Archive for October, 2011

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    • Traders Cautious Ahead of Eurozone Summit

    Friday, October 21st, 2011

    Globally traders were cautious this week, as sentiment was driven out of Europe, as they move to clarify their “comprehensive” plans to address the eurozone debt crisis. Many markets are still testing key overhead resistance levels from their recent trading ranges. Volatility remained high over the past week as the eurozone debt concerns continue to be in focus and the US earnings season rolled on.

    Globally financial stocks continue to be volatile, with further downgrades this week, due to concerns over capital adequacy, but the news that the European Commission are meeting this weekend to develop a bank rescue package should help with the financial system crisis in the eurozone. There are still short selling bans in a number of European countries. There were also rumours during the week that Germany and France has agreed to an extension of the EFSF to EUR2 trillion, but this has since been dismissed.

    US markets have eased back from key resistance levels at the top of their recent trading ranges, as the earnings reporting season rolled on. The tech sector has been sold down after disappointing earnings from the likes of IBM and Apple, and the financials were hurt by Goldman’s disappointing report. The earnings reporting season heats up next week with 40% of the S&P500 companies reporting. The Fed’s beige book troubled traders as the Fed presented gloomy forecasts, citing “uncertain” times for the market ahead.

    Europe investors have been anxious over the sovereign debt situation and have been jumping at shadows, as rumours abound regarding the prospects of the EFSF and bank rescue plans. The eurozone summit to be held on the weekend will be the focus for the next few trading sessions, but from all reports traders may be disappointed with the clarity of the outcome of the “comprehensive measures” to resolve the crisis. Investors are continuing to show some caution, as they take profits off the table from recent gains.

    Commodities remain a key focus and have been sold-down heavily again this week, after China after reported its annual GDP reading came in at 9.1% (down from 9.5% in the previous quarter). The GDP reading was seen as a negative near-term, but in the medium term it could point to some easing by the Chinese government going forward, and this will help commodities prices.

    Copper prices have plunged -12 percent this week and were down -6 percent overnight, for their biggest single day collapse in a month, on fears of a double-dip recession and growing doubts that Europe will resolve its debt crisis any time soon. Crude-oil markets barely moved, after news of the death of Libyan strongman Muammar Gaddafi, though it could lead to an earlier-than-expected full restoration of Libya’s oil exports. Libya produced about 1.4 million barrels per day of mostly high value light sweet crude before the rebellion against Gaddafi broke out at the start of 2011. Gold prices have retraced this week, and fell -2 percent overnight for its biggest single day drop in a couple of weeks, hurt by technical selling and concern over whether European leaders can reach a deal to boost the region’s bailout fund.

    Asian traders have been reacting to what is happening in Europe and the US as well, with growth sensitive stocks being hurt by the ratcheting down of the economic growth forecasts and the subsequent sell-off in commodities prices. The Chinese annualised GDP figures came in at 9.1%, down from 9.5% in the previous quarter and the Chinese market is now trading down at levels not seen since early 2009.

    Our View For Australia

    The Aussie market has backed off the top of its trading range this week, following on from the lead from the overseas investors. The recovery in the miners came to an abrupt halt this week, as commodities were sold-off sharply again, while the banks continue to hold on to their recent gains as we approach the dividend season. The S&P/ASX 200 hit the upper level of its trading range this week as we predicted last week, but has now retreated and the index is trading below its 50 day moving average.

    We had a milestone anniversary this week, as it has been almost a quarter of century (24 years) since the 1987 October crash. The US market collapsed -23%, while the ASX fell -25% on “Black” Monday in 1987, and by the end of October the US market had retracted -23%, while the ASX plunged -42% and the equities markets traded sideways for the next three years.

    The RBA has set the stage for an interest rate cut before the end of the year. Analysts expect a cut of 25 basis points at the next meeting on Melbourne Cup day in November. An interest rate cut would be good for the Christmas trading period.

    Last week we suggested that the bulls and the bears would be wrestling for control of the markets this week, and this has proven to be the case. Going forward the struggle is set to continue into next week. The Aussie market is trading at its 50 day moving average, around 4150 this week, and the this level looks to be a key pivot level as the market has found resistance around 4300.

    Investors should be looking to utilise options strategies to protect themselves in this type of market. There continues to be issues over eurozone bank solvency and as traders await some detail on the “comprehensive measures” to address the eurozone banking and sovereign debt crisis, which could be forthcoming at the EC summit this weekend.

    Remain attuned to the news from overseas particularly from China, Germany and the US regarding their economic growth and debt issues. Monitor the performance of the US dollar for a guide to the future direction of commodities and equities prices.

    The S&P/ASX 200 is currently trading at 4155 having backed off the 4300 level this week. Key levels for the index next week will be 4300 and 4080, with 4150 the key pivot level. Be prepared to use options to protect your capital and reduce your risk. Expect to see further volatility going forward as the market participants look for some confirmation on the near-term direction of the market.

