Investment Matters

What Matters this week

It was a fairly quiet week on the market ... until today. Wesfarmers announced the 'demerger' of Coles. Wesfarmers' share price leapt by 5%. The plan is to spin off the grocery company into a separate company, with Wesfarmers retaining a 20% holding. Elsewhere ...

McGrath’s new management kicked off the week with another downgrade (I’ve lost count of how many there has been!).  Lower volumes, i.e. fewer property listings, were to blame.

Newcrest (gold miner) had a tailing breach at its Cadia mine in central west NSW.  Whilst it is understood the breach is relatively minor (volume, nature of the dam contents, containment of the contents and thus no damage to the environment), it will nevertheless impact on production. And thus the share price (-4.7% on the day of briefing about the dam breach).

Woodside Petroleum and BHP have decided to be buddy-buddy on the large Scarborough gas field off the WA coast.  This follows last week’s sale of ExxonMobil’s stake in the field to Woodside.  Woodside will now become operator, and BHP has the option to increase its ownership stake.

There was a brief reprieve in the pressure on the iron ore price this week, on the back of stronger than expected Chinese economic data.  This benefited iron ore miners including Rio Tinto and Fortescue Metals.

The banking royal commission was the big news in the financial sector.  Hearings commenced this week.  It is ending up being an acrimonious environment, with some ugly stories and bad behaviour – including likely fraud - being disclosed.  If the commission starts getting their head around the scale of such conduct, and it is systemic as it initially appears to be, the commission could have a lot more of a negative impact on the banks (and their shareholders) than was previously thought.