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ASX holds 0.5% lead; Index heading for second weekly loss

Richard Branson plans to fly to space on July 11, days before a similar journey by fellow billionaire Jeff Bezos. The shares of Branson’s Virgin Galactic Holdings surged.

The VSS Unity spacecraft will also carry three Virgin Galactic employees and two pilots from the launch site in New Mexico, according to a company statement on Thursday. Bezos is planning a trip to space July 20 from nearby West Texas aboard a rocket made by Blue Origin, the Amazon.com founder’s space company.

Richard Branson plans to blast into orbit to evaluate the “private astronaut experience”.

Richard Branson plans to blast into orbit to evaluate the “private astronaut experience”.Credit:PA

Branson’s suborbital flight would fulfil a longtime goal for the British billionaire and Virgin Galactic, which he founded in 2004. The company recently completed data analysis from its last test flight on May 22, and concluded it was ready to evaluate the cabin experience, said Chief Executive Officer Michael Colglazier. Branson had his pick of which of two planned flights this summer he’d prefer to join.

“The foundation of it is: We’re ready,” Colglazier said in an interview. “There is nothing about a space race or ‘Who goes first?’ that played into this. We do our test flights when we’re ready to fly them.”

Branson will evaluate the “private astronaut experience,” the company said, as Virgin Galactic prepares to offer flights to well-heeled customers in 2022. The voyage this month will be similar to the test flight in May, in which the Unity flew to an altitude of more than 55 miles (89 kilometres).

Read the full story here

Bloomberg

Let’s go back to the Prime Minister’s COVID-19 press conference, which Nick Bonyhady reports was a bit of an info-dump.

Prime Minister Scott Morrison on Friday morning after leaving two weeks quarantine at his official residence in Canberra.

Prime Minister Scott Morrison on Friday morning after leaving two weeks quarantine at his official residence in Canberra.Credit:Alex Ellinghausen

Here’s what we learned earlier:

  • There will be a four-phase reopening scheme for Australia. Each phase will require a new vaccine milestone to be hit. Those milestones have not been set and will depend on modelling from epidemiologists and vaccine experts. The idea is that there will be enough people vaccinated at each stage to ensure we don’t see too many hospitalisations or deaths, even with the relaxed restrictions.
  • Each phase will see restrictions lifted a bit more than the last. Those very important details will all be determined by the national cabinet, so all the points below are just likely options at the moment.
  • We are currently in phase one. That is about vaccinating, testing (including of alternative quarantine arrangements) and planning. It comes, as of July 14, with a 50 per cent cut in international arrivals on commercial flights. It is expected to last until the end of the year.
  • Phase two will mean lockdowns only in extreme circumstances, a reversion to the inbound passenger caps in place before today, more students and economic visitors entering Australia, and shorter quarantine for vaccinated travellers.
  • Phase three is a consolidation phase, where the virus will be treated basically like the flu. People will be allowed to leave the country and return freely if they are vaccinated, for example. Booster vaccine shots will be delivered.
  • Phase four is a return to normal.

The federal government has also announced it’ll continue to fund its share of coronavirus health costs for the next year to the tune of $752 million and add additional repatriation flights, which will go some distance to making up for fewer commercial seats.

Tensions between billionaire Kerry Stokes’ Seven Group Holdings and takeover target Boral are at boiling point with the two companies at war over the construction giant’s ongoing share buyback program.

Seven this morning claimed the end of the financial year meant Boral was now in possession of material information on its annual performance, and therefore in a blackout period, meaning it should suspend its share buy-back.

Boral’s buy-back has helped support the price of its stock in recent months as the firm fights off the overtures of its major shareholder.

Seven Group Holdings chairman Kerry Stokes.

Seven Group Holdings chairman Kerry Stokes. Credit:Alex Ellinghausen

Seven has, however, also used the buyback to gradually increase its stake as it eyes an even bigger slice of the $8.7 billion materials company.

