25 OCT 21 – Monday Market Highlights – Transcript

SUMMARY KEYWORDS

expected, aristocrat, inflation, released, highlights, expectations, market, receive, economy, announced, week, prices, number, quarter, share, sydney, china, equity, premium, wage inflation

SPEAKERS

Fraser Jack, Roland Houghton

Roland Houghton 

Good morning. It’s Monday the 25th of October, and I’m rolling from Milford. China GDP data was released with the economy growing 4.9% and the 12 months to September, which came in below expectations highlighting the slowdown their economies experiencing industrial production was also a touch soft growing 3.1% first expectations of 3.9%. This is in part due to China’s factory gate inflation, which rose to a record high of 10.7% driven by rising coal prices. This makes it an economic for many small manufacturers to produce goods. On a more positive note, retail sales in China grew 4.4% versus expectations of 3.5%. Zealand inflation data was released and came in quite far ahead of expectations, CPI Rose 2.2% and the September quarter versus expectations of 1.4%. This took annual inflation to 4.9%, the highest level since 2011. There were a number of factors. However, the key drivers were construction costs, fuel prices and higher vegetable prices. Philip Lowe, the RBA governor released a speech last week and he continues to adamantly highlight that what other countries are experiencing is not taking place in Australia. This reinforces the view that interest rates won’t be increased until 2024. He highlights amongst other things that we aren’t seeing strong wage inflation, which will be needed to drive higher sustainable price inflation. Turning to equity news, it was a very busy week on the Aussie market with Monday merger menacing a number of transactions home co daily needs read or hdn announced it was planning on merging with a Ventus a large format retail retail event this unit holders will receive 2.2 units for every one of intership. They will also receive either 28.5 cents per share, or 0.038. Home coaches home co being the parent not the daily needs read. The parent is therefore paying for approximately 7% of the total transaction costs. This deal will create one of the largest retail rates on the ASX and is expected to be 4% accretive to hdn unit holders. aristocrat announced the acquisition of Playtech a UK listed Israeli based gaming company for around $5 billion. This was a 58% premium to play tics last closing price. To achieve this, they conducted an entitlement of an issued 5% of the equity with the balance of the deal to be completed by cash and debt. The transaction is expected to be mid to high single digit and creative in the first full year of ownership. However, beyond this, it is a highly strategic acquisition. It gives aristocrat high quality b2b real money gaming platform. This opens up the online gambling market in the US to aristocrat which is currently being legalized across America, cynics energy received a takeover offer from Pasco they offered $4.40 a share, which was a 15% premium to where it previously closed. Finally, Iron Gate property received a takeover offer from 360 Capital rate at $1.65 a share or at $1.60 posted dividend that is expected to be paid this compared to its previous close at $1.50. The bid is conditional on a number of fronts. However, one key area is that iesa has to agree to acquire some of iron gates assets, likely their industrial portfolio. quantas also announced that their Australian based Qantas and Jetstar employees are able to return to work in early December. They will also launch a new route from Sydney to Delhi before Christmas, and expect to resume flights from Sydney to Singapore, Bangkok Puckett Johannesburg and Fiji earlier than expected. Turning to the week ahead, Australian inflation data for the September quarter will be released on Wednesday. The market expects 3.1% annual inflation and 0.8% quarter on quarter inflation. US GDP growth will be released on Thursday night with the market expecting 2.8% quarter on quarter growth a slowing from the June quarter 6.7% growth. Also in the US, the Michigan sentiment index has to be released. This is similar to Australia’s Consumer Confidence Index and focuses on how much consumers view the prospects for their own financial situation, how they view the prospects for the general economy in the near term, and the view of the prospects for the economy over the longer term. Thanks for listening. We’ll see you next week.