Origin takeover rejected despite majority vote in favour, ASX rises, gold hits record — as it happened
A bid to take over Origin Energy by Brookfield and EIG has been rejected after narrowly failing to gain the 75 per cent majority required. The ASX is rising strongly on a record gold price.
Here's how the trading day unfolded.
Disclaimer: this blog is not intended as investment advice.
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By Michael Janda
Live updates on the major ASX indices:
By Michael Janda
Live updates on the major ASX indices:
By Michael Janda
What a busy Monday on the markets.
The ASX ended up a solid 0.7% higher at 7,125 points, but it had enjoyed gains of almost twice that earlier in the session.
Exactly three-quarters of Australia's top 200 share market listed companies enjoyed gains today.
Miners were some of the big winners, especially gold miners after the precious metal crashed through $US2,100 an ounce in Asian trade, before easing back just below that level.
The big miners, big banks, supermarkets, retailers and CSL all made solid gains, which left the main indices higher.
Origin was the big loser, before trading in its shares was halted as it awaited the outcome of its shareholder ballot on a $9.39 per share takeover bid.
That bid ended up failing, even though a majority of shareholders voted for it. At 69%, it fell just short of the 75% majority needed to get up.
Biggest gains:
Biggest falls:
That's me done for the day, big one tomorrow with the final RBA meeting of the year.
By Rachel Pupazzoni
Hello, Rachel Pupazzoni here – popping in with an update on a recent story of mine you might have seen about diamonds.
When the Argyle Diamond Mine in the Kimberley region in Western Australia's north closed down at the end of 2020, the rare pink diamonds mined there became even more prized – simply because there would be no more jewels uncovered.
But the owner of the mine, Rio Tinto, held back supply and recently sold 86 pink and one Fancy Red diamond from the mine, in a secret, invitation-only global tender process.
The winning bids are kept secret, but in a full circle moment, they've now revealed the Fancy Red diamond was bought by Kununurra-based jeweller, Kimberley Fine Diamonds.
It is a round, brilliant cut, 0.14 carat stone.
While the price Kimberley Fine Diamonds paid for the stone remains a mystery, what I can tell you, is the most expensive Fancy Red diamond ever sold at auction was the 2.09 carat Fancy Red Moussaieff heart.
It went under the Christie's hammer in Hong Kong in 2014 for $US5 million – or $US2.4 million per carat.
Kimberley Fine Diamonds was one of the first retailers to sell Argyle pink diamonds.
Owner Frauke Bolten-Boshammer, said she was thrilled with the purchase.
"I am delighted that this exceptional gem will stay in Australia, entrusted with Kimberley Fine Diamonds to continue its onward journey as one of the few highly coveted Fancy Red diamonds produced from the Argyle Diamond Mine.
"It is an extraordinary diamond of esteemed provenance, with a beauty that reflects its magnificent birthplace here in the East Kimberley region of Western Australia."
Other winning bids for the pink diamonds sold in the tender came from Australia, Japan, Hong Kong, Singapore, the US, Israel and Europe.
My story, linked below, looks at why white diamond prices have been plummeting.
By Michael Janda
Before the market prices settle and I post the final results for the ASX today, a couple of interesting observations from the analysts out there.
First to Benjamin Picton from Rabobank:
"The price action became even more interesting on the Asian open today. Gold prices hit a new all-time-high of $US2,135/ounce and Bitcoin busted through the $US40,000 level," he noted.
"What does this tell us? If asset classes variously disparaged as an 'inert pet rock' and 'digital magic beans' are surging, are we heading back to the 'good times' of the Covid bubble economy?
"Or are higher prices for zero-yield monetary alternatives a signifier of the market's (lack of) confidence in the US Dollar?"
Capital.com's Kyle Rodda, who I quoted earlier today, believes there's also some more technical factors at play for today's fairly dramatic moves.
"The typical thin trade in Asia on a Monday morning created fireworks to kick off the week," he argued.
"Markets are piling in on bets of Fed rate cuts next year, possibly as soon as March. That pushed gold and Bitcoin to critical levels, with the former busting to record highs and the latter hitting $US40,000 for the first time since May 2022.
"Gold's move boasted all the hallmarks of a technical melt-up, as the break of previous all-time highs set off stops and buy orders. The rally faded throughout the session as liquidity normalised; however, the fundamentals look favourable for no-yielding like precious metals and crypto-currencies; and low-yielders like the Yen."
By Michael Janda
AustralianSuper has put out a statement welcoming the rejection of Brookfield and EIG's $9.39 a share bid for Origin Energy.