In a release this morning Seven noted Boral had continued to buy back shares on July 1 despite the company “being in blackout” and despite the company committing it would not use the buy-back as a takeover defence tool.

“Following the close of the financial year, the company is in possession of material information on the performance of the business, particularly the underperformance of Boral Australia, which has not been adequately disclosed to the market in the target’s statement.”

Boral chief executive Zlatko Todorcevski dismissed Seven’s claims as having “no merit” and denied the company was in a blackout period.

“The arbitrary start of the traditional blackout period assumes that you do not have enhanced disclosure as you have in a takeover,” Mr Todorcevski said.

“In the current situation, which is entirely a result of the SGH offer, we have ensured the market is fully informed, with all material information about Boral and its prospects contained in the Target’s Statement, including guidance for FY21.

“Given our disclosures in the Target’s Statement, we are not in a blackout period in relation to FY21 full year results.”

Mr Todorcevski noted the buyback had received strong support from shareholders and was in place before Seven made its approach.

“It appears that the Boral Board and SGH both see value in Boral shares at these prices,” Mr Todorcevski said.

Seven has slowly been increasing its stake in the construction firm this year with a view to having more of a say in how it is run. Seven group chief executive Ryan Stokes is already on the Boral board.

Boral, however, continues to urge investors to reject Seven’s overtures, arguing the offer remains well below the $8.25 to $9.13 per share valuation given by independent expert Grant Samuel & Associates.

“The Seven Group offer is opportunistic and appears to be timed to take advantage of an improving outlook for Boral,” the company said yesterday.

Seven – which had a 23 per cent stake when it lobbed an initial takeover bid of $6.50 per share in May – has been adding to its slice through the company’s buy-back.

Yesterday Seven secured a path to taking a 29.5 per cent in Boral and subsequently lifted its offer to $7.30 per share, as promised last week.

Seven will further boost its offer to a maximum $7.40 per share if it secures 34.5 per cent of Boral by the close of business on July 7.

Seven yesterday said it would not increase its offer under any circumstances.

Boral shares were last 0.1 per cent higher at $7.37.

The Seven takeover offer closes on July 15.

Australia’s biggest insurer QBE says it will defend itself against claims it wrongfully denied coverage to policyholders whose businesses were disrupted by the coronavirus pandemic.

As reported by The SMH and The Age this morning, about 25,000 Australian businesses could be eligible to sign up to a class action against QBE and fellow global insurance giant Lloyds to seek compensation for losses sustained during COVID-19 after the pair refused to pay business interruption claims during the pandemic.

QBE says it will defend itself against the class action.

QBE says it will defend itself against the class action. Credit:Bloomberg

Gordon Legal, the class action firm that won $1 billion over the government’s robo-debt welfare debt recovery scheme, has started both class actions through the Federal Court to obtain compensation for rejected payments and missed opportunities.

QBE said the issues raised in the class action appeared to be “substantially similar” to those currently before the Australian courts in the second business interruption industry test case, due to be heard in August.

QBE also has its own Federal Court proceeding against Educational World Travel in liquidation and its liquidator.

“(QBE) is committed to applying the rulings of the Courts in the industry test cases when assessing claims. QBE is satisfied that its reserving in respect of Business Interruption claims remains robust,” the company said in a statement today.

Lockdowns to prevent COVID-19 starved thousands of businesses of income, causing many to make claims through business interruption insurance policies. These policies are typically used to cover losses associated with extreme weather events such as floods or fire.

However, the insurance industry argued the policies were never intended to cover pandemics despite an error in the policy wording that indicated otherwise. Clauses that sought to exclude pandemics referred to an outdated parliamentary act.

The Insurance Council of Australia (ICA) has bitterly fought liability for these claims through the courts, but it has been largely unsuccessful. The High Court rejected the insurers’ last ditch bid to deny liability last week.

QBE shares were down 1.2 per cent to $10.59 just after 2pm.