    Use options strategies to reduce your risk in these volatile times. The MDS Financial Advisory Services team can help with this and we have also discussed some of the strategies in our Analyst’s Eye Articles recently.

    We regularly update you on trade recommendations so for Buy and Sell recommendations on ASX listed companies register for a free trial of MDS Financial Research.

    MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio. Call me on 1300 610 024 for further information.

    By Michael Hevern begin_of_the_skype_highlighting     end_of_the_skype_highlighting
    Head of Research

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    Options Trading for All Types of Market Environments – Part V: Dividend Capture Covered Call Collar

    Friday, October 21st, 2011

    The Dividend Capture Covered Call Collar, is the options trading strategy that traders can use to protect an existing position that has recently surged into a key resistance level and is about to pay a dividend. Rather than simply taking profits on the share position and potentially missing out on the dividend and future upside, the trader enters into a Dividend Capture Covered Call Collar. This options trading strategy seeks to protect your existing share position while still participating in some of the upside, including the dividend, for a modest outlay.

    The Dividend Capture Covered Call Collar allows you to participate is some of the future gains up to the sold strike price and hopefully the dividend, while being protected by the put position.

    Dividend Capture Covered Call Collar – is ideal for participating in future gains and picking up the dividend, while being protected on the downside.

    If you are of the opinion that the stock market is likely to sell-off and the share has little chance of breaking the key resistance level, but you still want to hold on to it for the dividend, you could use a Dividend Capture Covered Call Collar options strategy. The Dividend Capture Covered Call Collar strategy is similar to the protective put options strategy in that you also buy put options as protection. The difference is that you will now finance the purchase of those put options with the proceeds from writing an equal number of out of the money call options.

    The position will still protect you from losses below the strike price of the put options at minimal cost to yourself, but it will stop the position from profiting beyond the strike price of the short call options should the stock stage a rally and you could miss out on the dividend if this rally happens before the Ex-dividend date. That is you would miss out on a strong rally in exchange for putting on the protection of the put options for free (apart from commissions of course).

    Use a Dividend Capture Covered Call Collar when you expect the share price to move modestly higher or pullback significantly from current levels and you want to hang on for the dividend.

    Recent Trade – Westpac Bank for Dividend

    A recent trade we recommended was to buy Westpac above $19.37 on September 27. This trade was intended to capture to the dividend and the share price has subsequently jump to around $22.00 where it is meeting resistance. If you wanted to hold on to your trade for the dividend, (WBC goes Ex-div $0.74 on 8th November), then you could take advantage of this Dividend Capture collar strategy**.

    We entered the share position on the day of the recommendation at $19.67. The share price is now trading around $22.00 and has now been trading sideways for the past 2 weeks but it will go Ex-div $0.74 on 8th November.

    Given the turmoil in the eurozone which has been triggered by the problems with the European financial system and the debt crisis, we considered a Dividend Capture covered collar was appropriate for this position. Based on technical analysis you can see from the chart that the $22.50 resistance level has held for over six months.

    So we bought protection at $21.00 by buying 2100 DEC11 Put for $1.00 and then wrote the 2250 DEC11 Calls for $0.44. This trade cost 56 cents but we are protected until December expiry down to $21.00 and profits will be capped at $22.50.

    Chart 1: Westpac Dividend Capture Covered Call Collar Trade


    You can plan and analyse your trade as shown above, using the Derivative Profiler option in the Market Analyser software. MarketAnalyser also provides a payoff diagram for further trade analysis as follows:

    Chart 2: The payoff diagram for the Westpac Dividend Capture Covered Call Collar Trade.

    Trade Note

    Westpac (WBC) is still trading between the $21.00 and $22.50 option strike levels and only time will tell where the share price will end up at expiry, but we are protected until December expiry down to $21.00, but profits will be capped at $22.50**.

    The Trade

    Options can be used in order to reduce your risk while still participating in potential profits from a significant move by the underlying stock. We have explained the Dividend Capture Covered Call Collar strategy which is allows you to participate is some of the future gains up to the sold strike price and hopefully the dividend, while being protected by the put position.

    In future articles we will talk about the High Yield Covered Call strategy and the Covered Call Stock Reversal strategy which is particularly relevant to this market.

    Utilise the features in the Market Analyser software to trade plan your options trades for the particular options strategy using your specific trade selection criteria. You will save time and potentially reduce your trading risk.

    By Michael Hevern
    Head of Research

    ** Please note your may need to refer to a tax profession regarding eligibility of franking credits.
    See Also:

    Options Trading for All Types of Market Environments (Part 1): The Protective Put

    Options Trading for All Types of Market Environments (Part 2): The Covered Call

    Options Trading for All Types of Market Environments (Part 3):The Covered Call Collar

    Options Trading for All Types of Market Environments (Part 4): Stock Repair

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

    MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio. Call 1300 610 024 for further information.

