$a Advances On Exports Gains But Stocks Index Up Just A Whisker

The Age

Thursday July 5, 2007

Vanessa Burrow

CONFIRMED in its expectations for interest rates, the currency market focused on Bureau of Statistics trade deficit figures, which showed Australian exports doing better than economists expected.

The seasonally adjusted trade deficit fell to $807 million in May, whereas the consensus view was that it would increase to $1.2 billion, from a revised $916 billion in April.

The dollar immediately moved up a notch, from about US85.55? to US85.65?. And it kept going, indicating confidence in the Australian economy and an increased expectation that interest rates will eventually have to rise.

It reached US85.86? before settling back slightly in European trading last night.

The S&P/ASX 200 Index gained just 0.4 of a point, to 6298.6 points. It was an increase of just 0.01 per cent, and of the top 201 stocks only 78 rose while 107 fell, and 16 stayed put.

BHP Billiton, which reached a lifetime high of $36.40, helped steady the index.

The diversified miner announced it had approved its $1.98 billion Pyrenees crude oil project, which could increase the company's oil production by more than 20 per cent. At the same time, benchmark West Texas intermediate crude inched higher to $US71.41 a barrel.

In takeovers watch, Wesfarmers eased a further 9?, or 0.2 per cent, to $42.51 a share after falling 6.8 per cent on Tuesday.

And Coles Group edged down 3?, or 0.2 per cent, to $15.59.

Macquarie Media, which will buy Southern Cross Broadcasting and then break up the spoils with Fairfax Media, fell 6? to $4.90. Southern Cross lost 7? to $17.21 after making a 5.1 per cent gain after the deal was announced.

And Fairfax Media clawed back some of its losses, gaining 5?, or 1.1 per cent, to $4.60.

Goldman Sachs JBWere analyst Christian Guerra said there were four reasons Fairfax Media would not benefit from its recent acquisitions until 2008-09.

Synergies with recently acquired Rural Press would not appear until then; the NSW economy, which was squeezing media advertising profit margins, probably wouldn't improve until then; the effects of a narrower broadsheet at The Age and The Sydney Morning Herald would lag behind the actual change; and moves to new premises in Sydney and Melbourne would probably not produce savings until 2008-09, he said.

Mr Guerra noted that Fairfax Media's decision to buy radio stations was a defensive move as it would complicate any purchase from an entity that owned television stations.

"But it can be overcome," he said, explaining that any purchaser could on-sell radio stations - and most private equity consortiums did not own a television station.

Sharefinder Investment Services managing director Gary Stone said the company's long-term mechanical trading system, Aureus, had just given a "sell" signal for Fairfax Media.

Clients who used the system - and the medium-term SPA system - would be getting out of the stock, after it hit a quarterly low, he said.

Mr Stone said most investors using his company's long-term quantitative system would have made about 15 per cent profit on the stock.

Among the 483 members of the All Ordinaries, Genepharm Australia gained 9.4 per cent and Life Therapeutic fell 11.8 per cent after announcing this week that it would renegotiate its proposed agreement with European pharmaceutical Kedrion.

The ASX, in its report on trading volume, said there had been 48.9 million cash market trades, with a total value of $1.3 trillion, in 2006-07.

In June there was a record average of 289,399 cash market trades per day, a substantially higher figure than May's record average of 251,067.

Their value was also higher, hitting $7.19 billion a day, up from $6.44 billion in May.

The monthly trading report showed a daily record of 362,805 cash market trades on June 8, an all-time high in daily cash market turnover of $12.5 billion on June 21, and a record 1.4 million futures and options contracts traded on June 13.

ASX figures also showed 283 entities were listed on the Australian Securities Exchange during 2006-07, taking the total listed entities to 2090.

The reporter owns Fairfax Media shares.

© 2007 The Age

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