Markets Live: Miners dig hole for ASX

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The recent trend of a mid-morning fightback on the ASX fizzled today, as selling in the big miners intensified, exacerbated by BHP and South32 trading ex-dividend and falling commodity futures.

The ASX 200 ended 18 points or 0.3 per cent lower at 5741. Aussie bond yields hit their highest since December 2015 as traders jostle to factor in what could be a faster tightening of US monetary conditions. The Aussie dollar, however, continued to slide, last fetching 75.1 US cents and heading lower.

The bond sell-off hit listed property stocks, with the sector down 0.6 per cent. Gold fell, too.

Energy stocks were hit by a sharp fall in the oil price overnight, with a slight recovery in the oil price during the session not enough to reverse the trend. Energy fell 1.1 per cent as a sector, with Santos ending 3.3 per cent lower and Woodside 1.1 per cent.

BHP dropped a hefty 5 per cent, including the effect of trading ex-div. Similarly, South32 went ex-div and fell 4.6 per cent, while Rio lost 2 per cent and Fortescue 3.9 per cent.

Also trading ex-dividend were big names such as QBE and ASX (both -2.2 per cent), as well as AMP, which managed to nudge higher.

Banks helped staunch the falls, as Westpac jumped 1.3 per cent, NAB 0.5 per cent, CBA 0.4 per cent and ANZ 0.1 per cent.

The day's best performer was Qube, up 4.5 per cent on talk of better margins at its 50 per cent-owned Patrick business (see post at 12:22).

Also enjoying strong support today were Seven West Media, up 4.4 per cent, and Nine Entertainment, up 3 per cent. A broker upgraded Nine to their highest rating on signs of improved ratings, while also saying chances of lower licence fees in the May federal budget would also help Seven West.

More than 500,000 ANZ retail stockbroking clients will be served by CMC Markets, after the bank sold the business,

CMC says its revenue will increase by $40 million once the deal is completed in April 2018.

The ANZ Share Investing brand will remain on the platform and ANZ said in a statement it will try to find roles for the about 180 Melbourne and Sydney staff who are affected.

The financial impact of the deal would not be material,ANZ said, while CMC confirmed it will charge ANZ a fixed price per trade executed.

The divestment is the latest under ANZ chief executive Shayne Elliott, who has already lined up deals for the bank's New Zealand-focused asset finance business and its retail banking and wealth management businesses in five Asian countries.

Buyers of some capital city apartments bought off the plan and sold within 18 months are losing up to 30 per cent of their investment, the AFR is reporting citing confidential analysis by the nation's largest valuation company reveals.

The potential loss of  more than $150,000 in the value of average-priced apartments not only highlights the need for buyer caution, it's causing lenders and regulators to turn the screws on developers and borrowers by toughening the scrutiny of building projects before final lending commitments are made.

The analysis tracked sales of apartments acquired off-the-plan and then resold in the market to a genuine buyer (rather than back to the developer) within 12 to 18 months. Developers have been known to buy back a property at an inflated price to prevent a lower pricing benchmark for the apartment block.

The  data reveals a fall in the resale price of 10 per cent-20 per cent. That could mean a $130,000 loss on a $650,000 apartment in 18 months.

Stamp duty, legal fees and agent's fees could strip another 10 per cent of the buyer's capital, or a loss of $150,000 on the same apartment. These losses are compounded if the currency exchange works against the overseas buyer and additional foreign taxes are included. 

"A large number of buyers are from overseas and China," says Tony Kelly, managing director of valuation group Herron Todd White (Melbourne). "They will judge their money in bricks and mortar in Melbourne and a safer haven even if a loss is evident. Like all investors, if the market is below what you paid, then why sell now."

Here's the whole article at the AFR

The report comes as BIS Oxford Economic predicts Sydney's hot property market will soon see values falling by about 5 per cent, while apartments could fall double that.

Robert Mellor, the managing director, presented his annual forecasts at the company's biannual conference in Sydney.

He is expecting a decline in Sydney of up to 5 per cent between June 2017 and June 2019 for the detached housing market, while those who bought apartments off the plan may see falls of 10 per cent.

Still, Mellor expects "modest corrections" rather than a property bust in Sydney.

Here's more at Business Insider

Corporate Australia has enjoyed one of the best earnings seasons in years, but investors don't appear to be buying in. The ASX200's growth so far this year has been modest, and has vastly lagged that of other major indices.