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    Stock Market Analysis: Traders Cautious Ahead of Eurozone Summit

    Friday, October 21st, 2011

    * US stock markets recovered from an early sell-off to finish modestly higher, as the Philly Fed figures surprised to the upside.
    * European stock markets fell overnight,  as concern and uncertainty about the outcome of the EC meeting of euro-zone ministers this weekend.
    * Asian stock markets ended lower yesterday, as growth sensitive resources companies led the falls again. Markets are expected to pullback again today.
    * Commodities prices traded sharply lower, as Gold prices fell to $US1,609 and while crude-oil closed down around $US86.

    The SPI Futures is trading around the key pivot level of 4200, ended up 0.3% (or 13 points) at 4,161. The key levels for our index today are 4230 to 4130.

    Yesterday  Australian shares sold off again, following on from falls in the US markets the previous night. The miners led the falls once again, as investors continued to be concerned over the eurozone debt crisis, falling global growth and the weakening Chinese economy.  The issues pertaining to the European sovereign debt crisis remain at the front of traders minds and until we can see some clarity there, the equities markets will continue to experience volatility.

    Business confidence suffered a sharp fall in the third quarter, according the National Australia Bank quarterly survey of more than 900 firms showed its measure of business confidence slumped to -4 in the September quarter (from +5), reflecting acute global market volatility and fears about the European debt crisis. The survey’s measure of business conditions dropped to -3 (from +2), with sales, profitability and employment all under pressure.

    The All Ordinaries (XAO) gave back some of its recent gains today closing down -1.6% at 4207, the S&P/ASX 200 (XJO) closed down -1.6% at 4145 and at 4.20 pm the SPI September futures contract was down -1.7% at 4148.

    Aussie investors are expected to show caution today, following the mixed leads from the US and Europe, as investors questioned the European Commission’s commitment to the bank rescue plan and economic growth forecasts were wound back.  The EC summit this weekend will be pivotal.  Commodities sold down sharply overnight which will weigh on our miners today.  We continue to have a busy week for AGMs and production reports, see below for details.  In the Analyst’s Eye today we tell you one option to protect your banks dividends.

    See below for ASX listed companies in the news today.

    Economics News Today
    *  Q3 International Trade Price:  Exports and Imports.

    U.S. Markets

    US stock markets recovered from an early sell-off to finish modestly higher.  
    The Dow Jones Index and the S&P500 finished up around 0.3%, while the tech-heavy Nasdaq closed -0.2% lower.  Stocks started the day selling off after reports that the Sunday European summit could be postponed because of disagreements on how to deploy cash in the Continent’s bailout fund.  However sentiment turned around after midday, when French President Nicolas Sarkozy and German Chancellor Angela Merkel issued a joint statement pledging that European Union leaders will have a bailout plan in place by Wednesday.
    In economic news the Philly Federal Reserve beat expectations as it reported its index of general business activity, showed signs of a rebound in mid-Atlantic manufacturing, as the gauge rose to 8.7 this month (up from minus -17.5 in September). Trader sentiment is being driven by news coming out of the eurozone, as investors eagerly watch for an outcome at the EC summit this weekend.

    Commodities traded sharply lower.  Copper prices plunged over -6 percent, for its biggest single day collapse in four weeks, on fears of a double-dip recession and growing doubts that Europe will get a handle on its debt crisis. Crude-oil markets felt little impact after news of the death of Libyan strongman Muammar Gaddafi, though it could lead to an earlier-than-expected full restoration of Libya’s oil exports. Libya produced about 1.4 million barrels per day of mostly high value light sweet crude before the rebellion against Gaddafi broke out at the start of 2011.  Gold fell -2 percent, its biggest 1-day drop in a couple of weeks, hurt by technical selling and concern over whether European leaders can reach a deal to boost the region’s bailout fund.

    The Dow Jones closed up 0.3% (or 37 points) at 11,541, the S&P 500 index closed up 0.5% (or  6 points) at 1,215, the Nasdaq ended down -0.2% (or -6 points)  at 2,598, and the smaller cap Russell 2000 was up 0.3%.

    European Markets

    European stock markets fell overnight,  as concern and uncertainty about the outcome of the EC meeting of euro-zone ministers this weekend, weighed on indices throughout the session and as concern about the global economy weighed. The Stoxx Europe 600 index lost 1.5%.  
    It was a volatile session as stocks initially fell on concerns on whether sufficient progress could be made at the weekend EC meeting, but markets recovered as the earlier rumors that the EC meeting could be postponed were dismissed. Sentiment was also buoyed after comments that the region’s key bailout fund could purchase sovereign debt directly from countries issuing new bonds or on the open market.  
    The “troika” made up of the European Central Bank, European Commission and IMF continue to work on the proposed “comprehensive” bailout plan.
     
