Archive for May, 2011

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    • Stock Market Analysis: Global Markets Offer Little Direction

    Tuesday, May 31st, 2011

    * Key markets in the U.S. and U.K. were closed overnight leaving local investors to fend for themselves on the last day of May.
    * European stock markets finished slightly lower in subdued trading.
    * Asian shares mostly fell yestersday, as the uncertainty over the European debt crisis and the faltering global economic recovery continue to weigh on sentiment.

    The SPI Futures is trading below the key level of 4800, rising 0.3% (or 14 pts) to 4,676. The key levels for our index today are 4730 and 4650.

    Australian shares are expected to trade flat today as we rule off the month of May.  Locally investors will have to fend for themselves as key markets in the U.S. and the U.K. were closed. The mining tax will be in focus again, as the spectre of the carbon tax is also weighing on sentiment.

    See below for ASX listed companies in the news today.

    Economic News Today

    * Financial Aggregates, incl Private Sector Credit for April
    * Q1 Balance of Payments & Current Account Balance
    * Building Approvals – Private Sector & Residential Building Approvals for April
    * International Reserves & Foreign Currency Liquidity for April

    US Markets

    U.S. stock markets was closed overnight for the Memorial Day public holiday.

    Commodities markets in both New York and London were closed for public holidays.

    European Markets

    European stock markets finished slightly lower in subdued trading overnight as both London and New York were closed for public holidays.  A top European Central Bank official has said that Greece could get another 20 billion euros in aid from its fellow euro countries and raise three times the amount through new austerity measures such as selling government property. 

    France has said it is not ready to give up nuclear power after Germany became the first major industrialised nation to announce it will close all its reactors, within the next 11 years, after the disaster in Japan.

    In London the FTSE 100 index was closed at 5,939, the German DAX was down -0.1% (or -3 points) at 7,160, while in France the CAC was down -0.2% (or -8 points) at 3,950.

    Asian Markets

    Asian shares mostly fell yesterday, as the uncertainty over the European debt crisis and the faltering global economic recovery continue to weigh on sentiment.

    In Japan trading was thin because of a lack of fresh buying incentives and holidays in London and New York.

    In China the Shanghai Composite ended lower for an eighth straight session in the red, due to ongoing fears the world’s number two economy could be slowing down, but in Hong Kong the market closed modestly higher.

    The SSE Composite was down -0.1% (or -4 points) at 2,706, while in Hong Kong the Hang Seng Index closed up 0.3% (or 66 points) at 23,184 and in Japan the Nikkei 225 Index was down -0.2% (or -17 points) at 9,504.  The South Korean KOSPI was flat, while the Indian market was down -0.2%.  

    Commodities

    The Dollar Index was lower at 74.95 on a higher Euro, while the Australian Dollar last traded lower at 106.96. Commodities prices rose.

    For the session the benchmark crude NYMEX for June delivery was up 0.4% to settle at $100.75. Copper prices are higher but still below 2-year highs as Copper for June delivery was up 1.7% (or 7.3 cents) at $US4.1760.  June gold was up 0.9% (or $US13.50) at $US1,536.50.

