ASX drops; Azure jumps 42pc; Whitehaven poised to cop strike

Big global hedge funds flying in for shareholder meetings, arguments over discount rates and oil price forecasts, outlandish statements behind closed door meetings and the country’s energy transition in the balance.

Welcome to Australia’s $18.7 billion game of bluff.

While the Origin Energy protagonists Brookfield and EIG Partners, and major shareholder AustralianSuper, prepare their next moves, everyone around the edges is waging their own battles.

Suitors Brookfield and EIG need to increase their offer if they want to make good on more than 12 months of work and $10 billion in equity commitments and acquire Origin. The battleground is how much.

The starting point is the current bid, a binding and Origin board-endorsed deal now worth about $8.83 a share. It was struck back when Origin’s Lazarus-like earnings recovery was only taking off.

Read Chanticleer here.

Whitehaven is poised to cop a strike against its remuneration report with 40.6 per cent of proxies rejecting the company’s executive pay scheme, and 38.5 per cent of proxies cast against pay plan for the managing director Paul Flynn.

Chairman Mark Vaile, the former deputy prime minister, said the vote was disappointing given an incentive plan for managers and directors was included in last year’s remuneration report, which was overwhelming approved.

Raymond Zage, the largest individual shareholder, suffered a 24.6 per cent proxy vote against his re-election as a director.

More to come.

Oil steadied after jumping on Wednesday on signs of a pending Israeli ground invasion of Gaza, reviving concerns the conflict could escalate and threaten energy supplies.

West Texas Intermediate traded near $US85 a barrel, after rising 2 per cent in the previous session, while global benchmark Brent was above $US90. Prime Minister Benjamin Netanyahu said his nation was in a battle for its very existence, and that an invasion was being prepared.

The remarks reignited a war premium in the oil price that had been subsiding over the last few sessions. The main threats in the Middle East, which accounts for about a third of the world’s crude, include the US taking steps to curb Iranian exports or disruptions to shipping.

Westpac chief economist Luci Ellis has tipped the Reserve Bank of Australia to raise the cash rate from 4.1 per cent at its November 7 meeting.

The 1.2 per cent increase in the September-quarter CPI report from April-June and the 1.1 per cent quarterly gain in the RBA’s preferred trimmed mean index were a “little higher” than the big bank’s forecasts, Ellis said in a note to clients.

“We assessed that it would take a significant upside surprise to induce the RBA Board to raise rates at the November meeting. A 0.1 per cent difference might not seem like a lot, but the underlying detail was sobering,” the chief economist said.

“So yes, I’ve seen enough to make my first-ever rate call to be a prediction of a hike.”

Yesterday, the Australian Bureau of Statistics reported that the CPI index gained 5.4 per cent at an annual rate in July-September compared with the June quarter’s 6 per cent pace, while the trimmed mean rose at an annual 5.2 per cent pace, down from the previous quarter’s 5.9 per cent clip.

The RBA has kept rates on hold since June 7 when it last bumped the benchmark a quarter percentage point higher to 4.1 per cent after tightening monetary policy from May 2022 in 12 separate moves.

ASX-listed lithium explorer Azure Minerals has accepted a $1.63 billion purchase by Chilean giant Sociedad Química y Minera (SQM) as deal fever sweeps through the Australian lithium sector.

Azure’s board accepted an offer of $3.50 per share, a 54 per cent increase from SQM’s first offer last month of $2.421. Azure traded at 56¢ in June, before it became a takeover target.

SQM remains the largest shareholder in Azure with 19.9 per cent, and is eager to increase its Australian operations as a way of diversifying income beyond Chile.

SQM is already partnering with Wesfarmers on Western Australia’s Mt Holland lithium mine and Kwinana lithium hydroxide processing plant.

Shares surged 42.6 per cent to $3.48 after coming out of a trading halt.

More to come.

Rich Listers and Chemist Warehouse founders Jack Gance and Mario Verrocchi have shared a $365 million dividend from Australia’s no.1 pharmacy chain, despite profit at the privately owned business falling more than 20 per cent.

Audited accounts for Chemist Warehouse’s parent company, CW Group, lodged with the financial regulator earlier this week, show the pair and their families were paid $264 million in dividends in the year ended June 30.

Directors were paid an additional $101 million in dividends earlier this month.

The $365 million cumulative payout compares with $280 million in dividends distributed in financial year 2022. Despite the bump in dividends, annual 2022-23 net profit fell 21 per cent to $302 million from the year-earlier $385 million.

Revenue inched higher to $3.1 billion from $3 billion.

Read more here.

