The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.
0300 GMT - A higher bid from BHP for rival Anglo American is both warranted and required, says Ben Cleary, portfolio manager for Tribeca Global Natural Resources Fund. Tribeca holds shares in both BHP and Anglo. "An all-scrip bid is obviously favored by BHP as it does not stretch their balance sheet while also leaving cash to pursue their growth ambitions," Cleary tells WSJ. A scrip bid may be easier for the Anglo board to eventually recommend, he says, as unlike a cash bid, it gives shareholders ongoing exposure to the assets. "There are the obvious risks related to potential flowback of BHP stock given it is no longer contained in any European indices, but that would be somewhat countered by increased weight in the Australian market along with the prospect of greater flow into a more attractive diversified investment proposition." (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0256 GMT - BHP has picked the right time to pounce on longtime rival Anglo American, according to Ben Cleary, portfolio manager for the Tribeca Global Natural Resources Fund, which holds shares in both BHP and Anglo. While a takeover would be complicated, if "we are entering a structural change in the copper market over the coming years due to the decarbonization transition, as we believe we are, then BHP needed to act now, no matter the deal complexities," he tells WSJ. BHP has picked a time when Anglo is in a vulnerable position and some peers may arguably find it hard to place a rival bid, says Cleary. There could also be value to be had for BHP in Anglo's diamonds and platinum group metals assets, which are unappealing to many but are top-tier mines in those industries, he says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0232 GMT - Venture Corp. is likely to see a gradual steady recovery in 2024, Maybank Research analyst Jarick Seet says in a note. The electronics-services provider had a weak start to 2024, as 1Q earnings were slightly below the brokerage's estimates, he says. However, Seet notes management is bullish on the company's prospects ahead and expects 2Q to be better than 1Q. Management says the demand schedule should be stronger in 2H than 1H, he says. Venture Corp.'s management also remains confident of maintaining net margins between 8%-10% for 2024 and continues to see significant growth opportunities in ecosystems such as life sciences, Seet adds. Maybank keeps its buy rating on the stock with a target of S$15.80. Shares are last at S$14.32. (amanda.lee@wsj.com)
0215 GMT - Westpac's credit profile is likely to remain robust even as it increases its share buyback by A$1.0 billion and announces a special dividend, says S&P Global Ratings in a note. As of end-March, Westpac's common equity Tier 1 ratio stood at 12.55%, notes S&P, adding that the lender will manage its CET1 ratio above 11%, which is above the Australian Prudential Regulation Authority's regulatory capital requirement of 10.25%. Westpac's capital return is "consistent with many domestic peers, who are also reducing the considerable capital buffers they have held above their targeted and regulatory requirements," says S&P. (alice.uribe@wsj.com)
0210 GMT - Carlsberg Brewery Malaysia's 1Q earnings were likely supported by stronger buying momentum, Hong Leong IB analyst Sam Jun Kit says in a note. A longer Lunar New Year sales period, increased purchases ahead of the April price increase, as well as higher tourist arrivals due to Taylor Swift's concerts in Singapore could drive sales, he says. The sales gap caused by the absence of the Asahi brand could swiftly be filled by the newly introduced Sapporo brand, he adds. However, Sam cuts 2024-2025 earnings estimates for Carlsberg by 1% and 2%, respectively after the company updated its annual report. Hong Leong cuts its target price for the stock to MYR30.12 from MYR30.31, while maintaining a buy rating due to its attractive valuation. Shares are 0.2% higher at MYR18.74. (yingxian.wong@wsj.com)