Big Four lender Westpac has taken Forum Finance to court following the discovery of a significant potential fraud.

The potential fraud relates to a portfolio of equipment leases with Westpac customers arranged by Forum Finance, which were referred to Westpac’s Institutional Bank.

The bank has a potential exposure of around $200 million after tax, with the extent of any loss dependent on the outcome of its investigations and recovery actions underway.

Westpac chief executive Peter King.

Westpac chief executive Peter King. Credit:Jessica Hromas

While investigations are ongoing and the NSW Police, ASIC and APRA have been notified, at this stage it appears no Westpac customer has suffered a financial loss.

The bank has obtained certain asset freezing and search orders to preserve available assets and relevant information.

Westpac is continuing to investigate how this occurred, including undertaking an external review.

“Westpac takes fraud very seriously and will take all necessary actions to protect the interests of the bank and its customers,” chief executive Peter King said.

Westpac earlier announced it would be reimbursing around $87 million to 32,000 customers whose financial advisers failed to notify them of commercial information between 2005 and 2019.

Shares in the bank were last 0.1 per cent lower at $25.63.

Opinion

It’s encouraging to see the scepticism with which this week’s intergenerational report from Treasurer Josh Frydenberg has been greeted. Any attempt to peer 40 years into the economy’s future will prove close to the mark only by happy accident.

But it’s discouraging to see the way the usual suspects have seized on the report’s most glaring weakness to do no more than push their vested interests in the name of “reform”.

This fifth version of the five-yearly intergenerational report allows us to see how far astray the report’s earlier projections have been, even though we’re only halfway towards the first report’s picture of the economy in 2041.

Josh Frydenberg’s crystal gazing.

Josh Frydenberg’s crystal gazing.Credit:Matt Davidson

In their projections of growth in the population, its authors have repeatedly overestimated the fertility rate (expected number of births per woman) and underestimated the growth in net overseas migration (foreigners arriving minus locals leaving).

They predicted that the retirement of the Baby Boomers would see a fall in the rate at which people of working age participate in the labour force, but this “participation rate” has recently been at record highs.

It would be nice to think that, since the object of all these projections has been to alert us to looming pressures on the budget – caused, in particular, by the ageing of the population – governments have responded accordingly, thus making the reports’ prophecies self-defeating. Nice, but not likely.

Read the full column here

The Australian sharemarket was holding on to a narrow lead at lunchtime as a bump in NSW COVID numbers and details from National Cabinet on the plan to lift the nation out of its pandemic limbo.

The ASX 200 rose by as much as 0.6 per cent at the open to 7312.3 but by 12.30pm AEST had eased back to 7283.2, a 0.2 per cent gain.

Energy stocks continued to outperform but the miners and tech names were weak.

National Cabinet has agreed on a pathway for the country to move from trying to suppress COVID-19 to living with the virus once enough of the population is vaccinated.

There will be four phrases to the pathway. Each new phase is triggered when Australia hits a threshold of vaccinated people.

We are in phase one now, which is about vaccinating, preparing and planning, Mr Morrison said.

The exact details are being worked out, the Prime Minister says.

Furthermore, far fewer people will be able to come to Australia after National Cabinet agreed to a 50 per cent reduction in passenger numbers due to the risk of the delta coronavirus variant.

Meanwhile, NSW has recorded 31 new COVID cases, 13 of which were active in the community while infectious. Brisbane will remain in lockdown for another 24 hours, while other south-east Queensland regions will have some restrictions lifted from 6pm.

Seven Group Holdings has escalated tensions with takeover target Boral, accusing the construction materials giant of breaching blackout rules by continuing its share buy-back program into the new financial year.

The Kerry Stokes-backed investment house this morning claimed Boral was in possession of material information on its annual performance – and should therefore suspend its share buy-back – a move that has helped support the price of Boral’s stock as it fights off the overtures of its major shareholder.

Seven Group yesterday increased its bid for construction materials firm Boral.