While many equity strategists remain upbeat – expecting the ASX to hit 6000 this year – the index has struggled to hold any gains above the 5800 mark, closing at 5759.7 on Wednesday.

The index has grown only 1.5 per cent since January 1. That's compared to the S&P500, up 5.5 per cent, or the DAX, which has added 4.2 per cent, the FTSE100, up 2.7 per cent, or the Hang Seng, which has grown 8.1 per cent. 

A reliance on materials, energy and financials has hamstrung the ASX, equity strategists said. 

"Some of the major sectors for the ASX are financials, materials and energy," said Patersons Securities economist Tony Farnham. "So that's going to be a drag – materials and energy shares have pulled back of late."

The financial, materials and energy sectors comprise 58 per cent of the ASX200, which is weighted by market capitalisation. On a year-to-date basis, the energy sector is down 4.2 per cent, the materials sector has shed 0.7 per cent, while financials have added 3.6 per cent.

Even so, Australian banks haven't enjoyed the same level of lift as overseas, said JP Morgan global market strategist Kerry Craig.

Here's more

Here's BusinessDay columnist Elizabeth Knight on how the Tabcorp takeover of Tatts looks to have crawled over the competition hurdle:

The competition regulator's apparently qualified approval of the merger of Australian gambling giants Tabcorp and Tatts shows just how much this industry has been disrupted by new competitors over the past 10 years.

The ACCC hasn't given the tie-up between the companies a full tick, as some concerns remain about a lessening of competition in some parts of the business, like monitoring and promotional services.

Still, the market seemed clearly satisfied that its statement was positive enough about the prospects for the deal, pushing the share prices of both companies up strongly on Thursday.

Tabcorp is the monopoly provider of retail betting outlets in NSW, Victoria and the ACT, while Tatts is the operator in all other states except Western Australia.

Despite their vast footprint, the ACCC said today that the rise of online bookmakers like Sportsbet and Crownbet means a merger would not lessen competition in wagering.

To allay regulatory concerns and get the $11 billion takeover of Tatts across the line, Tabcorp has needed to agree to a number of actions, including at least one divestment in Queensland and striking a long-term pooling arrangement with the WA operator of its totaliser operations.

Among those concerns, according to competition ACCC chairman Rod Sims, was a consideration of "whether the combination of Sky Racing and Tatts is likely to materially increase the market power currently held by Tabcorp in its dealings with licensed venues and racing media rights holders."

The competition watchdog will announce its final decision in less than two months.

This provides only a small window of opportunity for competing bidders for Tabcorp or Tatts to dust off any plans. The only alternative offer, which came from a Macquarie-led consortium, has been quiet for several months now, and nothing has emerged from offshore competitors who had earlier been expected to get into bidding game.

Read more.

Fundies are taking their first look under Officeworks' bonnet

Officeworks is a baby Bunnings category killer that has recorded average annual earnings growth of 10.7 per cent in the past eight financial years.

That's the pitch from Officeworks chief executive officer Mark Ward and numbers man Michael Howard, as they front fund managers this week for the first time on their journey to the ASX boards.

It was Melbourne fundies turn yesterday, and while new information about the group was light on, there were a couple of key numbers in the investor presentation.

The Officeworks team told investors that sales had grown at an average 6.3 per cent a year, compounded, since 2009, while EBIT had grown 10.7 per cent annually on the same basis.

Fundies said the business was pitched as a baby Bunnings, with little direct competition from any one competitor and further room to increase its store count as populations grow inside Australia's major cities.

Bunnings featured heavily in the discussions with both Ward and Howard - and Officeworks itself for that matter - formerly part of the Bunnings family.

The elephant in the room, of course, is why would Wesfarmers be seeking to sell the business if it was travelling so well?

While that's a question for Wesfarmers - and one fundies asked of it during recent results presentations - the answer seems to be that Officeworks is not big enough on its own to move the dial inside the conglomerate. Attention seems to be firmly on Coles and Bunnings as the big earners, while Officeworks and coal are on the block, and insurance was flogged off a few years back.

For what it's worth, fundies seem to like the idea of buying off Wesfarmers - or at least more than buying off private equity firms as seems to be the case with most IPOs.

However they will be keen to test the growth story, particularly if Officeworks comes back with a growth-style valuation. More will be known when sponsor brokers release their reports in coming weeks, before a prospectus is lodged with ASIC. It's understood Wesfarmers wants to have Officeworks listed before June 30.