    ASX Market News

    AAX – Ausenco has secured a further contract with Beadell Resources to manage a $75 million processing plant delivery at the Tucano gold project in Brazil.
    BYL – Brierty has won a $185 million contract to provide mining services and infrastructure for new iron ore producer Gindalbie Metals.
    EFG – Everest Financial Group has asked shareholders to approve de-listing from the local bourse and a buyback of around 40 percent of its stock, to complete the wind-down of the company.
    GBE – Globe Metals and Mining the Africa-focused miner has released positive rare earth exploration results.
    LYC – Lynas Corporation says UN nuclear experts have opened investigations into whether plans for an Australian-built rare earth refinery present any threat of radioactive pollution.
    NHC – New Hope Corporation the coal miner has blamed last summer’s floods for a 42 percent drop in quarterly sales. The company has also updated their JORC compliant reserves and resources statement, increasing their coal resources by 56% to 1,539Mt while coal reserves increased by 12.4% to 544Mt.
    ORG – The Origin majority-owned Contact Energy, has welcomed the granting of resource consents for 168 wind turbines and transmission lines to its proposed Hauauru ma raki wind farm in Waikato.
    OZL – OZ Minerals the single mine gold and copper producer, will trade on a post consolidation basis from Monday 30 May until 10 June. The number of shares on issue will reduce by a factor of 10 to 324 million.
    QAN – Qantas has suffered a further issue on its new flights to Dallas/Fort Worth, but the airline says it is confident the route is a viable one.
    SDL – Sundance Resources the African iron ore explorer and developer, has refuted a report that its majority shareholder Hanlong Mining is considering a full takeover of the company.
    SUN – Suncorp Group says it is still focused on insurance margin growth despite a $320 million hit from this year’s spate of natural disasters.
    TAH – Tabcorp Holdings is to raise $US460 million ($A429.38 million) in debt from the US private placement market for the proposed holding company of its casino businesses.
    TEL -  Fitch Ratings has placed Telecom NZ’s credit rating on “rating watch negative”, citing the separation of its network, which was necessary to win government ultrafast broadband contracts.
    WEC – White Energy Company expects to finalise work on the world’s largest coal briquetting plant and ramp-up to full production by the end of 2011.
    WPG – WPG Resources, the iron ore developer, expects the mining regulator to approve its mining and rehabilitation plan (MARP) for the Peculiar Knob project in South Australia in July.

    Local Corporate Reporting

    Ivanhoe Australia Ltd (IVA) AGM

    Ex-dividend Date

    None

    Market Summary

    ASX – to open higher
    US & UK/Europe – closed or flat

    US ADRs – Generally Higher (prices from Friday’s close)

    BHP up 0.8% & RIO  up 1.3%; AWC up 0.1%
    ANZ up 0.1% & NAB up 1.4%
    NEM  up 1.0%, JHX up 2.4% , NWSup 1.3%

    Commodities Stock Index up 0.3%
    Gold Stocks Index up 1.9%
    Oil Stocks Index up 0.3%

    By Michael Hevern
    Head of Research

    For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

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    ASX Company News: GRG International Enters US Distribution Agreements

    Tuesday, May 31st, 2011

    ATM company GRG International Limited (GRG) has entered into agreements with two new US distribution partners; ValueTec Financial Equipment LLC and American Bank Equipment. Both will provide regional sales and support coverage for GRG ATMs and related banking products. The exclusive agreement with ValueTec Financial Equipment LLC gives GRG ATM sales, marketing and service rights to Valutec in Arizona, Colorado and Wyoming. ValueTec has more than 20 years of financial equipment experience and has sold ATM products to more than 500 financial institutions across seven states. The exclusive agreement with American Bank Equipment gives GRG coverage to American Bank Equipment in Missouri, Kentucky and Ohio. American Bank Equipment has a trusted reputation for sales and service of financial equipment throughout the world and has a large inventory and knowledgeable team of technicians.

    GRG International is in a partnership between Global Cash Services and GRG Banking of Guangzhou, the largest ATM manufacturer in China. GRG International was founded to distribute GRG Banking products in the main English-speaking markets. GRG Banking is the largest ATM manufacturer in China, one of the largest ATM suppliers in the Asian region and is listed on the Shenzhen Stock Exchange with a $A2.2billion market capitalisation. The company leverages GRG Banking’s resources to design, develop, manufacture and sell ATMs, ATM management software and spare parts without incurring the associated overheads. GRG International will also sell the comprehensive range of other GRG Banking products such as Recyclers, Teller Cash Dispenser, Automatic Depository and Kiosk products. GRG International has exclusive rights to distribute GRG ATMs in the United States, Canada, Australia, United Kingdom and Ireland and non exclusive rights to the Mexican, South African and Indian markets.

    www.grgatm.com

    http://www.traderdealer.com.au/fundamentals/grg

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    ASX Company News: Motopia Enters Distribution Contract With Educate

    Tuesday, May 31st, 2011

    Mobile technology company Motopia (MOT) is delighted to announce it has signed a heads of agreement with Educate Ltd for exclusive distribution of the Lemon and Lime Platform to colleges and universities in the United Kingdom. Lemon and Lime is a revolutionary ready-made mobile application solution targeted at event organisers that can now be used to enhance the experience of students attending university all around the world. Customers in Australia already using Lemon and Lime apps include Future Music Festival, Fuzzy Events, Sydney Fringe Festival, Summadayze festival, WOMAdelaide and Adelaide Casino. Lemon and Lime has now been further developed to suit the needs of tertiary institutions around the world, and includes functionality to engage with students and enhance their connection with the university.

