Deutsche Bank upgrades ANZ stock to ‘buy’ as Australia market reacts to new prime minister
A RALLY for Australian mining stocks on speculation that the country’s new Prime Minister Julia Gillard would wind back a tax on resources profits proposed by her predecessor was short-lived.
While Asian stocks rose Thursday, led by the region’s mining companies, Friday saw a collective fall across Australian extraction stocks as optimism faded.
The world’s largest mining company, BHP Billiton, which pulled out of Cambodia last year, rose 1.3 percent Thursday, and led gains that buoyed the MSCI Asia Pacific Index to increase 0.3 percent to 117.41 after two days of losses.
Of the companies with concessions in Cambodia, Southern Gold did not trade Thursday but fell 1.16 percent on trading Friday to close at A$0.085 (US$0.074), while OZ Minerals climbed 1.95 percent Thursday but lost the gains on Friday to close 2.91 percent lower at $1.
Asian stocks’ Thursday gains were also erased Friday, dragging the MSCI Asia Pacific Index to its biggest slump in almost three weeks.
The index fell 1.6 percent to 115.29 – but was still higher than the 10-month low it hit on May 25. The fall was also fuelled by low earnings forecasts from US companies, raising concerns about the growth of the world’s largest economy.
Meanwhile, exposure to Asia saw ANZ Banking Group – 55 percent owner of Cambodia’s ANZ Royal Bank – upgraded to a “buy” from a “hold” recommendation by Deutsche Bank.
Australia’s third-largest bank would have “access to large pools of cheap deposits which can be transferred back to the group to help to fund growth in other areas”, a Deutsche report released Thursday said, adding that the bank’s “Asian expansion” would mean by 2014 ANZ could transfer A$50 billion to $60 billion of deposits back to the group.
This meant it would be able to fund 12 percent lending growth versus the peer average of 7 to 9 percent, the report stated.
Despite the positive outlook, ANZ closed Thursday 1.5 percent lower than Wednesday at $22.88 per share and continued to fall Friday along with the rest of the sector to close the week at $22.47.
ANZ Royal, which operates in Cambodia, saw its bottom line slide into the red in 2009, a National Bank of Cambodia report issued Friday stated.