ASX back at range lows, thanks to ANZ's cash-grab and US equity market losing streak - ASX futures down 2 points

Australia's ASX 200 (first chart) fell 135 points or 2.41% on Friday, against a backdrop of rising major Asian equity indices going into the weekend. The sharp sell-off seems to have been triggered by ANZ's less-than-gentle $3 billion capital raising, sending that stock down a whopping 7.5%, which has had the effect of wiping out any capital gains made for the last two years or so for ANZ shareholders, as you can see on today's second chart. Australia's abysmal market performance on Friday managed to flush out selling prior to a softer night on Wall St (Dow Jones on a seven-day losing streak so far) and some horrible export figures out of China, where the value of exports dropped 8.3% versus expectations of a ~1% drop. The value of Chinese imports also fell, but this was probably due to the commensurate fall in the price of the commodities--rather than volumes--that it imports. Chinese steel mills are not slowing down, so just as quickly as Australia can ship cheap iron ore, China is milling and flipping it as steel and then flooding that market with cheaper product - no doubt Andrew Forrest will have something to say about this trend, as it really sticks out among otherwise falling exports due to slower global demand.

Asian markets were not open when the trade data emerged from China, although I note that the Australian dollar (third chart) remains elevated - this may not be a good 'risk on/risk off' measure, however, as the FX market may remain primarily focused on the diminishing likelihood of falling interest rates in Australia, over foreign economic headwinds, which are certainly nothing new.

ANZ Banking Group's $3 billion raising ($2.5 billion capital raising from institutions, $500 million from retail investors) triggered a lot of selling in the--very heavily weighted--financial sector of the ASX 200. Those who will be worst-effected by this fall are larger retail shareholders, who will be capped to a $15,000 application for the discounted Share Purchase Plan (SPP). A reminder that the offer price will be the lower of a) the $30.95 institutional placement price; or b) a 2% discount to the five-day weighted average price up to and including the SPP expiry date. CEO Mike Smith should be wary of any shareholders wielding cream pies, I note his somewhat nonchalant quote in the AFR, "the easy thing to have done would have been to do the whole thing as an insto placement but we felt we had to give some to retail." We're humbled by your benevolence, Mike.


Source: Rivkin, Saxo Bank

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How to apply for the FGG IPO

As was the case with Future Generation Investment Company (FGX), Rivkin will be working with its broking partner CMC Markets in donating the broker stamping fees to charities associated with the investment company’s cause – in this case, youth mental health and homelessness.

With this in mind, we strongly urge you to follow the following steps accurately so Rivkin can add to the philanthropic nature of this IPO.

  1. Visit http://www.futuregeninvest.com.au/Global/prospectus.pdf to download and read the prospectus
  2. IMPORTANT: complete the Broker Firm Application Form on page 87 of the prospectus, this way we can donate the stamping fees
  3. Ensure you have sufficient funds in your Rivkin Securities stockbroking account to pay for the stock
  4. Enter the Broker Code 02662
  5. Enter the Adviser Code 0001
  6. Email your application to customerservice@rivkin.com.au or post it to:

Rivkin Securities FGG Offer
Po Box 1524
Double Bay 1360

Don’t have a Rivkin Securities stockbroking account? Open one now by emailing customerservice@rivkin.com.au (your Relationship Manager will call you back and pre-fill forms etc.) or phoning 1300 748 546. Our online brokerage is $11.00 or 0.11%, $9.90 or 0.11% for SMSFs that use Rivkin Super. PLUS we go the extra mile and donate non-core earnings like broking fees from this IPO to charity. You’re doing yourselves a favour and doing those in need a favour by getting involved.

This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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