Are bond yields closing in on a danger zone that spells doom for the entire market?

To Bill Gross, the bear is about to roar in the $13.9 trillion Treasuries market. Benchmark US 10-year yields reached 2.58 per cent overnight, the highest since December, on a report showing unexpectedly strong hiring in February.

They're at 2.56 per cent today but still fast approaching the 2.6 per cent mark that Gross, the bond-market veteran at Janus Capital Management, said will signal the start of a bear market, should it hold on a weekly basis.

From technical analysis to the potential for a pickup in mortgage-related hedging, there's plenty of backing for that as a crucial level. What's more, traders in short-term interest rates are geared up for a hawkish message from next week's Federal Reserve meeting. If they're right, yields could be set to surge.

Ten-year yields have practically doubled since touching a record low 1.32 per cent in July. The losses accelerated after Donald Trump won the presidency in November with promises of tax cuts, deregulation and fiscal spending. Fed signals that a rate hike is likely next week spurred the latest leap in yields.

"If the 10-year breaks 2.6 per cent on a weekly or on a monthly basis, because it's so strong and so important in terms of technical analysis, that if and when it's broken on the upside, it's a bear market," Gross, who manages the $US1.9 billion Janus Global Unconstrained Bond Fund, said in January.

Gross has said the threshold is a more important financial-market barometer than the Dow Jones Industrial Average passing 20,000, which it did January 25.

Other bond titans, like DoubleLine Capital chief executive Jeffrey Gundlach and Guggenheim Partners chief investment officer Scott Minerd, have said a US 10-year yield of 3 per cent is when the bear market begins.

Gundlach said Tuesday in a webcast that it may fall to 2.25 per cent before climbing.Those who follow technical analysis in Treasuries acknowledge that 2.6 per cent is an important level to watch, as 2.64 per cent is a key retracement level for the bull market of the past few years.

If it breaks, yields could complete a full retracement of the entire cycle, implying a test of an area just above 3 per cent, the high of 2013.

Tom di Galoma, managing director of government trading and strategy at Seaport Global Holdings, said he's not so certain that breaching 2.6 per cent spells doom for the market. He said Wednesday that he's betting the 10-year yield doesn't break past 2.62 per cent for now.

Ian Lyngen and Aaron Kohli at BMO Capital Markets see a "big support" at 2.639 per cent - the intraday high on December 15 - that will halt losses.Wednesday's 10-year note auction showed there's plenty of interest in the debt at these levels. The bid to cover was the strongest since June.

Meanwhile, Aussie 10-year bonds continue to sell off, sending yields as high as 2.939 per cent this morning, their highest since late December, and further reducing the spreads between US and Australian yields. The 10-year yield is currently at 2.922 per cent.

China's producer prices surged at the fastest pace since 2008, further lifting the outlook for global reflation.

The producer price index rose 7.8 per cent last month from a year earlier, compared with estimates of 7.7 per cent growth and a 6.9 per cent gain the prior month. Factory prices only swung out of 4 1/2 years of deflation in September.

The consumer price index rose just 0.8 per cent versus a 1.7 per cent increase forecast by analysts. The data are distorted by the week-long Chinese New Year holiday, which started in February last year, driving up food prices as families prepare for gatherings, whereas it fell in late January this year, when CPI climbed to a 2 1/2 year high of 2.5 per cent.

"Why didn't skyrocketing PPI translate into higher CPI? Because there is no recovery in demand yet," said Zhou Hao, an economist at Commerzbank in Singapore. He says China's PPI may have already peaked.

China is lifting the global price outlook as producer inflation climbs and a pick up in demand fuels commodity prices. Still, economists see such forces moderating as year-earlier comparisons begin to rise and policy curbs restrain the property market.

"Everything has peaked in the first quarter - nominal GDP growth, corporate earnings, PPI inflation," said Larry Hu, head of China economics at Macquarie Securitiesin Hong Kong. "The strong numbers we are seeing now are not sustainable."

The local selloff in stocks has just picked up a notch, with miners taking most of the heat following drops in commodity prices.

BHP is by far the biggest drag on the index, losing 4.4 per cent as it trades ex-dividend. The dividend component of BHP's fall alone accounts for around 5 negative index points. But even taking the pay-out into account, the stock is still down 2.4 per cent. 

