It wanted $500 million, but in the end had to make do with $201 million, so clearly Santos's move to tap shareholders for more money didn't exactly set the world on fire.
To recap, just before capital markets shut down in mid-December, Santos raised $1 billion via an institutional placement at $4.06, and then turned to small shareholders with a share purchase plan at $3.94.
Or as the company puts it: "The SPP gave retail shareholders the opportunity to participate in Santos's turnaround strategy following the successful completion of the institutional placement".
With its shares unable to get much traction above $4 in recent weeks, it is no wonder smaller shareholders kept their hands in their pockets with the SPP.
Still, something's better than nothing.
Santos shares are 0.3 per cent lower this morning at $3.94.
James Packer's lawyers are taking steps to halt the distribution of a dodgy online ad that claims he endorses highly speculative binary options trading.
Fairfax Media has seen the ad distributed for some weeks through Google's automated ad servers. It was discovered on Fairfax Media websites last week before being removed and was also observed in advertising slots of reputable publishers such as The Guardian and Bloomberg.
It is almost identical to a similar scam featuring Bill Gates. Air Asia CEO Tony Fernandes has also been used to spruik binary options in Malaysia without his permission.
Binary options scams are a growing problem in Australia. According to the competition regulator, 179 Australians reported collectively losing $6.8 million to binary options scams in 2016 – on average $38,000 each.
A spokesman for Consolidated Press Holdings, Mr Packer's investment vehicle, said: "Mr Packer has no association or knowledge of this product, and is taking legal steps to stop the online publication."
The slick ad purports to reveal the "secret formula that the average Australian is using to make fast money from home".
Binary options are highly speculative bets on the price of a particular share or commodity at a set point in time, without buying the underlying asset. An incorrect bet leads an investor to forfeit all the money bet.
ASIC cautions that while "binary options may appear to be simple ... picking the short-term movements of a share price, currency, index or commodity is extremely difficult, even for professionals.
"Binary options are a high-risk, speculative investment which, unless you are following a market carefully, are really just a bet or gamble on an asset price movement."
Tesler's own risk disclosure statement says that the platform allow users to "trade in highly speculative investments which involve a significant risk of loss".
The front page of its website however, features a video by CEO Steven Abrahams, in which he assures customers it is "mathematically impossible to lose money".
Talk of deregulation on Wall St has helped boots Aussie bank stocks this morning, with the major lenders all higher by around 1.2 per cent, while gold miners are continuing their great run in 2017.
The ASX 200 index is 36 points, or 0.6 per cent, higher at 5657, with miners the major break on the market's upward momentum. An interest rate hike in China on Friday and sharp selling in Chinese commodity futures continued to push the likes of BHP, South32, Rio and Fortescue lower.
NAB is 1.3 per cent higher following a quarterly earnings update, but that has just paced the gains in its three big competitors. Macquarie is 1.5 per cent up.
Energy stocks are also doing well as US imposes new sanctions on Iran, an oil producer. Woodside is up 0.5 per cent.
Graincorp has dropped 1.4 per cent following a broker downgade.
BHP Billiton and Rio Tinto shares seem to be at frothy levels, but broker CLSA reckons there could yet be further upside.
CLSA analyst Kaan Peker told clients the flow of money away from bond-style equities and into growth stocks will continue for a while yet.
He believes Rio has the edge over its old rival because of its lower debt, impressive free cash flow generation and clearer growth pipeline.
That's not to say BHP lacks growth, as The Australian Financial Review outlined today.Like most analysts CLSA reckons Rio is closer to a special round of shareholder returns than BHP.
"Rio has a more compelling growth profile as its projects generate an aggregate return of 20 per cent (versus BHP's 17 per cent) and a five-year copper-equivalent production compound annual growth rate of 2.6 per cent (double that of BHP)," Peker said.
"RIO's capital intensity also has the benefit of a shorter payback period."
Peker has an "outperform" rating on BHP and Rio, with a preference for Rio.
NAB has revealed "soft" quarterly earnings update due to higher expenses, Regal Funds Management analyst Omkar Joshi says, but "pleasingly net interest margins have started to stabilise".
Here's Omkar's round-up:
- Cash earnings came in at $1.6bn which were in line with consensus expectations, as was reported profit. NAB experienced negative jaws in the quarter with revenue increasing by 1% while expenses grew by 5%.
- The margin was broadly stable which is pleasing to see but consensus has started to expect increases in the margin this year which may turn out to be too optimistic if competition remains intense. NAB has called out continued pressures from competition and funding pressures.
- Bad debts were 34% below consensus expectations with the bad debt charge at around 12 basis points (bps) while expectations were for 18bps. This was largely due to a non-recurrence of the mining-related bad debt charges in the previous period. Concerningly, gross impaired assets as a percentage of gross loans increased in the quarter.
- Underlying profits were c4% below expectations, with the lower bad debt charge making up for this at the bottom line.
Wall St investors were tugged between opposing forces on Friday night, writes NAB currency strategist Ray Attrill:
San Francisco Fed's John Williams spilled the beans on Friday saying that raising rates at the Fed's March meeting might make sense. He said that inflation will build up if we push the economy too hard and sees arguments for moving rates earlier not later. He says all FOMC meetings are 'live'. In doing so he reversed a good chunk of the market's reaction to US employment data that in all but the headline payrolls number was a weaker than expected report.
Payrolls rose by 227k against 180k expected, but the prior two months saw downward revisions totalling 39k while the unemployment rates ticked up to 4.8% from 4.7% (albeit aided by a 2/10% rise in the labour participation rate).