Seven Group yesterday increased its bid for construction materials firm Boral. Credit:

“We note that the Boral board continued to buy back shares yesterday, despite the company being in blackout and despite the company committing it would not use the buy-back as a takeover defence tool,” Seven wrote in a release.

“Following the close of the financial year, the company is in possession of material information on the performance of the business, particularly the underperformance of Boral Australia, which has not been adequately disclosed to the market in the target’s statement.”

Seven said it expected Boral to suspend the buy-back during the blackout, consistent with its last buy-back in 2015.

“Following the close of the Seven Group offer, we look forward to returning to the Board room and participating in any decisions around capital management and will make sure the company acts prudently with shareholders’ funds.”

Seven Group chief executive Ryan Stokes is a member of the Boral board and the company has slowly been increasing its stake in the construction firm with a view to having more of a say in how it is run.

Seven – which had a 23 per cent stake when it lobbed an initial bid of $6.50 per share in May – has been adding to its slice through the buy-back.

Yesterday it secured a path to taking a 29.5 per cent in Boral and lift its offer to $7.30 per share, as promised last week.

Seven will lift its bid to a maximum $7.40 per share if it secures 34.5 per cent of the company by the close of business on July 7.

It said yesterday it would not increase its offer under any circumstances.

Boral, however, continues to urge investors to reject Seven’s overtures, arguing the offer remains well below the $8.25 to $9.13 per share valuation given by independent expert Grant Samuel & Associates.

“The Seven Group offer is opportunistic and appears to be timed to take advantage of an improving outlook for Boral,” the company said yesterday.

Boral shares were last 0.1 per cent higher at $7.37.

The Seven takeover offer closes on July 15.

Opinion

It’s an experience I cannot forget, 30 years later. Communist pork tasted of petroleum. Visiting Czechoslovakia in 1990 I remember being astonished – surely the only things required to make a pig delicious are fire and an enormous quantity of salt? Why marinate it in Soviet tractor diesel?

Life behind the Iron Curtain had a peculiar texture in other ways, too, in a world where free will was largely rendered meaningless and free economic choices didn’t exist. Cynicism prevailed and where enterprise existed it did so largely at the whim of a bureaucrat or a police officer, in a manner that drained the word of its meaning.

Amazon chief Jeff Bezos is stepping down this month.

Amazon chief Jeff Bezos is stepping down this month. Credit:AP

So I find it uncanny today that so many aspects of the “platform economy” mirror that dismal experience. Last week, six new draft bills emerged from US congressional committees, thanks to a surprising bipartisanship agreement between Republicans and Democrats. Four bills are specifically aimed at big tech, and two at making monopoly laws more extensive and effective. Critics argue that they’re flawed, but this misses the point.

The more pertinent question is why do these bills exist at all? How has antitrust suddenly won support across the political spectrum, just as Jeff Bezos prepares to step down as Amazon chief executive in the coming days to spend more time with his rockets?

The answers lie in a story that is actually much bigger than big tech – it’s about the “platformisation” of business. It’s the result of many billions of dollars of capital investment devoted to reconfiguring supply chains and playing games with us consumers.

Read the full story here

The Telegraph, London

NSW has recorded 31 new local coronavirus cases, as the Premier warns the impact of Greater Sydney’s lockdown will not be seen until next week.

Thirteen of the cases were not in isolation while infectious.

“We are anticipating there could be an increase in numbers over the next few days, and then hopefully early next week we should see the impact of the lockdown,” Premier Gladys Berejiklian said.

The Premier said it was “concerning” that 13 people were in the community with the virus, and urged people to stay home and for essential workers to not attend work even with mild symptoms.

“I also want to stress that, if you are a close contact, it means you cannot leave the house: that includes for vaccination, that includes for medical attention. If you are a close contact please ring Health and Health will meet all of your needs.”

NSW has broken its daily testing record, with more than 73,602 tests recorded in the 24 hours to 8pm.

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