    Students can benefit from linking with points of interest on campus, downloading interactive maps, having convenient information on course timetables, being updated with university event schedules and being offered university-controlled social media integration to enable them to share their experiences. Educate Ltd currently supplies its clients with advertising and media solutions and is in the perfect position to distribute this unique ready-made App solution to its existing client base of more than 120 universities across the UK.

    Dan Beynon, commercial director of Educate Ltd, is excited to be joining forces with Motopia. “This partnership with Motopia represents a considerable opportunity for Educate Ltd and is a perfect extension that allows us to grow our product offering to universities with a best of breed mobile applications platform and take advantage of the phenomenal growth in the mobile marketplace,’’ he said.

    Motopia is a publicly-listed global company that specialises in mobile and digital marketing, creating applications and content for use on mobile phones and other online devices. Motopia aims to become a world leader in mobile marketing, platform development and branded mobile content creation, licensing and distribution. Motopia has offices around the world, including in Melbourne, Adelaide, Singapore, London and Los Angeles.

    www.motopia.com

    http://www.traderdealer.com.au/fundamentals/mot

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    ASX Company News: Brierty Secures Contract With Karara Iron Ore Project

    Tuesday, May 31st, 2011

    Civil and mining contractor Brierty Limited (BYL) is pleased to confirm that it has executed a contract with Karara Mining Limited for the Hematite Mining and Associated Services at the Karara Iron Ore Project. The contract is valued at $185 million and will run for approximately four years. In February this year, Brierty announced that it had been named preferred contractor on Karara. With the contract terms now settled, Brierty has commenced delivery of mining services including drill and blast, load and haul, crushing and screening, road haulage and train loading.

    Brierty Chief Executive Officer Peter McBain said that the award of the Hematite Mining contract was testament to the company’s mining credentials. “We have an experienced team and a fleet of new equipment ready to go to work and look forward to delivering our services safety and efficiently,” said Mr McBain. “The contract is a cornerstone mining project and provides Brierty with the ability to leverage additional opportunities from the development of the burgeoning Midwest region of Western Australia. “There is increasing activity in the mining, land development and infrastructure sectors which Brierty as a self performing contractor is well positioned to benefit from.”

    Brierty provides civil construction and mining services to government and private industry through four lines of business which include Transport Infrastructure; Resources Infrastructure; Land Development; and Mining.

    www.brierty.com.au

    http://www.traderdealer.com.au/fundamentals/byl

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    Stock Market Analysis: Global Markets Down For A Fourth Week

    Monday, May 30th, 2011

    * U.S. stock markets declined for a fourth straight week, giving the U.S the first month of consecutive weekly losses since the GFC in June 2008.
    * European stock markets closed lower for a fourth week as sovereign debt concerns escalated.  Resources stocks offered support as commodities prices rose.
    * Asian markets have fallen for a fourth week, due to concerns over a faltering global recovery. Many markets have had their biggest string of consecutive losses in two years.
    * Commodities prices continued to recover.  

    The SPI Futures is trading below the key level of 4800, rising 0.1% (or 5 pts) to 4,695. The key levels for our index this week are 4780 and 4600.

    Australian shares are expected to trade flat today as markets fell for a fourth week across the world, with China leading the declines.  Banks were the worst hit in our ASX Top 20 stocks last week.  The mining tax will be in focus again this week after the WA Government sharply increased the state iron ore royalities from the miners by $2 billion.  The spectre of the carbon tax is also weighing on sentiment.

    The Australian GDP figures are due out this week and comments from the Treasurer are not very reassuring, as he said the natural disasters in Australia probably cut more than 1 percent from economic growth in the first quarter.  He went on to say “… 85 percent of Queensland’s 57 coal mines suffered production losses in the early part of the year”.  The OECD has forecast the Australian economy will advance 2.9 percent this year and accelerate to 4.5 percent by 2012.

    See below for ASX listed companies in the news today.

    Economic News Today

    * Q1 Business Indicators Company Profits  &  Inventories.