    In London the FTSE 100 index closed down -0.5% (or 40 points) 5,450, the German DAX was up 0.6% (or 36 points) at 5,913  while in France the CAC was up 0.5% (or 16 points)  at 3,157.

    Asian Markets

    Asian stock markets ended lower yesterday, as growth sensitive resources companies led the falls again.  Investor sentiment continues to be buffeted by the increased concerns over the eurozone’s ability to agree upon a credible resolution to its debt crisis and after the U.S. Federal Reserve issued a gloomy economic outlook.

    In Japan the Nikkei Stock Index fell -1%, as tech stocks followed their Nasdaq counterparts lower.  In Hong Kong the Hang Seng Index and in mainland China the Shanghai Composite Index declined -1.8%, as resource stocks continued to sell-off over -3.5%.

    In China the SSE Composite was closed down -1.9% (or -46 points) at 2,331, while in Hong Kong the Hang Seng Index was up 1.3% (or 232 points)  at 18,310 and in Japan the Nikkei 225 Index was down -1.0% (or -90 points)  at 8,682, South Korean KOSPI was down -2.7% for the session, while the Indian market was down -0.9%.   

    Commodities

    The Dollar Index was lower at 76.93 on a higher Euro, while the Australian Dollar last traded lower at 1.0245. Commodities prices were sharply lower.

    For the session the Benchmark crude NYMEX for December delivery was down -0.9% (or -$US0.81) settle at $US85.98.  Copper prices are seeking a support level as Copper for December delivery was down -6.1% (or -20 cents) at $US3.0420.  December gold was down -2.1% (or -$US34.10) at $US1,609.00. 

     
    ASX News Today

    AMC – Amcor the packaging maker, says it remains confident of achieving earnings growth in the current financial year after its first quarter performance met expectations.

    BOQ – Bank of Queensland (BoQ) dropped -2.9% after its credit rating was placed on review for possible downgrade after the bank reported a rise in bad debts. Earlier this month BoQ said natural disasters and three corporate exposures almost doubled its bad debts to $200 million for the year to August 31.

    CGF – Challenger sold a record $509 million of retail annuities in the first quarter, putting the company on track to meet its target of a 25 percent increase in retail annuity sales for the year.

    ENV – Envestra the natural gas transporter has maintained its guidance for a 33 percent jump in full year net profit, underpinned by regulatory mandated gas price increases.

    LEI – Leighton Holdings says the Standard & Poor’s downgrading of its credit rating does not properly reflect the company’s credit quality.  Also Leighton Holdings has closed a six-year, $US600 million Indonesian leasing facility.

    MCC – MacArthur Coal says Peabody Energy and ArcelorMittal have extended the offer period for the $4.83 billion takeover.

    NCM – Newcrest Mining reported a 16% lower gold production in the September quarter, due to maintenance shutdowns at Lihir in PNG, but says it still expects to meet production and cost guidance. Also cash costs of $A594 per ounce were 10 per cent. Newcrest Mining plunged -6.4%.

    OMH – OM Holdings the manganese miner says production fell in the three months to September and the company has forecast higher production in the final quarter of the year.

    QAN – Qantas disruptions – The union representing Qantas engineers has called off all protected industrial action for three weeks.

    RIO – Rio Tinto has offered $C578 million ($A602 million) for Canadian junior uranium explorer Hathor Exploration in an all cash deal.

    STO – Santos the oil and gas producer Santos has increased third quarter sales revenue by 27 percent and has maintained full year production guidance.

    WBC – Westpac says weak demand for loans is making it tougher for banks but there are still ways of growing profits.

    WES – Wesfarmers increased first quarter sales at its Coles supermarket by 8 percent, but it faces challenging trading conditions in the lead up to Christmas.

    Local Corporate Reporting
    SAI Global (SAI)                 Full year 2011 AGM 
    PaperlinX  (PPX)                Full year 2011 AGM 
    Forge Group  (FGE)            Full year 2011 AGM 
    Slater & Gordon  (SGH)      Full year 2011 AGM 
    Regis Resources (RRL)       September Quarterly Report 
    Gloucester Coal (GCL)       Q1 2012 Results 
    Woodside Petroleum (WPL)    Q3 2011 Activities Report 
    Ex-dividend Date
    Multiplex European (MUE)
    Redflex Holdings (RDF)
     
    Market Summary 

    ASX – to open higher
    US & UK/Europe -  Mixed

    Commodities Stock Index  up 0.3%
    Gold Stocks Index down -1.2%
    Oil Stocks Index  up 0.8% 

    US ADRs – Broadly Mixed!!…

    BHP down -0.3% & RIO down -6.1%; AWC up 0.9%
    ANZ up 0.9% & NAB down -1.3%
    NEM  down -1.1%, JHX up 2.0%, NWS up 0.9%

    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 5 September, 7:15am 

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    Share Purchase Plan: Ferrowest

    Friday, October 21st, 2011

    Ferrowest (FWL) announced on the 17/10/2011 that they would be conducting a Share Purchase Plan to raise additional capital. The record date was the 14/10/2011 on which shareholders must own the share to participate in the SPP. The closing date is 17/11/2011.  Shares will be issued on 18/11/2011 and begin trading on 21/11/2011.   A maximum of $15,000 can be purchased by each shareholder at $0.05.

