the standing down of its chief executive Ken Charteris two weeks ago, with Jarrod White appointed interim chief executive as the company looked to focus on “capital preservation and cost rationalisation”.

Shares in the company were down 12.7 per cent at 24 cents on Wednesday, down from 39c at the start of the year.

Online retailer Kogan has reported another consecutive month of massive growth as the business continues to benefit from a COVID-induced shift to online shopping.

Earnings before interest, tax, depreciation and amortisation for August grew 466 per cent compared to the same month last year, and active customers jumped by 152,000. This marks the largest monthly increase in customers in Kogan’s history.

Shares in the firm jumped 6.7 per cent to $20.52 after 30 minutes of trade on Wednesday and have more than doubled in value in 2020.

Kogan.com CEO Ruslan Kogan.

Kogan.com CEO Ruslan Kogan.

Gross sales jumped 117 per cent for August and gross profit rose 165 per cent. Kogan has boasted similar monthly growth rates since March when the COVID-19 pandemic swept Australia. Its share price has risen 157 per cent since the start of the year, and the business is now worth $2 billion.

At its full-year results in August, Kogan’s net profit after tax rose 55.9 per cent to $26.8 million, with chief executive Ruslan Kogan saying Australia was in the midst of a “retail revolution”.

The company has also been attempting to capture more customers who are stuck at home, as the business’ marketing spend for August was also the largest monthly amount in its history. It did not specify the amount spent.

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