    US Markets

    U.S. stock markets declined for a fourth straight week, giving the U.S the first month of consecutive weekly losses since the GFC in June 2008.  To date the pullback has been measured with stocks down only 2.4% during the four-week sell-off. 

    The U.S. markets appear to be following the same script as this time last year. Despite the Japanese earthquake disaster thowing a spanner in the works, the other issues that are impacting the markets are similar to that of this time last year.  The jury is out as to whether the Fed will still hold to its commitment to turn off the QE2 tap in June. 

    Economic data continues to disappoint with the latest data showing weekly jobless claims exceeding 400,000 for a seventh straight week.  Consumer spending growth has been revised down from 2.7% to 2.2%, while economic growth for the first quarter remained at 1.8%. 

    A recent survey from the American Association of Individual Investors showed the bullish numbers shrinking to less than 26%, the smallest since last August, as investors have withdawn nearly $US5.8 billion from U.S. stock mutual funds so far in May, while redeploying funds into more defensive positions with more than $US16.5 billion invested in bond funds even as yields are miserable.  This could be setting up for another bullish run in the next quarter, as the VIX volatility index remains at 3-year lows showing investors are not actively buying put options to protect their positions, ie. the fear gauge is currently running low. 

    Commodity prices have supported the markets recently with crude oil prices hovering around $US100 after having slumped 12% in May, copper rebounding 5.5% over the past three weeks, and gold has bouncing above the $US1,500 level again.

    The Dow Jones closed up 0.3% (or 39 points) at 12,441, the S&P 500 index closed up 0.4% (or 5 points) at 1,331, the Nasdaq ended up 0.5% (or 14 points) at 2,797, and the smaller cap Russell 2000 was up 0.6%.  The U.S. market in on holiday tonight.

    All ten company groups that make up the S&P index traded higher: the Financials sector was higher by 0.7%, Materials were up 1.1%, Industrials were up 0.5%, Consumer Staples were up 0.3%, Technology was up 0.5%, while the Energy sector was up 0.3%.

    European Markets

    European stock markets closed lower for a fourth week as sovereign debt concerns escalate.  The Stoxx Europe 600 index ended down -0.2% for the week. The debt issues are most problematic in the PIIGS economies in particular Greece, Portugal and Spain. 

    Resource stocks were among the best performing of the 19 industry sectors in the Stoxx 600 last week, while Russia has announced it will cease its ban on wheat exports on 1 July. 

    The European Central Bank is signaling that it remains on track to raise interest rates further despite the continent’s debt crisis. 

    In London the FTSE 100 managed to finish in the green on Friday, as the miners and energy majors again provided support, making up some ground after losses of the past few weeks.  In Germany markets recovered on Friday as the sentiment for banks improved as the Fitch Ratings credit ratings agency said it does not foresee any rating action on German banks as a direct result of their exposure to Greek sovereign debt.

    The FTSE 100 index closed up 1.0% (or 58 points) at 5,939, the German DAX was up 0.7% (or 49 points) at 7,163, and the French CAC was up 0.9% (or 4 points) at 4,062.

    Asian Markets

    Asian markets have fallen for a fourth week, due to concerns over a faltering global recovery as many markets have experienced their biggest string of consecutive losses in two years.

    Resource stocks have provided support in the region on the back of the recent rising commodities prices, with crude oil holding around $US100 after Goldman Sachs and Morgan Stanley raised their 2011 and 2012 forecasts earlier in the week.  There have been pockets of investor bagain hunting for stocks that have been sold-off recently, but the broader markets continued their falls. 

    In the course of the week the Japanese Nikkei Index fell 0.9%, South Korea fell 0.5% and the Aussie S&P/ASX 200 dropped 1%.  Hong Kong finshed 0.4% lower, while the Chinese Shanghai market plunged 5.8% for the week, its fifth loss in six weeks and is 11.4% off its mid-April high. 

    Credit Suisse the investment house noted that the Shanghai Composite Index is now well below its 200-day average and is trading at 15.3 times profits, below the average 16.9 multiple seen over its last three troughs in 1996, 2005 and 2008.

    However Chinese data continues to point to slow growth in the world’s second largest economy, as data showed a preliminary HSBC Purchasing Managers Index had slipped to a 10-month low, pointing to a slowdown in manufacturing.