    Discount :  -4.2% Liquidity : Poor Profitability : Poor  Stability : Poor

    www.ferrowest.com.au

    *Note: Discount is based on the closing price on the 20 November 2011.

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    ASX Company News: Leighton Asia Secures $1.2 billion Hong Kong Station Contract

    Friday, October 21st, 2011

    Leighton Asia (LEI) in joint venture with Gammon has secured a A$1.2 billion contract from the MTR Corporation to construct the West Kowloon Terminus Station North, part of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL). This is the biggest and final XRL civil contract to be awarded and the fifth MTR Corporation contract secured by Leighton Asia in the past two years, giving a total value of projects of A$2.4 billion. On completion, the project will provide a world-class rail terminus and serve as an international gateway to the mainland of China with a daily pass-through of over 100,000 passengers. Facilities will include nine long-haul and six shuttle platforms, customs and immigration facilities, departure lounges, duty free and other retail outlets. A key element is a dramatic steel and glass roof structure above the entrance that will be a prominent feature of the Kowloon skyline.

    Leighton Asia has the capability, experience and resource capacity across Asia to pursue additional projects with this important client with as much as A$7.6 billion of new projects expected to be released over the next five years.

    Bob Cooke, Acting Managing Director of Leighton – Asia, India & Offshore, said: “We are delighted to win this landmark project with a client with whom we share a long and successful relationship. It aligns with our strategic imperative to deliver major infrastructure projects in Hong Kong, one of the most advanced infrastructure markets in the world. We are ideally suited to successfully deliver this quality project with our significant building, rail and civil infrastructure experience.”

    Leighton Asia is a leading contractor in the Hong Kong market, with strong market share positions in both the civil infrastructure and building sectors. The company is strategically positioned to deliver much of the government’s annual capital works spend of over A$7.5 billion per year for the next five years. Leighton Asia is the only contractor that provides a full suite of construction and mining services across Asia, providing clients with a depth of international experience from the Leighton Group with entrenched local market knowledge.

    Since establishing a presence in Asia in 1975, Hong Kong-headquartered Leighton Asia has gone from strength to strength as one of the region’s leading construction and mining service providers. Over the ye ars, we have built up a s olid track record and a s trong reputation for reliability based on a uni que co mbination o f local k nowledge an d ex tensive international experience. The XRL is a cross-boundary transport infrastructure project that will provide high-speed rail services to the commuters of Hong Kong and mainland China. In 2008, the Hong Kong SAR Government entrusted the design and construction of the XRL to the MTR Corporation after many years of planning, design and consultation. The 26-kilometre long Hong Kong section of the XRL will be underground from the terminus in West Kowloon to the boundary crossing point at Huanggang, Shenzhen.

    www.leightonasia.com.au

    http://www.traderdealer.com.au/Fundamentals/lei

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    ASX Company News: Leighton Holdings Secures $600 million In Lease Funding

    Friday, October 21st, 2011

    Leighton Holdings Limited (LEI) announced that it had successfully closed a US$600 million syndicated Master Lease Facility. The new 6-year Facility streamlines Leighton’s existing Indonesian leasing arrangements and provides the Company’s two operating subsidiaries in Indonesia with additional capacity to fund their expanding Indonesian mining activities.

    Leighton Holdings’ Chief Financial Officer, Mr Peter Gregg, said the new facility highlighted the strength of the Company and its ability to secure additional funding in the current financial market. “Leighton is in a very strong position globally with more than $46 billion work in hand and positive exposure to growth markets particularly in the infrastructure and resources sectors in Asia and Australia,” Mr Gregg said. “This new Facility will enable us to take advantage of the many opportunities available to the business in that country,” he said.

    LEIGHTON HOLDINGS LIMITED, founded in Australia in 1949, is the parent company of one of the world’s major project development and contracting organisations. We are also the world’s largest contract miner. Listed on the Australian Stock Exchange since 1962, Leighton Holdings is a top 40 company by market capitalisation and has its head office in Sydney, Australia. Leighton Holdings owns and operates through a number of diverse and independent operating companies: Leighton Contractors, Thiess, John Holland, Habtoor Leighton Group, Leighton Africa, Leighton Asia, Leighton Welspun India, Leighton Offshore and Leighton Properties. These operating companies provide development, construction, contract mining, and operation and maintenance services to the infrastructure, resources and property markets. They operate in more than 20 countries throughout Australia, Asia, the Middle East and Africa from headquarters in Australia, Hong Kong and Dubai. These operating companies directly employ around 50,000 employees and each function autonomously with its own Board and Managing Director.

