As it happened: Zip soars 17% but miners keep ASX flat

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As it happened: Zip soars 17% but miners keep ASX flat

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Good night all

That about does it for us today. Thanks for tuning in to Markets Live.

Alex Druce will be back in the morning.

Get our wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up for The Sydney Morning Herald’s here and The Age’s here.

The gifts that were really responsible for Australia Post’s woes

By Eizabeth Knight

Opinion

Make no mistake. There were generous and inappropriate gifts handed out at Australia Post, but they weren’t the Cartier watches awarded to senior executives by Christine Holgate.

Instead, they were the Australia Post directorships handed to the federal government’s friends. In a governance sense, making politically motivated board appointments is a recipe for disaster.

When you look at this Australian government enterprise through a governance lens - like the one that applies to privately listed companies - it’s clearly dysfunctional.

Christine Holgate’s biggest mistake was taking the job without a proper appreciation that having only one shareholder meant the normal rules of corporate governance wouldn’t protect her.

Christine Holgate’s biggest mistake was taking the job without a proper appreciation that having only one shareholder meant the normal rules of corporate governance wouldn’t protect her.Credit: Alex Ellinghausen

There are factions within the board, there was an obvious discord between the chief executive Holgate and the chairman, Lucio Di Bartolomeo.

Holgate’s biggest mistake was taking the job without a proper appreciation that having only one shareholder, the government (in the style of an absent landlord), meant the normal rules of corporate governance wouldn’t protect her.

You would have thought the demise of her predecessor, Ahmed Fahour, would have been a sufficient portent of the dangers of the post. He was dispatched by former prime minister Malcolm Turnbull after concerns he was overpaid.

Read Elizabeth Knight’s full column here

Markets wrap: ASX subdued as miners offset red-hot BNPL stocks

By Alex Druce

The Australian sharemarket threw away an early lead to finish flat on Tuesday, with the iron ore miners offsetting a stellar run for lithium players and buy now, pay later rocket Zip Co.

The benchmark ASX200 index gained just 2.9 points to finish marginally higher at 6976.9. The market retested the 7000 barrier with a 0.3 per cent rise in early trade, before fading away.

The result, while unconvincing, did manage to snap a two-session decline that had taken local stocks away from Thursdays 13-month high.

The ASX finished just 2.9 points higher on Tuesday.

The ASX finished just 2.9 points higher on Tuesday.Credit: Jim Rice

The lead from US stocks was weak as investors prepared for the start of earnings season, and the arrival of inflation figures.

The local materials sector continued its poor start to the week.

Iron ore titan BHP fell 1.1 per cent to $45.69, Rio Tinto dropped 1.2 per cent to $113.53, and Fortescue Metals was 0.9 per cent lower at $20.36.

Tech stocks were among the brightest performers.

Afterpay rose 3.1 per cent to $124.98 and touched its highest price in five weeks, while Xero added 1.4 per cent to $143.22, Wisetech Global added 2.5 per cent to $31.38, and Computershare was 3.1 per cent higher at $15.01.

Payment platform Zip Co added 17 per cent to $9.73 on strong March quarter revenues. Fellow BNPL player Sezzle gained 8.1 per cent, and Splitit rose 8.3 per cent.

Australian Eagle Asset Management chief investment officer Sean Sequeira said the market’s heavyweight sectors - mining and banking - had lagged growth stocks in recent days as bond yields held steady.

He added that the local market appeared to be waiting for fresh impetus for its next move.

“Some of the bigger drivers might come from the information provided by mining companies, who have quarterly results coming up,” Mr Sequeira said.

“Banking results will be another big driver, and how they assess their dividend payments going forward.”

The market’s lithium miners were strong on Tuesday as a booming electric vehicle market continues to send global prices higher.

The $1.9 billion Orocobre added 6.6 per cent to $5.83 after it announced March quarter sales at its Olaroz lithium facility in Argentina were 3,032 tonnes at $US5,853 a tonne, with pricing increasing by more than 50 per cent on the December period.

Pilbara Minerals rose 1.7 per cent to $1.175, and Galaxy Resources was 4.5 per cent ahead at $3.26.

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ASX runs out of steam, finishes flat

By Alex Druce

The ASX200 threw away an early lead to finish flat on Tuesday, with the iron ore miners again a significant weight on the market.

The benchmark index finished marginally higher on Tuesday, gaining just 2.9 points to close at 6976.9. The result, while unconvincing, snapped a two-session decline from Thursdays 13-month high.

Technology stocks and BNPL firms were strong, with Zip Co adding 17 per cent to $9.73 and Afterpay rising 3.1 per cent to $124.98.

The Commonwealth bank gained 0.5 per cent to $87.19. CSL was weak, as was Transurban and Telstra.

US futures were mixed at Tuesday’s ASX close. Inflation data is due tonight.