    In China the SSE Composite was down -1.0% (or -27 points) at 2,710, while in Hong Kong the Hang Seng Index was closed up 0.9% (or 217 points) at 23,118 and in Japan the Nikkei 225 Index was down -0.4% (or  -40 points) at 9,522.  The South Korean KOSPI was up 0.4%, while Indian market was up 1.2%.  

    Commodities

    The Dollar Index was lower at 74.95 on a higher Euro, while the Australian Dollar last traded lower at 106.96. Commodities prices rose.

    For the session the benchmark crude NYMEX for June delivery was up 0.4% to settle at $100.75. Copper prices are higher but still below 2-year highs as Copper for June delivery was up 1.7% (or 7.3 cents) at $US4.1760.  June gold was up 0.9% (or $US13.50) at $US1,536.50.

    ASX Market News

    AJL – AJ Lucas Group, the resources services provider, has downgraded its full year earnings guidance, and flagged asset sales to reduce its debilitating debt.

    ALL – Aristocrat Leisure Ltd our largest poker machine maker is business as usual after governments from around the country failed to reach a consensus on reforms to limit problem gambling.

    AUN – Austar United Communications the Pay-TV provider has had a takeover bid from Foxtel, valuing the company at $1.93 billion.

    CIL – Centrebet International the internet gaming and wagering company has agreed on a scheme by which the London-based online gaming company Sportingbet Plc will acquire the company for $183 million.

    CTX – Caltex says refiner margins continued to contract in April, as the price of crude oil rose on tight supply after the Japanese earthquake and Libyan conflict.

    CXY – Cougar Energy will open an office in Beijing to help support the growth its underground coal gasification (UCG) projects in China and Asia.

    FPA – Fisher & Paykel returned to profit in the year to March, but its revenue for the latest 12 months fell 3.7 per cent from the year before to $NZ1.12 billion ($A850.84 million).

    GNC – Graincorp, the grain handler and marketer, has posted half year net profit up 66 percent, and has lifted guidance for earnings and profit for the full year.

    ILU – Iluka Resources Ltd, the mineral sands producer, plans to boost production of zircon and high grade titanium ore after achieving price increases in the first half of calendar 2011.

    LLC – Lend Lease Group the construction company and property developer, is on track to deliver its target full year return on equity (ROE) of 15 percent.

    NHC – New Hope Corp has updated its JORC compliant reserves and resources statement, increasing coal resources by 56% to 1,539Mt while coal reserves increased by 12.4% to 544Mt.

    ORG – The Origin majority-owned Contact Energy has welcomed the granting of resource consents for 168 wind turbines and transmission lines to its proposed Hauauru ma raki wind farm in Waikato.

    OZL – OZ Minerals, the single-mine gold and copper producer, will trade on a post consolidation basis from Monday 30 May until 10 June. The number of shares on issue will reduce by a factor of 10 to 324 million.

    TWR – Tower, the insurer and fund manager, says 1H11 net profit fell 54 percent to $A9.7 million, with the result including the impact of earthquakes in Christchurch and a loss due to changes in the global investment market.

    VBA – Virgin Australia has to wait until June for final approval of its proposed partnership with Delta Air Lines on trans-Pacific routes after the US government extended the comment period by a week. While locally Virgin Blue Holdings has suffered a fall in domestic and international passenger numbers in April.

    Local Corporate Reporting

    None

    Ex-dividend Date

    None

    Market Summary

    ASX – to open higher
    US & UK/Europe – higher but down again for the week

    US ADRs – Generally Higher

    BHP up 0.8% & RIO  up 1.3%; AWC up 0.1%
    ANZ up 0.1% & NAB up 1.4%
    NEM  up 1.0%, JHX up 2.4% , NWS up 1.3%

    Commodities Stock Index up 0.3%
    Gold Stocks Index up 1.9%
    Oil Stocks Index up 0.3% 

    By Michael Hevern
    Head of Research

    For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

    Written on 30 May, 7:15am

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    ASX Company News: Moodys Downgrades CBA Following A Review Of NZ Banks

    Monday, May 30th, 2011

    Moody’s Investor Services (Moody’s) announced the outcome of their review of the ratings of all major New Zealand banks, including ASB Bank.  This follows a similar review carried out in relation to Australian banks, including ASB’s parent company, the Commonwealth Bank of Australia (the Group).