"AustralianSuper believes Origin has a highly strategic portfolio of assets to participate in, and for members to benefit from, the energy transition," it said.
"We have never wavered in our belief that the value and future value of Origin is better in the hands of members and other shareholders rather than a private equity consortium seeking to make a quick return based on the proposed scheme terms and we are pleased that this is the outcome.
"With the shareholder vote now finalised, we are looking forward to working with Origin's Board and executive team as they look to execute their strategy and ambition to lead Australia's energy transition."
By Michael Janda
Here's how the proxy voting looked:
For: 66.97%
Against: 31.07%
Open: 1.96%
It seems like most of those open votes ended up cast in favour of the takeover, with Origin's chair saying that around 69% of votes were for the deal.
However, the deal required 75% support to become binding, and so the proposed takeover is off.
Given that AustralianSuper holds about 17% of Origin's shares, that shows it didn't have a huge amount of support for its opposition to the deal, but enough to block it.
We'll wait to hear what Origin, its suitors Brookfield and EIG, and the main opponent of the deal AustralianSuper have to say about what happens next.
But, for now at least, Origin will remain an ASX-listed company.
By Michael Janda
The takeover bid from Brookfield and EIG for Origin Energy has failed, despite receiving support from a large majority of shareholders.
While around 69% of votes were cast in favour, the takeover scheme needed at least 75% support to be approved, and so failed.
By Michael Janda
There's a lot of Australians who've "earned" more from owning their home over the past couple of decades than they have from working.
What does that mean for the economy and society?
What lessons should we take from Australia's previous land booms, like the infamous boom and bust in Victoria in the late 1800s?
Another fine analysis from our resident economic historian Gareth Hutchens, this time on Australia's housing market.
By Michael Janda
As noted earlier, pretty much all asset classes traded up on Friday in the US and into this morning in Australia.
This is Capital.com senior financial market analyst Kyle Rodda's explanation for why.
"Futures now imply a 50/50 chance of a rate cut by March and an almost 100% chance of a cut by the middle of the year," he wrote.
"The dynamic has supported equities while weakening the US Dollar and driving gold prices to near-record highs.
"Of course, this has been catalysed by an aggressive bear-steepening of the yield curve as front-end yields drop on expectations of rate cuts.
"Although such aggressive rate cuts, on the surface, signal a rapid slowdown in US economic activity, which ought to stoke fears of a recession, the narrative investors appear to be latching onto is that the Fed will be cutting rates to keep real rates at constant levels as inflation trends lower."
So, basically share traders are betting on getting the benefit of rate cuts without the costs to corporate earnings of the recession that iften goes along with them.
But Rodda isn't quite buying the optimism.
"The prospect of recession is looking more likely based on forward-looking indicators," he continued.
"The US ISM Manufacturing survey showed the slowdown in manufacturing was unchanged last month despite forecasts of a modest rebound.
"New orders and employment are also signalling weaker demand, with businesses trying to clear inventory.
"The survey isn't yet at levels that scream US recession; the trend is heading in an ominous direction."
By Michael Janda
We're now a little over halfway through the trading session, and initial enthusiasm has waned slightly.
After being up around 1.25% earlier on, the benchmark ASX 200 index is now 0.8% higher at 7,133 points.
Although, enthusiasm for gold and Bitcoin hasn't faltered, with gold punching fresh record highs of $US2,111.39 and Bitcoin now firmly back above $US40,000 for the first time since April 2022.
The mining sector is still the biggest boost to the main indices, up 1.4%, while education (+2.1%) and real estate (+1.7%) had bigger percentage gains.
Utilities and energy were down, on declining oil prices and the seemingly doomed takeover bid for Origin.
Overall, 157 of the top 200 companies were up, while 37 were down.
Biggest gains:
Biggest falls:
By Michael Janda
The latest ABS lending finance figures again highlight what's been driving the latest rally in property prices.
While the October data showed a 4.9% rise in the value of home loan commitments on the month before, it's still close to a quarter down on the peaks seen during the last boom that ran from late 2020 through to the beginning of 2022.
And, unlike the COVID property boom during that ultra-low interest rate period, it isn't rampant demand driving prices up.
In fact, the number of new home loans being issued now is pretty similar to the property price downturn of 2018/19, and the rising value of loans is mainly being driven by higher selling prices.
That suggests — as has been noted by the main real estate data providers such as CoreLogic, PropTrack, Domain and SQM — that it's more a shortage of properties up for sale rather than a surge in buyer numbers that's pushed prices higher.