The rich made $6.5tn in the pandemic. The UN chief wants them to give some back

By Edith Lederer

The United Nations chief wants urgent action, including a wealth tax, to help finance the global recovery from the coronavirus pandemic.

Secretary-General Antonio Guterres said the world’s failure to unite on tackling COVID-19 has created wide inequalities, citing the latest reports that indicate “there has been a $US5 trillion [$6.5 trillion] surge in the wealth of the world’s richest in the past year”.

He urged governments “to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities”.

UN Secretary-General Antonio Guterres.

UN Secretary-General Antonio Guterres.Credit: AP

Guterres’ call followed an appeal in October by UN World Food Program Executive Director David Beasley to the more than 2000 billionaires in the world, with a combined net worth of $US8 trillion, to open their bank accounts. He warned in November that 2021 would be worse than 2020, and without billions of dollars “we are going to have famines of biblical proportions in 2021.”

Guterres told the UN Economic and Social Council’s Forum on Financing for Development that since the pandemic began “no element of our multilateral response has gone as it should”.

He pointed to more than 3 million deaths, increasing coronavirus infections, the worst recession in 90 years, some 120 million people falling back into extreme poverty, and the equivalent of 255 million full-time jobs lost.

“Advancing an equitable global response and recovery from the pandemic is putting multilateralism to the test,” he said. “So far, it is a test we have failed.”

Read the full story here

Asian markets rise; Chinese trade balance narrows sharply

By Yuri Kageyama

Asian markets were mostly higher on Tuesday as hopes grew for a global economic rebound despite surging coronavirus cases in many places.

China reported its exports rose nearly 31 per cent in March, in line with expectations but weaker than the 60 per cent growth seen in the first two months of the year.

Asian markets were mostly higher on Tuesday.

Asian markets were mostly higher on Tuesday. Credit: AP

The rising trade activity reflects higher demand in overseas markets even as some countries reimpose precautions to counter rising numbers of new infections.

OANDA’s Asia-Pacific analyst Jeffery Halley said in US Dollar terms, China’s trade surplus fell to $US13.8 billion versus an expected surplus of $US52 billion.

Japan’s benchmark Nikkei 225 gained 1 per cent in morning trading to 29,832.50. South Korea’s Kospi gained 0.8 per cent to 3,159.49.

Hong Kong’s Hang Seng surged 1.2 per cent to 28,779.09, while the Shanghai Composite was little changed at 3,413.29.

Robert Carnell, Regional Head of Research Asia-Pacific at ING, expects trading in the region to be tentative as investors await data that will help assess the recovery from pandemic damage.

Apart from the Chinese trade data, “Asian markets, like others, will be on tenterhooks pending the release of important March US inflation figures later today,” he said in a report.

Earnings season is approaching and corporate results may indicate the direction of future growth as nations gradually emerge from the damage set off by the pandemic.

JPMorgan Chase and Wells Fargo report on Wednesday, while Bank of America and Citigroup report on Thursday.

Worries remain about recent surges in COVID-19 cases, including Brazil and Michigan state in the US. Earlier this week, Japan, which trails the world in the vaccine rollout, called for government-backed measures to curb the recent surge in the sickness in some areas.

In Thailand, authorities are warning of a potential explosion in cases after many new infections were found among people who frequent clubs and other entertainment venues.

Reuters

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CSL dips as Novavax focuses on offshore production sites

By Emma Koehn

All eyes are still on Australia’s vaccine manufacturing capability but it looks likely we’ll be importing its orders of the Novavax vaccine, rather than making it here.

Last week’s surprise decision to recommend the Pfizer vaccine over AstraZeneca for under 50s because of clotting risks had many asking whether it was possible for CSL, or another manufacturer, to start making doses of the Novavax vaccine onshore.

Last week’s surprise decision to recommend the Pfizer vaccine over AstraZeneca for under 50s because of clotting risks had many asking whether it was possible for CSL, or another manufacturer, to start making doses of the Novavax vaccine onshore.

Last week’s surprise decision to recommend the Pfizer vaccine over AstraZeneca for under 50s because of clotting risks had many asking whether it was possible for CSL, or another manufacturer, to start making doses of the Novavax vaccine onshore.

The government said it was in conversations with Novavax about the possibilities for local production.

However, when asked by this masthead whether Novavax had plans to add an Australian production site, a spokesman from the US firm said the focus was currently on the company’s existing planned production sites.

So far the firm has announced a number of manufacturing partnerships including with the Seruim Institute in India and with GSK in the UK.

“We are currently focused on completing our regulatory submissions in the UK, US, [European Medicines Agency] and elsewhere. We also continue to focus on producing doses in the sites that are already in place to ensure that doses are ready to ship assuming we receive regulatory authorisation,” the Novavax spokesman said.

CSL shares were down 0.3 per cent on Tuesday at $264.69.