    As a result of the review, ASB Bank’s long-term senior unsecured rating has been lowered from Aa2 to Aa3. The ratings outlook is stable.  This rating adjustment reflects Moody’s view of the Australian and New Zealand banking systems’ structural sensitivity to the wholesale funding market, which is one of the sources of funding for all major banks in New Zealand.

    CBA Treasurer, Lyn Cobley said “As with the outcome of Moody’s review of the major Australian banks announced last week, we do not expect this adjustment will have a material impact on the funding plans of either ASB or the CBA Group.”

    www.commonwealthbank.com.au

    http://www.traderdealer.com.au/fundamentals/cba

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    ASX Company News: Centrebet International To Merge With Sportingbet

    Monday, May 30th, 2011

    Centrebet International Limited (CIL) announces that it has entered into a Scheme Implementation Agreement with Sportingbet plc and Sbet Australia Pty Limited, a wholly-owned subsidiary of Sportingbet, under which it is proposed that Bidder will acquire all of the outstanding ordinary shares and performance rights in Centrebet under two separate inter-conditional Schemes of Arrangement. Under the terms of the Schemes, Centrebet shareholders and performance rightholders will receive a cash consideration of A$2.00 per Centrebet Security, valuing Centrebet equity at approximately A$183 million. The Cash Consideration is intended to be financed by way of a £65 million underwritten issue of ordinary shares and a £65 million issue of convertible bonds, for which firm binding orders have been received by Sportingbet.

    Michael McRitchie, Centrebet Managing Director, said: “The offer is demonstrably attractive and a combination with Sportingbet will make Centrebet a stronger business in the Australian market. I am excited about the ability of the merged group to take advantage of the opportunities in the current market.”

    Centrebet commenced operations in 1992 and in 1996 was the first licensed bookmaker in the Southern Hemisphere to offer online sports betting. Centrebet is now a leading International online wagering and gaming operator offering fixed odds betting on a wide variety of  Australian and International sporting, racing, entertainment and political events, as well as online poker and casino products. Sportingbet is a UK based online sports betting and gaming group primarily operating in Europe and Australia.

    www.centrebet.com

    http://www.traderdealer.com.au/fundamentals/cil

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    ASX Company News: IPGA Acquires PT Web Marketing

    Monday, May 30th, 2011

    IPGA Ltd (IPP), the owner of Asia’s No. 1 network of property portal sites under the iProperty brand , announced that it has agreed to acquire PT Web Marketing, owner and operator of Indonesia’s largest property portal www.rumah123.com. Simultaneously IPGA Ltd has also agreed to acquire the number three ranked property portal in Indonesia, www.rumahdanproperti.com. Rumah123.com is Indonesia’s largest and most established property portal. Based in Jakarta and with a staff of more than 50, rumah123.com is the only Indonesian property portal to have successfully rolled out a paid advertising model with more than 1,200 real estate agents purchasing a monthly subscription and another 4,000 agents in the database. In addition rumah123.com also generates revenue from property developers and display advertisers. Rumahdanproperti.com is the number 3 ranked portal in Indonesia. It has an additional 2,200 agents, 15,000 property listings and an additional audience of 100,000 unique visitors per month.

    Shaun Di Gregorio, the CEO of IPGA, commented: “Following our success in Malaysia, Singapore and Hong Kong, we identified Indonesia as a natural growth market for the business. Research shows that Indonesia is undergoing strong economic growth and there is now more than US$100 million per annum being spent on property advertising and a rapidly growing Internet audience of more than 30 million.” “To ensure the best chance for long term value creation, we simultaneously targeted acquiring the clear market leader in rumah123.com and the #3 player, rumahdanproperti.com. Together this provides a clear leadership position similar to the one we enjoy in the rapidly growing Malaysian market,” continued Di Gregorio.

    IPGA Ltd has agreed to acquire PT Web Marketing for AUD1.0 million in cash and 7.0 million shares in IPGA Ltd upon completion. IPGA will acquire ‘rumahdanproperti.com’ for AUD300K in cash upon completion and an additional AUD200K in cash within twelve months of completion based upon certain performance criteria being met. Completion for both acquisitions is targeted to occur by June 30th, 2011.