South32 is another blue chip trading ex-dividend, down 5.2 per cent, while Rio and Fortescue have dropped 2.6 per cent and 3.2 per cent respectively.

This comes as Dalian iron ore futures slide another 2 per cent to 652 yuan ($US94.26), after earlier in the session dropping to 666.5 yuan, their lowest in a month. The spot price fell 2.9 per cent to $US87.19 a tonne overnight.

Not helping sentiment, BHP chief financial officer Peter Beaven told the AFR Business Summit this morning that fading stimulus measures in China could bring "much lower" iron ore prices.

Fundamentals "point to a softening" and miners "should be ready for a much lower iron ore price," Beaven said.

Meanwhile, bank stocks are mostly higher, led by a 1 per cent rally in Westpac, as global yields continue to push up.

In data just out, China's producer prices surged at the fastest pace since 2008, further lifting the outlook for global reflation.

The gold price remains under pressure, dropping to $US1205.50 an ounce, its lowest since February 1, as markets prepare for the next US rate rise.

"Non-farm payrolls ... will provide final confirmation of a rate hike next week and this could put more pressure on gold," Julius Baer commodities analyst Carsten Menke said. 

Higher rates tend to put pressure on gold prices because they raise the opportunity cost of holding non-yielding bullion while boosting the US dollar, in which it is priced. The dollar index , which pits the greenback against six major currencies, has risen over the past sessions.

Gold has been falling since a number of Fed officials last week started talking up the chances of a rate rise at the Fed's March meeting, in what appeared to be a concerted effort.

"Despite the recent selloff we think that gold prices have been very resilient, given the circumstances," said Georgette Boele, precious metals analyst for ABN Amro, pointing to the rise in two-year-US Treasury yields and strong US equity markets.

The ADP National Employment Report overnight showed its biggest increase in more than a year in February, suggesting the US economy remains on solid ground.

"It puts upward pressure on both the consensus and our forecast for payrolls on Friday," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto.

Despite the gold price extending its losing streak, gold shares are up, albeit only slightly, for the first time in five sessions. The All Ords gold index has added 0.3 per cent.

At $US90/tonne it's no surprise to hear that every iron ore miner out there is in the money.

Analysts at Deutsche Bank have run the numbers on the cash margins of the industry's players at current lofty commodity prices and prevailing currency rates. At spot prices and including the various costs, their "margin curve" shows "only a handful of smaller mines are losing cash" - just 1 per cent of total supply.

But, as ever, the best cure for high prices is high prices, and iron ore "is well into incentive pricing territory", the DB analysts say, which should lead to lower prices as supply swells. There is already evidence.

Chinese domestic production is now operating at a 280 million tonnes per annum run rate, up from an average of 220Mtpa in 1H16, the analysts say. "Non-traditional suppliers" are shipping at a rate of 195Mtpa to China, a recovery from 170Mtpa.

All of which means "although Chinese steel demand is robust, we think more low cost supply from the majors and juniors in 2017 will result in a retracement in the iron ore price to US$60-70/t by mid-year".

Finally, with updated cost figures from the most recent reporting season, they estimate that around 14 per cent of supply is cash flow negative at $US60/tonne. The analysts' last estimate in middle of 2016 was that only 5 per cent of supply lost cash at that iron ore price, but currency moves and higher oil prices have crimped profitability.

Qube's shares have been out of favour for a while now, buffeted by concerns over sluggish economic growth and competition in some key areas of operation.

Even so, price rises being pushed through by a competitor stevedore may open the door for Patrick, which is half-owned by Qube, to follow suit and help revive squeezed margins.

DP World is introducing an infrastructure surcharge from the beginning of April of $21.16 per container in Sydney and $32.50 in Melbourne (up from $3 at present). It will be levied on road and rail operators, the Citi analysts said, and will then be passed onto their customers.

"Given the previous experience of surcharges by one stevedore being followed by others, we expect a similar outcome, with Patrick, Hutchison and VICT expected to follow," the report noted.

"We assume Patrick will follow these surcharges from July 1."

As a result, the analysts have raised earnings estimates a notch for Qube.Citi has a "buy" call on the stock with a $3.01 price target, which is well ahead of the shares which are holding around $2.30.

Bonds have continued to sell off into the Asian session, with Aussie 10-year yields hitting their highest since late 2015 this morning, as investors around the world gear up for a near-certain US rate hike next week.