0155 GMT - Chinese shares open higher on the first day of trading after the labor day holiday week. The April Politburo meeting, at which policymakers pledged to address the housing crisis, among other things, has sent positive signals to onshore markets, UOB analysts say in a research note. Among major stocks, BYD is 3.35% higher, while CATL adds 3.2%. Decliners include PetroChina, which drops 3.5% and Jiangxi Copper, which is 2.8% lower. The benchmark Shanghai Composite Index is up 0.9% at 3132.65 , the Shenzhen Composite Index is 1.6% higher, while the ChiNext Price Index gains 2.05%. (tracy.qu@wsj.com)
0147 GMT - Westpac's 1H FY 2024 results are largely in line with consensus views, with the capital returns element "encouraging," says UBS analyst John Storey in a note. The performance of Westpac's business and wealth unit supported the results, while overall cost growth met consensus expectations. "Against this we note a worse-than-expected deterioration in asset quality, and lower overall provision coverage," says UBS, adding that return on equity is still low. The results suggest cost inflation is moderating, but UBS thinks investment and software amortization expenses will remain high, and expects to see some deterioration in credit quality. (alice.uribe@wsj.com)
0144 GMT - Hong Kong's Hang Seng Index rises 0.3% to 18525.79, tracking Wall Street gains on Friday. Sentiment has improved after weaker U.S. jobs data boosted hopes for Fed rate cuts, Westpac analysts write in commentary. Hong Kong's GDP data also came in much stronger than expected last week, UOB Global Economics & Markets Research writes in commentary. This has likely boosted market sentiment. Among advancers, Xinyi Glass rises 5.6%, Wuxi Biologics gains 3.9% and Li Auto is 2.9% higher. Among decliners, Nongfu Spring is 3.5% lower, Chow Tai Fook Jewellery Group sheds 3.6% and Country Garden Services loses 3.3%. (kimberley.kao@wsj.com)
0115 GMT - GrainCorp's profit warning catches RBC Capital Markets off guard. GrainCorp says it expects 1H underlying Ebitda of A$164 million, representing a 5% miss to RBC's A$172 million forecast. Its projection of a 1H underlying net profit of A$57 million also falls short of market hopes. "Honestly we were surprised by the 1H miss," analyst Owen Birrell says in a note. That's because GrainCorp has historically taken a conservative approach to its guidance. Also, recent rains and market commentary have suggested a more positive near-term contribution may have been forthcoming, says RBC, which has an underperform call on GrainCorp's stock. (david.winning@wsj.com; @dwinningWSJ)
0113 GMT - Singapore's FTSE Straits Times Index rises 0.2% to 3299.04 in morning trade, led by REITs. A goldilocks U.S. labor market report released last Friday seems to have boosted risk sentiment, Westpac analysts say in a note. CapitaLand Ascendas REIT rises 2.0%, Mapletree Pan Asia Commercial Trust adds 1.6% and Mapletree Logistics Trust is 1.5% higher. Shares of Singtel are 0.8% higher after the telecom company named Stephen Rue to lead its Australian telecom operations. Meanwhile, the worst performers include Venture Corp., which falls 2.2%, and Seatrium, which is down 1.1%. (amanda.lee@wsj.com)
0106 GMT - Malaysia's benchmark Kuala Lumpur Composite Index is 0.1% higher at 1591.73. The local bourse may see sustained buying interest, especially in tech stocks, given Wall Street's gains last Friday and better-than-expected results from selected tech giants, Malacca Securities says in a note. The brokerage has a positive outlook on the utilities sector, as investment in data centers is expected to drive electricity demand in the future. Among the gainers, YTL Corp. adds 0.9% and Public Bank is up 0.5%. Meanwhile, Bumi Armada is down 0.9% and Capital A is 0.6% lower. (yingxian.wong@wsj.com)
0056 GMT - Macquarie is likely to deliver 22% net profit growth in FY 2025, say Morgan Stanley analysts in a note. This is despite guidance for slower-than-expected Macquarie Capital FY 2025 investment gains recovery and weaker margin trends for Macquarie's banking unit, says the investment bank. MS cuts its FY 2025 earnings per share by 7.5% on weaker margins in the banking unit, and slower investment gains recovery in Macquarie Capital, but reckons Macquarie is likely to benefit from capital markets recovery. (alice.uribe@wsj.com)
(END) Dow Jones Newswires
May 05, 2024 23:02 ET (03:02 GMT)
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