    IPGA Limited (IPP) owns Asia’s leading network of property websites under the iProperty.com umbrella brand. The Company is focused on developing and operating Internet- based real estate portals with other complementary offerings in Asian markets. It currently operates consumer and business online property portals in the markets of Singapore, Malaysia and Hong Kong, with investments in India and the Philippines. With further expansion planned, IPGA is continuously working to capitalise on its market-leading positions and the rapidly growing online property advertising market throughout the region.

    www.rumahdanproperti.com

    www.iproperty.com

    http://www.traderdealer.com.au/fundamentals/ipp

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    The Power of Probabilities When Trading

    Friday, May 27th, 2011

    Successful trading is about developing a strategy that skews the odds in your favour. There are many different ways of doing this but every successful trading strategy comes down to probabilities.

    What a Difference a Day Makes

    Consider the following table which shows the returns for different days of the week on the Australian market.

    Trading Probabilities - Weekly View

    Thursday is the best day of the week with a favourable risk reward and win%. So clearly the probability favours entering a trade long on a Thursday, though Wednesday and Friday are not far behind. The probability also favours going short on a Tuesday.

    These probabilities on their own are not enough to be a robust trading strategy, but they could be the base for a trading strategy, adding other signals to this, or taken into consideration when designing a trading strategy.

    So a successful trader thinks in terms of probability. Is the probability higher that the market will move up or down from here? If the probabilities are in your favour then take the trade.

    Past performance is certainly no guarantee of future performance, however if it doesn’t work in the past the probability certainly suggests that it is extremely unlikely the strategy will work in the future.

    The Probability of a Month

    Extending the analysis of the Australian market to the months of the year uncovers some interesting results. Different times of the year present different trading opportunities.

    Trading Probabilities - Monthly View

    April and December provide the best opportunities to trade the market long with a probability of 81% that the market will rise during April, 74% in December and 70% in August. On the short side June is the obvious stand out with the market only rising 37% of the time during this month, so it goes down 63% of the time. February is also weak with the market lower 52% of the time but losing an average of -0.02% during the month.

    The probabilities definitely favour some months as being better than others when trading Australian shares, but once again this is unlikely to be a complete trading strategy. It is more likely to be used as the basis of, or in conjunction with another strategy for entry and exit.

    There are no guarantees when trading, but aligning your positions with the markets can assist you in taking advantages of the probabilities that exist. Statistics could become your best friend as a trader.

    Jeff Cartridge
    Education Manager

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    Stock Market Analysis – Weekly Market Wrap

    Friday, May 27th, 2011

    Month-End Rally Market Setup Is In Play

    Investors are tentatively breathing a sigh of relief with markets now set up for a month-end rally following a month of sustained selling. Many markets have been testing key levels this week with investors beginning the week with further selling. We could see some consolidation with an upward bias in the next week, but there are plenty of headwinds for investors to mull over as the month of June unfolds.

    Globally, markets have been plagued with concerns over the sovereign debt issues in Europe. Asian markets have been hindered by reports showing Japan is in a recession, and Chinese growth is slowing near-term.

    The week started with further selling as investors were again cautious over the results of the key IMF and EU finance minister meetings which deliberated over the plight of the PIIGS economies, in particular Portugal, Greece and Spain. The spectre of a debt restructure is still hanging over Greece, but Portugal received a bailout package.

    The US markets have seen some respite after a number of positives including the very successful LinkedIn IPO and a bullish note from Goldman Sachs on the prospect of commodities in the near-to-medium term.

    In Australia the market has benefited from the recovery in resource prices but has been weighed down by the banks being downgraded by Moody’s. Commodities prices have recovered this week due to the US dollar running into key resistance, however the jury is still out on the sustainability of the global economic recovery.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 experienced sustained selling early this week. The Aussie markets are again testing key support levels where a potential month-end rally can be launched. Banks have been the worst hit in our ASX top 20 stocks this week because of a delayed reaction to the Moody’s downgrade of last week, and Goldman Sachs’ downgrading of ANZ and CBA coming to a hold. However, the banks are now starting to look attractive on a dividend yield basis.

    Miners have benefited from the recovery in commodities prices this week, but they still have a number of unresolved issues on the taxation front with the mining tax in focus after the WA government sharply increased the state iron ore royalties to be charged to the miners by $2 billion, and the spectre of the carbon tax is also in the background.