New York | Morgan Stanley has appointed Ted Pick as its new chief executive, succeeding Australian James Gorman after his 14-year run that reshaped the US investment bank.

Pick, a co-president and three-decade veteran of the bank, will take over the top job in January and join the board, a bank statement said. Gorman, 65, will stay on as executive chairman.

In tapping Pick, 54, the bank is turning to the man credited with spurring a revival in its trading business after a perilous stretch during the GFC, when clients ditched Morgan Stanley amid doubts about its ability to survive.

Gorman rescued the bank from that near-collapse and engineered a transformation with wealth management at its core.

That strategic overhaul was accelerated by two signature deals announced in 2020, turning Morgan Stanley into a money-management powerhouse barrelling toward a $US10 trillion ($15.9 trillion) goal and taking its market value above that of rival Wall Street giant Goldman Sachs.

Michele Bullock has rejected a comparison to millionaire property developer Tim Gurner, who last month said unemployment had to jump by 40 per cent to 50 per cent to “remind people that they work for the employer”.

“But isn’t essentially that economic project … comparable to the RBA’s tolerance of increased unemployment to discipline inflation?,” Greens Senator Barbara Pocock asked Bullock, alluding to the RBA’s forecast unemployment will rise to 4.5 per cent from 3.6 per cent.

“I don’t think those words have ever come out of my mouth,” Bullock said.

The governor said she is forecasting employment will further increase, but it just won’t grow as quickly as the workforce.

“So the mechanical outcome of that is that the unemployment rate rises,” Bullock says.

Mr Gurner told The Australian Financial Review Property Summit last month that people had “decided they didn’t really want to work so much any more through COVID” in a discussion about productivity in the construction sector.

“Unemployment has to jump 40 to 50 per cent in my view. We need to see pain in the economy,” Mr Gurner said.

”We need to remind people that they work for the employer, not the other way around.

“Tradies have definitely pulled back on productivity. They have been paid a lot to do not too much in the last few years, and we need to see that change.”

The Australian sharemarket opened lower on Thursday after Wall Street fell on mixed profit reports from Microsoft and Alphabet.

The benchmark S&P/ASX 200 fell 0.6 per cent or 42.6 points to 6811.9 at market open, weighed by sharp losses in tech stocks. The information technology sector was the worst performer, tumbling more than 2 per cent. Megaport lost 12.6 per cent, WiseTech shed 2.6 per cent and Xero declined 3.2 per cent.

Overnight on Wall Street, the S&P 500 dropped 1 per cent and the Nasdaq underperformed. Alphabet plunged 9.5 per cent as its cloud business suffered. It was the opposite for Microsoft, which jumped 3.1 per cent. Facebook’s parent, Meta, reported after market close. It posted sharply higher earnings for the third quarter, boosted by an increase in advertising revenue and lower expenses after it laid off thousands of workers.

Also putting heavy pressure on Wall Street was a rise in Treasury yields. The 10-year yield climbed to 4.94 per cent from 4.82 per cent, which helped to send the large majority of stocks lower.

The final US third-quarter GDP report will be released in Washington at 8.30am (11.30pm AEDT). American GDP is projected to have expanded at a 4.5 per cent annual rate, an economists’ survey predicts; that would be more than double the pace of the second-quarter and the fastest pace since the end of 2021.

Stocks on the move

Westpac slipped 0.6 per cent. The big four bank said it was going to lose $173 million to significant items such as restructuring costs, customer remediation and litigation in its financial year ended September 30.

Pilbara Minerals tumbled 4.2 per cent after its revenue was 42 per cent lower than the prior quarter, at $493.1 million in the September quarter. The company blamed weaker lithium prices and lower production volumes on the result.

Coles fell 0.2 per cent after even as its supermarkets sales revenue increased 4.7 per cent to $9.2 million in the first quarter. Total group sales revenue rose 3.6 per cent $10.3 million.

White goods and electronics retailer JB Hi-Fi dropped 1 per cent after reporting a slowdown in sales, according to its latest quarterly update. Total sales growth for JB HI-FI Australia slipped 0.1 per cent. Compared with pre-COVID-19 pandemic FY19, total sales growth had jumped 40.5 per cent.

Fortescue Metals lost 1.2 per cent. The mining giant shipped 45.9 million tonnes of iron ore through Port Hedland in the September quarter; down from 48.9 million tonnes in the previous three months and 47.5 million in the same period of last year.

Lithium explorer Azure Minerals rallied 42.3 per cent after it agreed to sell itself to Chilean giant Sociedad Química y Minera (SQM) for $1.63 billion, as deal fever sweeps through the Australian lithium sector.