    www.leighton.com.au

    http://www.traderdealer.com.au/Fundamentals/lei

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    ASX Company News: PlatSearch To Develop European Mines

    Friday, October 21st, 2011

    Variscan Mines, a wholly owned subsidiary of PlatSearch (PTS), has signed a Memorandum of Understanding with ERAMET for assistance in developing and operating mines in Europe. Subject to mutual agreement, ERAMET will have the right to earn an interest in certain mineral properties acquired by Variscan through financing, constructing and operating a plant at a project site. ERAMET will also provide its extensive downstream mineral processing, metallurgical R&D and refining capabilities, plus its extensive client base and marketing skills to deliver the highest quality products to customers.

    The agreement provides the Company with valuable underlying financial and technical capacity for new mine development. PlatSearch NL (PTS) is pleased to announce that its wholly owned European company Variscan Mines SAS has signed a Memorandum of Understanding (MOU) with ERAMET to assist in the development and construction of new projects that Variscan acquires in Europe. ERAMET is a major French multi-national mining and metallurgical group and a significant producer of nickel and manganese. It is actively seeking new growth opportunities, notably in its core commodities as well as into specialty metal markets. The MOU allows ERAMET (subject to mutual agreement) to earn an interest in specialised metal projects (e.g. Critical metals such as tungsten and alloying metals such as nickel and manganese) acquired by Variscan by funding the engineering and construction of the metallurgical plant at a mine site, as well as providing the operational and product marketing expertise.

    Commenting on the MOU with ERAMET, PlatSearch’s Managing Director, Greg Jones said: “This is a positive development for PlatSearch. The MOU aligns the Company, through Variscan, with a large, well financed group which helps provide added depth and flexibility, particularly in project financing of new mine construction and access to outstanding metallurgical, R&D and marketing skills”.

    Platsearch is a diversified resource company with numerous exploration projects in eastern Australia and a strong portfolio of investments within a number of ASX-listed resource companies. The Company’s key, wholly owned exploration projects include the Ghostrider lead/zinc/silver project, and Kempsey and Wyoming West gold projects in NSW. In addition, the PlatSearch has a number of joint ventures over projects such as Junction Dam (uranium) and Mundi Plains (lead/zinc/silver) near Broken Hill, western NSW. ERAMET is a leading global producer of: – alloying metals, particularly manganese and nickel, used to improve the properties of steel, – high-performance special steels and alloys used in industries such as aerospace, power generation and tooling.

    www.platsearch.com.au

    http://www.traderdealer.com.au/Fundamentals/pts

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    Stock Market Analysis: Caution Required – The Eurozone Debt Crisis Is Not Over!

    Thursday, October 20th, 2011

    * US stock markets dropped overnight, as the Fed Reserve’s produced a dim assessment on the U.S. economy and earnings reports disappointed.
    * European stock markets posted modest gains overnight, as traders played catchup.  However investor still have concerns about fiscal and financial conditions in the eurozone debt crisis, ahead of the European summit this weekend.
    * Asian stock markets ended generally higher yesterday, following gains in the US markets.  However markets are expected to pullback today.
    * Commodities prices traded sharply lower, as Gold prices fell to $US1,642 and while crude-oil closed down around $US86.

    The SPI Futures is trading around the key pivot level of 4200, ended down -0.9% (or -37 points) at 4,181. The key levels for our index today are 4230 to 4130.

    Yesterday Australian shares resumed their up-trend, with the exception of the miners (particularly the iron ore miners), after Wall Street staged a strong and steady advance overnight, despite the continuing concerns over European debt woes and ratings downgrades, plus the slowing Chinese economy. The All Ordinaries (XAO) recovered today closing up 0.6% at 4275, the S&P/ASX 200 (XJO) closed up 0.6% at 4214.

    All sectors traded higher today except for Materials down -0.5%, with most sectors up over 1.2%, except for Info Tech was up 1.8% and  Telecoms up 1.6%, while Utilities, Industrial and Consumer Staples sectors closed up 0.9%.

    Aussie shares are expected to retrace today, following the negative leads from the US and Europe, as investors questioned the European Commission’s commitment to the bank rescue plan and economic growth forecasts were wound back.  Also Chinese trade and CPI data are pointing to weaker economic growth near-term.  Note it is Index options expiry today and we continue to have a busy week for AGMs and production reports, see below for details.

    See below for ASX listed companies in the news today.

    Economics News Today.
    *  September Foreign Exchange Transactions and Holdings of Official Reserve Assets.