    The strong Aussie dollar is still weighing on company profits and forecasts and we had a number of companies foreshadowing profits downgrades this week.

    US Markets

    US stock markets are setting up for a month-end rally. The leaders this week have been the mining and energy sectors which have outperformed, after Goldman Sachs and Morgan Stanley reported a boost to their commodities forecasts for 2011 and 2012. The focus was on crude oil price forecasts for the rest of the year. Manufacturing data continues to point to a softening recovery in the US, which is particularly worrying given the FED turns off the QE2 tap shortly.

    The US dollar is at key resistance levels currently and this could be a leading indicator for the equities/commodities markets near-term.

    European Markets

    European stock markets have been under pressure this week with continued concerns over debt issues in Greece and the other PIIGS economies weighing on sentiment. Investor sentiment was buoyed mid-week with Greece announcing it had accepted an international bailout, and that it had reached a preliminary agreement with the International Monetary Fund (IMF) and European Union (EU) for a new economic adjustment plan. There is still uncertainty over the proposed bailout package and a restructure of Greek debt is looking more and more likely to be the eventual outcome.

    Late in the week the sentiment for banks improved as the Fitch Ratings agency said it does not foresee any rating action on German banks as a direct result of exposure to Greek sovereign debt. Rising commodities prices prompted traders to seek stocks aligned to global growth, however the IPO of Glencore International (the commodities trader) was subdued.

    Sovereign debt is of great concern since interest payments can often place great demands on governments and individuals. Using a debt-to-GDP ratio is one of the most accepted measures of assessing a nation’s debt. In theory, one of the criteria for admission to the European Union’s Euro currency is that a country’s debt should not exceed 60% of that country’s GDP.

    Here is some food for thought. Standard and Poor’s has released its estimates of debt-to-GDP ratios for the European majors and they are as follows:

    Greece 143%, Ireland 96.2%, Portugal 93.0%, Germany 83.2%, and Spain 60%.

    This is why the IMF and the EU finance ministers have serious difficulties in trying to reduce the sovereign debt of these nations without collapsing the global economy, and why the sovereign debt issues will be with us for some time to come.

    Overnight in London the FTSE 100 index closed up 0.2% at 5,880, the German DAX was down -0.8% at 7,114, while in France the CAC was down -0.3% at 3,917.

    Asian Markets

    Asian markets have rebounded as the week progressed, with investors going “bargain hunting” for stocks that had been beaten down in the recent sustained sell-off. The Japanese market has been under pressure after GDP data confirmed that it is in a “technical” recession after the problems resulting from the March earthquake.

    Chinese markets have also been soft with data continuing to point to slow growth and showing that a preliminary HSBC Purchasing Managers Index had slipped to a 10-month low, pointing to a slow-down in manufacturing. Resource stocks are starting to see a recovery across the region on the back of the recent rising commodities prices with gold above $US1,500 and crude oil holding above $US100 after Goldman Sachs and Morgan Stanley raised their 2011 and 2012 forecasts earlier in the week.

    Overnight in China the SSE Composite was down -0.2% at 2,736, while in Hong Kong the Hang Seng Index closed up 0.7% at 232,900 and in Japan the Nikkei 225 Index was up 1.5% at 9,562. The South Korean KOSPI was up 2.7%, while the Indian market was up 1.1%.

    Our View

    The Australian share market has again had a strong rebound this week after early weakness. As the week progressed investors added risk to their portfolio positions and took advantage of the sustained sell-off in equities prices in the past few weeks.

    The S&P/ASX 200 index is again testing resistance at its 200-day moving average and the recent recovery in commodities prices has added to support. The Aussie markets have set up for a potential month-end rally, but need to close above this month’s high before a sustained rally can be contemplated. Banks are now starting to look attractive on a dividend yield basis and the miners will have benefited from the recovery in commodities prices this week. The headwinds remain with a strong Aussie dollar and the proposed carbon and mining resource taxes simmering in the background.

    The S&P/ASX 200 is currently trading at 4655 having found support around the 4,580 level this week. Key levels for the index next week will be 4750 to 4580.

    Remember the old adage that “it is best to buy insurance when you can, not when you have too”. You can use options to protect your positions.

    By Michael Hevern
    Head of Research

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