Investment Matters

What matters this week

This week the news of significance in financial markets was the US interest rate rise.  The rate rise itself was expected, sooner or later.  The news was that 2017 is likely to see more rate rises than the market was expecting.  Once this news sunk in, the markets fell away a little (S&P down on their Wednesday). But don't fret - the sugar rush returned for trading on their Thursday / our Friday.

The Bellamy's (the organic food and baby formula company) saga continues.  And, boy oh boy, does it continue.  At its own behest, this week it went into a trading halt, then into trading suspension until 21-Dec-16.  The reason is to allow the company to complete "a review in order to finalise an updated announcement of the impact of trading conditions on the Company's expected financial results". 

This not long follows the major earnings downgrade, released on 2-Dec-16.  This is a terrible look - for instance, why is it taking so long to figure out where the company's finances are at, why didn't it do the review before the downgrade, and how much worse are things than the downgrade?  Class actions have already been mooted.

Retailers such as Kathmandu, Adairs and Super Retail (Supercheap Auto, Rays Outdoors, BCF and Rebel Sport) would not have had a smile on their face on Wednesday, with the release of the Westpac Consumer Confidence figure for December.  It fell below 100 - the mark of there being more pessimists than optimists.  Or perhaps they already knew what the data is suggesting - pre-Christmas sales, with discounts normally akin to Boxing Day, are reportedly widespread (i.e. as consumers haven't been opening their wallets to the degree hoped and expected).

Santos, an oil and gas producer, not unexpectedly (given its stretched balance sheet and lack of execution to date on asset sales) did a capital raising - $1 billion underwritten institutional, and $0.5 billion retail SPP (which is unlikely to be taken up in earnest due to the slim discount to the last trade price).   Corporate Travel Management also snuck in a $71m pre-Christmas raise.  By contrast, it was what we classify a "good raise", in that the proceeds are to be used for acquisitions - which should contribute to future earnings growth.

The ACCC had a win against Flight Centre for price fixing.  The case concerned Flight Centre's contractual arrangements in effect between 2005 and 2009, to ensure that it offered the cheapest flights.

And finally, one that has gone largely under the radar - Zurich has made a $741m takeover bid for Cover-more, the travel insurance provider.