    U.S. Markets

    US stock markets dropped overnight, as the Fed Reserve’s produced a dim assessment on the U.S. economy and earnings reports disappointed.
    The Fed “beige book” report of economic activity around the country said the outlook is “uncertain” at this time.  The report indicated the “Operation Twist” the plan to stimulate the economy by buying longer-term securities brought limited benefits to the economy.
    The Dow Jones Index fell 0.6%, will the broader indices slumped even further as the S&P500 dropped -1.3% and the tech-heavy Nasdaq gave back even more down -2.0%, after Apple’s surprise earnings disappointment. Technology stocks sold-down after Apple’s 4Q earnings disappointed as sales of iPhone were below par, however they are forecasting improvement in the next quarter.
    Commodities sold-off as the US dollar strengthened as the euro dollar turned negative after the latest plan for the European bailout fund weighed on the eurozone currency.
    All ten company groups that make up the S&P index traded lower: the Materials were down -2.7%, Energy sector were down -0.7%, Financials sector was up 5.5%, Industrials were down -0.9%,  Technology sector was down -1.7% , while the Consumer Staples were down -1.4%.
    The Dow Jones closed down -0.6% (or -72 points) at 11,504, the S&P 500 index closed down -1.3% (or -15 points) at 1,210, the Nasdaq ended down -2.0% (or -53 points)  at 2,604, and the smaller cap Russell 2000 was down -2.1%.

    European Markets

    European stock markets posted modest gains overnight, as traders played catchup after the UK based Guardian newspaper which cited unnamed European Union diplomats as saying that the two largest eurozone economies had agreed to boost the 17-nation bailout facility to EUR2 trillion. The Stoxx Europe 600 index rose 0.6%, end two days of losses.
    The Guardian’s report was qualified by a later Dow Jones News wires story that said European officials were still debating the size of the fund. However there was optimism because there was actually some progress and the financials stocks recovered with Commerzbank and Deutsche Bank AG up 4.2%, while Lloyds Bank added 3.4%.  Also a Wall Street Journal report helped sentient as it reported European officials have turned their attention to a plan where the European Financial Stability Facility (EFSF) will provide money to individual countries, and those countries would then hold the money as collateral against new debt they issue.
    In London the FTSE 100 was up 0.7%, the German DAX and French CAC rose over 0.5%.   Investors ignored the Moody’s Investors Ratings Service downgrade of Spanish government bond ratings to A1 from Aa2, as the Spanish market rose 0.4%.  Technolgy stocks sold down on the back of Apple’s disappointing earnings.
    Remember European Union leaders are meeting in Brussels this weekend for a closely watched summit.
    In London the FTSE 100 index closed up 0.7% (or 40 points) 5,450, the German DAX was up 0.6% (or 36 points) at 5,913  while in France the CAC was up 0.5% (or 16 points)  at 3,157.

    Asian Markets

    Asian stock markets ended generally higher yesterday, following gains in the US markets, due to optimism over the eurozone bailout fund ahead of a key summit this weekend.  Trading volumes around the region was subdued and many markets backed off their early highs.

    In Japan the Nikkei Stock Index added 0.4%, while in Hong Kong the Hang Seng Index climbed 1.3%, while in mainland China the Shanghai Composite fell 0.3%.  Growth sensitive stocks across the region weighed, including the technology and mining stocks, while financial stocks found some support.

    In China the SSE Composite was closed down -0.3% (or -6 points) at 2,377, while in Hong Kong the Hang Seng Index was up 1.3% (or 232 points)  at 18,310 and in Japan the Nikkei 225 Index was up 0.4% (or 31 points)  at 8,773, South Korean KOSPI was up 0.9% for the session, while the Indian market was up 2.0%.

    Commodities

    The Dollar Index was lower at 77.09 on a higher Euro, while the Australian Dollar last traded lower at 1.0227 Commodities prices were lower.

    For the session the Benchmark crude NYMEX for December delivery was down -2.6% (or -$US2.26 settle at $US86.00.  Copper prices are seeking a support level as Copper for December delivery was down -3.0% (or -10.1 cents) at $US3.2160.  December gold was down -0.4% (or -$US10.15) at $US1,641.80.

    ASX News Today

    BHP – BHP Billiton increased its iron ore and petroleum production in the first quarter of the financial year, but base metal volumes fell.

    CSL – CSL the drugs maker, will buy back up to $900 million of its own shares and reaffirmed its earlier +10% profit guidance, saying the business was trading in line with its expectations.

    LLC – Lend Lease the property developer has launched a wholesale investment vehicle that will take ownership of four NZ shopping centres.

    MAP – Sydney airport has reported a 2.2 percent fall in domestic passenger numbers, but international passenger growth increased by 3.4 percent in the year to September 2011.

    OZL – OZ Minerals, copper and gold miner, says annual copper production remains on target despite a drop in production in the three months to the end of September.

    PSA – Petsec Energy, the oil and gas producer and explorer, has lowered its full year production and revenue forecasts after a drop in third quarter production.