Lithium miners strong as EV market heats up

By Alex Druce

The market’s lithium miners are strong today as a booming electric vehicle market continues to send global prices higher. Lithium has been strong over the past year due to strong support for electric vehicles from US President Joe Biden and hype around Elon Musk’s Tesla.

The $1.9 billion Orocobre was among a number of lithium-exposed ASX firms bucking a wider mining sector decline on Tuesday.

Orocobre was up 4.2 per cent at $5.70 after it announced March quarter sales at its Olaroz lithium facility in Argentina were 3,032 tonnes at $US5,853 a tonne, with pricing increasing by more than 50 per cent on the December period.

Lithium prices are strong thanks to support for the global electric vehicle  market.

Lithium prices are strong thanks to support for the global electric vehicle market. Credit: Bloomberg

Orocobre said it expects prices for the June quarter to be about $US7,400 a tonne, which would be the highest pricing in two years.

As a result, second half FY21 pricing will be about 20 per cent higher than prior guidance.

Elsewhere, fellow lithium player Galaxy Resources rose 3.9 per cent to $3.24, while Pilbara Minerals was up 2.6 per cent to $1.185.

Prospect Resources was 2.8 per et higher at 18.5 cents.

Macquarie’s global automotive research team this morning said a stronger demand outlook for lithium, largely driven by rising global electric vehicle sales, and supply response limitations due to rising product-quality requirements is expected to see the lithium market shift to a deficit in 2022 and remain tight for 2023 through to 2025.

“Given the size of the deficits, we expect lithium prices to remain at or above incentive pricing, which we estimate is $US720/t for spodumene, $US13,000/t for lithium carbonate and $US16,000/t for lithium hydroxide.

Macquarie also expects EV-driven battery demand to deliver an average compound annual growth rate of 33 per cent from 2021 to 2025.

This translates to a global penetration rate for EV sales 16 per cent for combined battery electric vehicles and plug-in hybrid electric vehicles by 2025.

Longer-term, Macquarie assumes 2030 penetration rates of 33 per cent globally and 41 per cent in China.

Blackstone tweaks Crown takeover conditions

Blackstone has tweaked a couple of conditions on its proposed $8 billion takeover of Crown Resorts, safeguarding against the cancellation or suspension of Crown’s casino licences in Victoria and Western Australia.

Crown this morning said Blackstone had revised the regulatory approval conditions on its offer to buy all the Crown shares it does not already own for $11.85 each.

Crown’s gleaming $2.2 billion casino and luxury resort that sits on Sydney’s foreshore.

Crown’s gleaming $2.2 billion casino and luxury resort that sits on Sydney’s foreshore. Credit: Bloomberg

Blackstone is now guarding against Crown’s Victorian or Western Australian casino licences being threatened, suspended or cancelled, and the NSW licence not being granted after another hearing on the matter.

Crown has already been found to be unfit to hold a licence in Sydney and is facing royal commissions into its operations in Melbourne and Perth.

Blackstone has also included a condition in the event that gaming regulators impose, or indicate they will, terms or conditions that could constitute a material adverse change.

Crown said Blackstone is still expected to receive probity approval from state regulators for the takeover by the third quarter of 2021.

Crown shares were down 0.1 per cent at $12.08 by 1.30pm AEST. The company has gained 25 per cent in value this year so far.

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Jack Ma’s Ant Group is becoming a member of a club he despises

By Stephen Bartholomeusz

Opinion

Last October Jack Ma gave the fateful speech in which he likened the Basel Accord that governs the way banks are regulated to a “club for the elderly.” His Ant Group has just become an affiliate member of the club.

On Monday Ma’s Ant Group, the world’s largest fintech, was ordered to become a financial holding company, subject to a range of regulation that will make it more like a bank – one of those state-owned or controlled banks that Ma criticised in the speech for having a “pawnshop mentality.”

Jack Ma’s empire is feeling the heat from China’s government.

Jack Ma’s empire is feeling the heat from China’s government.Credit: Bloomberg

That speech, which also included the rather provocative description of China’s financial system as “adolescent” – he said China had no systemic risks because it “basically has no financial system” – has been cited as one of the reasons why the planned $US37 billion ($48.6 billion) initial public offering of Ant Group was called off last November, only two days before it would have been the largest IPO in history.

The speech may have been a contributing factor but it is more likely that, when the Chinese authorities saw the massive valuation attributed to Ant by the IPO, and read the detail of the nature and scale of its operations in the offer document, they were taken aback and probably alarmed.

Ant Group started as a peer-to-peer payments system within Ma’s Alibaba group but rapidly – in the space of five or six years - evolved into one of China’s largest, and its fastest-growing, financial institutions. It has online lending, investment and insurance businesses that have about $US635 billion of assets under management.

Its consumer and small business loan book, however, had only about $US2.5 billion of capital supporting $US333 billion of assets.

Read Bartho’s full column here

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