The yield on a 10-year security has climbed to 2.93 per cent, above its December peak and within spitting distance of its December 2015 high of 2.98 per cent. The bonds last yielded above 3 per cent in July of that year and bottomed at 1.8 per cent last August.

The equivalent US security has also continued to be sold (remembering bond prices move in the opposite direction to yields), as 10-yr Treasury yields last fetched 2.56 per cent - a huge increase from the record low of 1.36 per cent reached last July and approaching their December highs of 2.64 per cent.

Very strong US jobs data overnight provided extra comfort that Friday night's key employment numbers will remove the final potential hurdle to a Fed hike next week, which the market has almost entirely priced in.

Not only that, traders and economists are now beginning to wonder whether the US Fed could accelerate its monetary policy tightening, having flagged three this year.

The market's new willingness to cede to the Fed's authority reflects the fact that "the data has changed," Jeffrey Gundlach, who runs the $US100 billion US fund manager DoubleLine Capital said.

"Nominal GDP has been upgraded, because inflation is at or above 2 per cent by many measures, because the unemployment rate is at or above 2 per cent by many measures, because the unemployment rate has been below 5 per cent now for several quarters."

As a result, he argued, 'there's no more excuses for why the Fed shouldn't be raising interest rates."

But Gundlach said there were risks in the Fed's reverting to more traditional behaviour: it may follow past patterns by embarking on serial interest rate hikes.

"They may start to go 'old school' and start to see more sequential Fed rate hikes. And if we're going to go 'old school', what has happened historically - and this is pre-credit crisis - is [that] the Fed gets into a sequential hiking mode and they keep doing it until something breaks.

"And the definition of 'something breaks' is the onset of recession."

But Gundlach appeared relatively sanguine there was little likelihood of a US recession, at least in the near-term. He noted that what typically happens in the lead-up to recession is the yield curve (the difference between short-term and long-term bond yields) either flattens or inverts.

"Clearly, the yield curve has been flattening since July, [and] post-election, but it's nowhere near inverted", he said.

Rio Tinto chairman Jan du Plessis is set to bring his eight year stint as chairman to an end, as he prepares to take on another major directorship in the United Kingdom.

Du Plessis is expected to seek re-election to the board at Rio's annual meetings of shareholders in April and May, but is unlikely to serve his full year, with an announcement on his resignation believed to be imminent.

The departure means the chairman roles at Rio and BHP Billiton will be in flux at the same time, with BHP chairman Jac Nasser flagging his departure in November.

Nasser is expected to be replaced in the middle of 2017.

Du Plessis's departure is expected to coincide with him being appointed chairman of financial services company BT.

Ratings agency Moody's expects no change to Australia's coveted triple-A credit ratings and stable outlook due to the country's robust institutional framework and stronger fiscal metrics than many of its peers.

"We expect Australia's financial system and economy to absorb possible external and internal shocks," Marie Diron, associate managing director at Moody's told Reuters.

Australia is one of only a dozen countries still rated triple-A by all three major credit ratings agencies.

Moody's said, however, there might be a risk of a ratings downgrade if the government changed its commitment to reduce its persistent budget deficit.

S&P Global Ratings has repeatedly warned it could downgrade Australia's credit rating after revising its outlook to negative last July.

Big drops in miners and energy stocks are pulling the overall sharemarket down, offsetting solid gains in financials.

The ASX has fallen 0.35 per cent to 5739, with the energy sub-index losing 2 per cent following a 5 per cent slide in oil prices overnight, while materials have lost 1.9 per cent.

Following a very strong US employment survey overnight, Fat Prophet CEO Angus Geddes said it is now almost a "dead certainty" that the Fed will increase rates next week, unless Friday's non-farm payrolls data come in well below expectations.

"The question is, with the first rate hike for 2017 in (three were flagged to the market last year), how many more are we going to see before December?" he said.

"With the US stock market now looming overextended ... we are yet to see what the catalyst for coming correction will be (between 5% and 10% in my opinion). The upward trend in the US dollar could certainly be one of them."

BHP is weighing heaviest on the benchmark index, losing 1.8 per cent, while Rio is down 1.3 per cent, South32 has shed 3 per cent and Fortescue has dropped 2 per cent.

Among energy stocks, Santos is down 3.8 per cent and Woodside has lost 2.1 per cent.

The big banks are all uup around 0.3 per cent with Westpac gaining 0.7 per cent, following their US peers after yields spiked overnight on strong economic data and bets the Fed will lift rates next week.