    QAN – Qantas troubles continue as the engineers’ union has claimed a Qantas manager illegally said he had checked an aircraft engine although it turned out the jet had not even landed at the time.

    VBA – Virgin Australia says it will provide additional capacity to minimise the impact of ongoing Qantas industrial action on the Australian travel and tourism industry.

    WEB – Webjet the online travel agency, says its pre-tax first quarter profit is up 23 percent on the same period last year, and still expects 10 percent growth in its annual profit.

    Local Corporate Reporting
    Amcor Limited (AMC)        Full year 2011 AGM
    Challenger Limited (CGF)   Q1 2012 Trading statement

    G.U.D. Holdings (GUD)      Full year 2011 AGM

    Envestra Ltd (ENV)         Full year 2011 AGM
    Ten Network (TEN)          Full year 2011 Preliminary results
    Wesfarmers (WES)           Q1 2012 Sales
    MAP Airports Ltd (MAP)     September Traffic Results

    Newcrest Mining (NCM)      September 2010 Quarterly Results

    Resolute Mining (RSG)      September Quarterly Report
    Santos Ltd (STO)        Q3 2011 Activities Report
    Ex-dividend Date
    Multiplex European (MUE)
    Redflex Holdings (RDF)
    Market Summary

    ASX – to open lower
    US & UK/Europe –  Mixed

    Commodities Stock Index  down -2.4%
    Gold Stocks Index down -6.1%
    Oil Stocks Index  down -0.6%

    US ADRs – Broadly Higher!!…

    BHP down -4.4% & RIO down -6.1%; AWC down -2.5%
    ANZ down -2.5% & NAB 2.2%
    NEM down -4.8%, JHX down , NWS down -1.8%

    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: Clough Awarded Contract Extension By ConocoPhilips

    Thursday, October 20th, 2011

    Engineering and construction company Clough Limited (CLO) announced that Clough AMEC has been awarded a two year contract extension by ConocoPhillips to provide operations and maintenance services to the Bayu-Undan facilities located in the Timor Sea. The contract extension has an estimated value of AU$100 million.

    Clough AMEC is an incorporated joint venture established to provide engineering, operations and maintenance services to clients in the Australasian hydrocarbons industry. The joint venture has provided operations and maintenance services to the Bayu-Undan facilities since July 2004.

    “We are delighted to continue our long-term relationship with valued client ConocoPhillips on this important contract” said John Smith, Clough CEO.  “Clough AMEC has a long history of supporting ConocoPhillips on Bayu Undan and this award reinforces the strength of our relationship and our commitment to the successful operation of this facility” said AMEC Director Australia and South EastAsia, Steve Ciccone

    Established in 1919, Clough delivers an integrated Engineering, Procurement and Construction service to oil and gas and minerals projects in Australia and South East Asia. The Group’s services range from concept development through design, construction, installation, commissioning, operations and maintenance.

    AMEC is a focused supplier of consultancy, engineering and project management services to its customers in the world’s oil and gas, minerals and metals, clean energy, environment and infrastructure markets. With annual revenues of around £3 billion, AMEC designs, delivers and maintains strategic and complex assets and employs more than 27,000 people in around 40 countries worldwide.

    www.clough.com.au

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

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    ASX Company News: Carbon Polymers Awarded Victorian Government Roading Contract

    Thursday, October 20th, 2011

    Carbon  Polymers  Limited  (CBP)  is  pleased  to  announce  to  shareholders  that  it has been awarded  a  Victorian  Government  tender  to  supply  granular  crumb  rubber  to  Sprayline Services. Sprayline  is  the  commercial  contracting  arm  of  VicRoads  and  is  responsible  for  bitumen resurfacing.    Sprayline  utilises  rubber  from  recycled  tyres  and  bitumen.  This  method  is environmentally  friendly,  reduces  water  penetration,  increases  aggregate  retention  and reduces reflective pavement cracking.

    The  contract  is  to  supply  2,000  tonnes  of  granulated  rubber  to  Sprayline  in  Victoria,  South Australia and New South Wales.  Sprayline  operates  from  five  Victorian  delivery  centres.    SprayLine  is  a  member  of  the Australian  Asphalt  Pavement  Association,  the  Civil  Contractors  Federation  and  the  Road marking Industry Association Australia.

    SprayLine maintains a third party accredited quality standard, and is a pre‐qualified supplier  to the Victorian, New South Wales and South Australian road authorities.  CBP is negotiating with several manufacturers of bitumen products that utilise rubber and will have further updates for shareholders  when  this  comes  to  hand.    This  supply  arrangement will  further  build  on  its existing  sales  and  reinforce  its position  as  the  largest  listed manufacturer of crumb rubber products in Australia.

    CBP  operate  a  national  footprint  of  manufacturing  and  processing  facilities  throughout Australia  and  are  dedicated  to  providing  its  customers  with  high  quality  products  with certainty of supply.

    www.carbonpolymers.com.au

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

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