In share trading, that's what might be described as a thin market. And price moves based on thin trading are notoriously more volatile than those based on large volumes.
Another reason why, as the number of homes listed for sale normalises, which is already happening in the south-east states, price gains are slowing or even reversing.
Meanwhile, the home building sector continues to struggling with both the demand shadow created by HomeBuilder and surging interest rates.
"Lending for the construction and purchase of new homes in October rose 1.8 per cent compared to the previous month," noted Housing Industry Association chief economist Tim Reardon.
"This leaves lending for the construction and purchase of a new home 22.4 per cent lower than at the same time the previous year and at their lowest level since the GFC.
"This low volume of lending has been sustained since the start of 2023 and will see new home construction continue to slow through 2024, despite the need to increase the supply of new homes."
By Michael Janda
Origin shareholders will meet at 2pm AEDT at the Shangri-La Hotel in Sydney to formally consider Brookfield and EIG's proposed buyout of the gas producer and electricity generator and retailer.
The result is likely to be known either before or early on during that meeting when proxy votes are revealed. These will include most of the big institutional shareholders that will decide the outcome.
The biggest of those is Australian Super, which holds about 17% of Origin's shares, and has indicated it will vote against.
That makes the $9.39 a share deal extremely unlikely to get up, given that it needs 75% in favour to succeed.
Brookfield has indicated it may walk away altogether if this bid fails, given the time and effort that's gone into it, and fresh regulatory uncertainties around Australian energy markets.
Origin shares are one of the few drags on the market today, down 3.2% to $7.92, which indicates what the market thinks are the takeover's chances of success.
We'll let you know what the outcome is after the vote is revealed.
By Michael Janda
ANZ and job website Indeed's monthly indicator of employment ads slumped 4.6% in November.
ANZ economist Madeline Dunk says October's figure was also downwardly revised.
"ANZ-Indeed Australian Job Ads has fallen a cumulative 8.4% over the last three months, but the series remains very high compared to historical levels," she notes.
"The decline in job opportunities highlights that the labour market is cooling, and points to a further lift in the unemployment rate."
Indeed Asia-Pacific economist Callam Pickering says the decline in job opportunities was greatest in the nation's two most populous states.
"The monthly decline in ANZ-Indeed Job Ads was the largest since June 2018, excluding the pandemic," he observes.
"The decline over the past three months has been concentrated in New South Wales and Victoria, with a smaller subtraction from Queensland and South Australia.
"Western Australia and Tasmania defied the national trend.
"Job Ads fell the most in the therapy, sales and software development categories, offsetting gains in food preparation, education and mechanical engineering opportunities."
Further evidence that the Reserve Bank's interest rate rises are slowing down the economy, potentially quite sharply.
By Emilia Terzon
Emilia here with a guest post on a new report by the Grattan Institute.
The think tank has come out with its take on the future of the much-hyped energy source hydrogen.
Hydrogen has been touted as an alternative future energy source to solar and wind power, and it has some big proponents. (Who could forget Andrew Forrest's lecture on the topic!?)
Currently, the massive amounts of hydrogen being made globally are being generated using natural gas, and the material is going to feedstock.
To get so-called "green hydrogen", which is where the hype has been focused, you need to generate hydrogen using renewable energy and electrolysis. That is where you literally use power to split water into oxygen and hydrogen. (This process always makes me think of the Kate Bush song, Cloudbusting.)
This idea was actually part of the original play by Forrest to take over the central Australian project Sun Cable, which could have seen its mass amounts of solar used for hydrogen generation.
"Supplying green hydrogen increasingly appears to be more expensive and complex than previously hoped," Grattan says.
Grattan's take is that you should focus hydrogen's future on the outcomes that have the most promising results and benefits, namely using hydrogen for energy intensive production like making alumina. This is already a pretty common view.
In Grattan's opinion, there is also potential to use hydrogen for activities like flying planes, but they note it will take industry incentives from governments to get this happening.
And then they throw cold water on some other uses of hydrogen, including for fuelling smaller cars.
Currently, Japan and South Korea produce almost all of the hydrogen passenger cars in the world, as their governments promote and use this power source. Toyota, a Japanese car brand, and Hyundai, a Korean brand, have both been plugging these cars here in Australia, to notably little effect.
Industry groups that stand to lose out as households move towards electrification (with some states now even banning gas connections in new homes) have also been lobbying for hydrogen as a fuel source in households, such as for flame stoves.
That could help keep gas-equivalent fitter jobs in action. But Grattan doesn't think this effort is worth it, and is arguing against subsidisation of this technology.