But the standout feature of the report was the mere 0.1% rise in average hourly earnings and where going in to the numbers the risks were seen to be skewed toward a rise of as much as 0.5% due primarily to the rise in minimum wage in many states
While scepticism regarding the veracity of the earnings number abounds, at face value annual growth dropped to 2.5% in January from 2.8%, well below the 3% that Fed vice chair Stan Fischer told us last year he wanted to see to be consistent with the Fed's 2% inflation target.
10-year Treasury yields dropped from 2.48% to 2.43% rose all the way back up to 2.5% after Williams, before settling at 2.465%. On the week, 10s were down 1.9bps.
The payrolls report was a goldilocks affair as far as equities were concerned, the S&P500 adding 0.7%, the Dow 0.9% and the NASDAQ 0.5%. Stocks didn't take a hit on Williams' comments, unlike bonds.
NAB has reported cash earnings of $1.6 billion in the December quarter or 1 per cent lower than the prior corresponding period as salary increases and redundancy costs weighed on profits.
The bank reported a 1 per cent increase in revenues, with the bulk coming from lending growth and higher trading income. Net interest margins were broadly stable.
CEO Andrew Thorburn described the result as a solid start to the year, highlighting the bank's growing revenues and asset quality as evidence of the continued turnaround.
He did however also note that many of the pressures that the banks faced had not abated.
"While the Australian and New Zealand economies remain resilient and continue to deliver solid growth, the operating environment has some challenges with funding costs remaining elevated and competition still intense" Mr Thorburn said.
Among the key takeaways from the result was a rise in expenses of approximately 5 per cent. These flowed from an enterprise bargaining agreement that delivered employees salary increases and redundancy conditions combined with additional spending on projects and compliance.
Bad and doubtful debts for the quarter declined by 23 per cent to $164 million.
The bank common equity tier 1 ratio was 9.5 per cent at the end of the quarter down from 9.8 per cent as of September 30. The banks is preparing for new global bank capital requirements that are expected to be released in March and implemented locally in 2018.
The quarterly results will be studied carefully by the market ahead of Commonwealth Bank's interim results due on Wednesday February 15.
NAB is Australia's fourth largest bank by market capitalisation and its shares closed at $30.39 on Friday after a broad rally in bank shares took NAB from a low of $25.79 on November 9.
Here are the market highlights from Friday night's trade:
- SPI futures up 24 points or 0.4% to 5596
- AUD +0.2% to 76.83 US cents
- On Wall St, Dow +0.9%, S&P 500 +0.7%, Nasdaq +0.5%
- In New York, BHP -3.8%; Rio -4.4%
- In Europe, Stoxx 50 +0.6%, FTSE +0.7%, CAC +0.7%, DAX +0.2%
- Spot gold +0.4% to $US1220.30 an ounce
- Brent crude +0.3% to $US56.74 a barrel
- Iron ore -1.4% to $US82.19/tonne
- Steam coal +0.3% to $US83.00/t, met.coal flat at $US168
- LME aluminium +0.3% to $US1835
- LME copper -1.9% to $US5772 a tonne
- 10-year bond yield: US 2.46%; Germany 0.41%; Australia 2.79%
Ahead on the economic scene:
- December retail sales data at 11:30am AEDT, ANZ job ads
Stocks to watch:
- NAB releases quarterly update
- WiseTech and Codan release half-yearly sales
- Beach Energy is preparing bid for Origin's upstream assets, reports AFR
- Rio Tinto "a real possibility" to boost payout, reckons Credit Suisse
- Woolworths raised to buy at UBS
- Suncorp raised to buy at Deutsche Bank
- BoQ cut to equak-weight at Morgan Stanley
- NIB cut to accumulate at Ord Minnett
- Graincorp cut to neutral at Credit Suisse
- Independence Group raised to outperform at CS
US President Donald Trump's move to scale back Dodd-Frank financial regulations lit a fire under US bank stocks on Friday, and Wall St was further boosted by strong jobs numbers, both of which signal a resumption of the Trump trade that is expected to push the Australian market higher this week.
In the weeks after the US election, overseas investors piled into Australian financial stocks, boosting the sector 5.5 per cent in December. But the financial index fell in January, helping drag the ASX 200 lower.
The ASX is set to open higher this morning - ASX 200 futures were up 0.4 per cent on Sunday - marking a shift from last week's pessimism, which saw the ASX 200 decline 1.6 per cent. The index declined 0.8 per cent in January - a bad omen for those who hold the market's January returns to be a good indicator of its full-year run.
Pressure on miners may temper any upbeat start to the week's trade after China on Friday unexpectedly lifted interest rates.
Shares of Rio Tinto fell 4.4 per cent in New York, while BHP Billiton slid 3.8 per cent as copper, nickel and zinc pulled back.
In the wake of the global financial crisis, many of the features of Dodd-Frank were put in place in Australia's financial regulations, said AMP Capital head of investment strategy Shane Oliver. "I suspect the debate now will be around financial deregulation in other parts of the world, including here," he said.
This should give the Reserve Bank board plenty to think about on Tuesday, even if it is unlikely to sway the members' cash rate decision.
With almost unanimous consensus that the central bank will hold rates steady, attention has turned instead to its releases later in the week. On Thursday, RBA governor Philip Lowe will give his second major speech at the A50 Economic Forum dinner in Sydney, and on Friday, the RBA will release its quarterly statement on monetary policy.
"Of most interest will be any revisions to the RBA's forecasts, where we expect a downwards revision to the growth forecasts following the September quarter growth contraction and a possible pushing out in the return of inflation to target," Mr Oliver.
Good morning and welcome to the Markets Live blog for Monday.
Your editors today are Jens Meyer and Patrick Commins.
This blog is not intended as investment advice.
Fairfax Media with wires.
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