Prime Minister Malcolm Turnbull has called an urgent meeting of big gas producers to try and avert an eastern coast "energy crisis".

Speaking at the AFR Business Summit, Turnbull said he was concerned by the latest report by the Australian Energy Market Operator which showed there could be both gas and electricity shortages within the next few years.

Turnbull said Australia was in danger of losing its competitive advantage in energy with electricity prices doubling in the past decade and the grid struggling to cope with the influx of renewable energy such as wind and solar.

The Prime Minister took aim at the state Labor governments, especially the Victorian government, about bans on on-shore gas exploration.

"We are facing an energy crisis because of this restrictions on gas," he told the summit. "What we have now is a scarcity of gas driven by politics because state governments are not allowing exploration and development of onshore gas.

"The Victorian government, in the absurd position of a 50 per cent renewable target, has encouraged the closure of Hazlewood [power station]. They've seen that closed at the same time that they will not allow the development of gas resources in their boundaries. We need to have more gas, which will deliver more opportunities for industry and households."

Turnbull said he was bringing together the chief executives of east coast gas companies to have a "serious discussion" with the bulk of gas being sent overseas in LNG.

Big energy producers and users have called for an emissions intensity scheme for the electricity sector to bring down carbon emissions and provide certainty in the NEM.

Some industrial users have threatened to close down and move overseas because of a scarcity of gas or high prices threatening their competitiveness.

But Turnbull side-stepped the issue of an EIS saying the bigger question was the availability and the price of gas.

Here's the live blog from the AFR Business Summit

Over the past four trading days the Dow Jones has given up the entire premium gained following the Trump speech to congress, IG analyst Gary Burton notes:

The futures market moved back to the starting point from last Wednesday. An orderly and measured move with support found at 20,888. This highlights the index moves have been profit taking, and further the markets have not moved to a complete "sell" mode. Healthcare remains the strongest performing sector in the US (and in Australia).

The VIX, a measure of bullish and bearish volatility remains low and quite dull at 11.44 falling again last night by 1 per cent, showing the markets have no real pricing concerns over the coming months.

Gold seems determined to move back to $US1200 down a further $US6.24 overnight, the bigger picture of this commodity is the overall primary downtrend is in place, with further lows expected. Overnight oil slipped over 4 per cent to $US50.54 a barrel, now this sounds dramatic and it will be quite concerning to OPEC players currently reducing production, this is now 85% compliant. Put into context the West Texas contract fell below the 11 week support level of $US52 a barrel.

These long consolidation periods often build up incumbent volumes of long positions and short positions with one side eventually having to fold the position, leading to a tipping point and a violent move. Put option volumes against the Oil ETF skyrocketed from the 20 day average of 47 thousand contracts to 220,000 contracts. With 47,000 contracts being traded for May expiry at $10.50. This type of low price contract is often taken in volume to manage risk margin with at the money contracts.

While iron ore also saw some pricing pressure with the futures contract last price $US87.19 down from last weeks $US92 will bring a cap into the Iron ore space today.

From the remnants of reporting season many equities are now going ex dividend, this becomes a further cap on the Index in the coming weeks. For the ASX 200 the resistance level of 5833 seems to far away for now, with a potential retest of the 5600 level possible should further weakness come thru this week.

Here's more

Huntr Hall shares have been put into a trading halt as the company "enters into final stages of discussions around a market sensitive transaction".

Earlier, the AFR's Street Talk reported that a merger between the fund manager and boutique asset manager Pengana Capital might be in the making.

NAB Asset Management's disclosure to staff this week that it had sold its 49 per cent stake in Pengana Capital to Washington H Soul Pattinson has set off speculation that a bigger deal is afoot, Street Talk said.

Soul Patts is of course a 20 per cent owner of Hunter Hall as it battles for control of the asset management firm.

Now its recent deal with NAB is expected to pave the way for a final and definitive play for Hunter Hall involving Pengana, of which it is a large shareholder, and may itself have aspirations to list on the ASX.

Sources told Street Talk that combining the two firms together to create a $3 billion retail focused asset manager may be a compelling option as Hunter Hall looks for a solution to its current predicament.

It could be argued the two would fit together nicely - Hunter Hall would plug the "green" gap that has been missing from Pengana's stable - and market watchers are paying close attention to Soul Patts' next move, Street Talk writes.