Here's a bit more on the Grattan reasoning:
This criteria answers the question: is hydrogen the best technical option to replace fossil fuel use?
Examples of applications that have a high technical score include high-temperature industrial heat, and chemicals manufacturing.
For some applications, it is not yet clear whether hydrogen will be the clear winner. An example is power generation. As the power generation sector becomes dominated by solar and wind, the key challenge is ensuring that the system remains reliable.
Overbuilding renewable generation to the extent required to ensure reliability, and greater deployment of transmission and battery storage, will become very expensive.
Likely solutions include pumped-hydro storage, natural gas with offsets or carbon capture and storage, or hydrogen used in turbines.
Applications that score poorly are those in which hydrogen will have only a small niche application, or those that have competitor technologies that are more efficient than hydrogen at delivering the same service.
Examples include light vehicles (battery-electric cars out-compete hydrogen fuel-cell cars), and residential heating and cooking (heat pumps and induction cooktops out-compete hydrogen heaters and stoves).
More on their report here, including their recommendations for what should be done, including addressing carbon/electricty pricing, and government incentives.
So what do you think? Are you team Hydrogen?
The ABC's AM program also covered this report in the morning if you prefer to listen.
By Michael Janda
Gold is usually a safe haven when geopolitical times are tough, so it's no surprise it's at a record high after the ceasefire between Israel and Hamas lapsed and a US destroyer shot down a Houthi drone attacking commercial shipping in the Red Sea.
Gold is currently trading just cents off a record high of $US2,077.99 set today.
What's unusual is that lots of other asset classes are also gaining and trading at multi-week, multi-month or even multi-year highs.
My colleague David Chau on ABC News Channel has compiled this list:
By Michael Janda
Live updates on the major ASX indices:
By Michael Janda
The mining sector is leading large early gains for the ASX 200 index, with real estate, healthcare and education also strongly on the up.
The ASX 200 is up 1.2% to 7,159 points in early trade.
Gold miners have seen particularly big gains, as the precious metal trades at $US2,077 an ounce.
But the two massive diversified miners on the ASX, BHP and Rio Tinto, are pushing the index rise with both up 2%.
The major banks are playing a supporting role, with all gaining just below 1%.
Overall, 186 out of the top 200 companies are trading higher, with just a dozen posting losses so far today.
The most notable drag on the market is Origin Energy, off 2.8% to $7.95 as a takeover bid led by Brookfield looks likely to face defeat when shareholders vote on it at a meeting in Sydney from 2pm AEDT.
Biggest gains:
Biggest falls:
By Michael Janda
With unemployment expected to rise back above 4%, and possibly towards 5%, as interest rate rises slow demand in the economy and renewed migration increases labour supply, job search services for the unemployed will take on increasing importance.
In that context, a major federal parliamentary review into employment services was handed down last week.
It found the privatised system, set up early on during the Howard government, has utterly failed jobseekers and the economy.
While not advocating a return to a fully public Commonwealth Employment Service, it does want to see the establishment of a public job search organisation to backstop the private providers.
My colleague Gareth Hutchens penned this excellent analysis of what the report says and what it's likely to mean for the future of Australian job search.
By Michael Janda
From my colleague, senior business correspondent Peter Ryan on News Radio this morning.
It's been a tough 18 months for anyone with a mortgage — but tomorrow the Reserve Bank is likely to deliver a pre-Christmas interest rate reprieve.
Most economists predict the Reserve Bank's official cash rate will stay on hold when the RBA meets tomorrow — it's final meeting of the year, with a summer break until February.
That's after 13 rate hikes since May last year — from near zero levels at the height of the pandemic to 4.35% after last month's hike of Melbourne Cup day — money markets only see a 4% chance of what would be an unwelcome pre-Christmas rate rise.
Last week we saw monthly inflation slowing to 4.9% (more than expected) in October, and optimism from the Paris-based economic think tank the OECD, which thinks the RBA's cash rate has peaked — and interest rate cuts are likely late next year.
However, while monthly inflation might be slowing, these numbers are more volatile and consider a smaller basket of goods and services than the quarterly inflation figures — which don't hit until January the 31st — so economists are swinging their attention to the Reserve Bank's February meeting.
If inflation rebounds or remains sticky then a February rate hike could be on the cards.
We'll also be getting an update on economic growth later this when when the National Accounts are released.
GDP for the third quarter of this year is likely to show the economy expanded by 0.4% (not great but still growth), making sluggish annual growth of 1.7%, which is close to what the Reserve Bank and Treasury have been predicting.
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