Stockbrokers Face Moment Of Truth
The Age
Wednesday August 18, 2004
For stockbrokers, the reporting season can be a bit like getting exam results.
Results season is not only a time of truth for companies but also for stockbrokers, who have put other people's money on the line with their own reputation."For a stockbroker, reporting season is a bit like getting your exam results," Shaw Stockbroking senior client adviser Lachlan Hughes said."You've told clients to buy stocks from companies you believe are going to get good results, and you're going to be proven right or wrong," he said.CommSec chief equities economist Craig James believes the real test is predicting how the company will travel after the results season, particularly as most companies have prepared investors for their results."One response by investors is to take some money off the table in the absence of a substantially positive surprise that would engender further interest in the company," he said.Bargain hunters came out of the woodwork yesterday, snapping up stock mainly in the resource sector after a drop in oil prices and an upbeat Wall Street brought global markets back to life.The Dow Jones Industrial Average surged almost 130 points to 9954.55. And the benchmark crude oil price fell US53 ? to $US46.05 a barrel as the world's fourth-largest oil producer, Venezuela, steered clear of civil unrest as President Hugo Chavez won a weekend referendum.Buoyed by mining heavyweight BHP Billiton, the S&P/ASX 200 rose 14.9 points to 3483.2. The All Ordinaries was up 14.7 to 3495.4.Despite higher gold prices, lower oil prices and mixed results in base metal prices, BHP Billiton hit a record $13.39 as investors anticipated its profit announcement due today. The stock gained 23 ? to $13.33.Riding its wave was WMC Resources, up 12 ? at $4.92, and Rio Tinto, up 36 ? to $36.48.But, as always, good news can be bad news for some and Australia's energy sector took the price drop in oil badly. Woodside Petroleum gave up 15 ? to $18.65 and Santos shed 11 ? to $7.21. Origin Energy fell 9 ? to $5.94 after turning in a $204.9 million full-year net profit, up 26.5 per cent.However, Mr Hughes advised against knee-jerk reactions, saying profit results and company forecasts were best left for a week to cool while analysts took a fine comb to companies' figures."The market takes time to get its head around a result," he said.Commonwealth Bank dived after what seemed to be investors collecting their dividend and dumping the stock.Down 31 ? at $29.18, the bank's performance took the eagle eye off National Australia Bank, which picked up 13 ? to $26.36. Westpac rose 14 ? to $16.28 while ANZ slipped 2 ? to $17.77.Insurance provider AMP rose 6 ? to $6.46, with investors putting their money on its half-year result, to be announced today.Funtastic, electrical, lifestyle and toy distributor of products such as Cabbage Patch Kids, Barbie and Revlon, announced its half-year result first thing this week, declaring a 76 per cent increase in turnover.The cash register clocked up $127.5 million sales and net profit almost tripled at $3.4 million. The shares edged up 3 ? to $2.33.BRIEF CASE SOLAGRAN LIMITEDAustralian biotech company Solagran was founded in 1995 to market Bioeffectives, a series of compounds derived from green pine needles. The bio-medical substances are used in human and veterinary pharmaceuticals as well as cosmetic and agricultural products to treat skin ailments and liver conditions including hepatitis and cirrhosis. One of the Bioeffectives, type R, was used by the chairman of Solagran to treat his own third-degree burns in late 2000. In a graphic display on the company's website, his wounds healed without surgery or skin grafts and he recovered hand and joint mobility. Solagran shares closed at 11.5 ?, down 1 ?.
© 2004 The Age
