Financials lead the ASX to 5950!
Another decent session for the ASX today with financials once again dominating the gains, although after hitting an intra-day high of 5950, some profit taking became obvious on the index. We had a range today of +/- 52 points, a high of 5950, a low of 5898 and a close of 5929, up +16pts or +0.28%.
Banks accounted for +12pts of the index gains, however the most love was felt in the diversified financial space with Platinum Asset (PTM) up +2.44%, Magellan put on +2.43% while BT (BTT) was the standout adding +3.81%. A space we continue to like.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
BHP continues to be the talk of the town after the proposal from Elliot Partners doing the rounds, with three clear recommendations. On contemplation, the proposal is sound but it’s unlikely to get up.
Dissolving dual listing; This is expensive and complicated and something BHP have considered on a number of occasions in the past. It’s unlikely to happen
Spinning off the Petroleum Division; A possibility and BHP do have form here after spinning off Onesteel, BlueScope, S32 in recent history, however BHP are big on their 4 pillars of future growth, being Iron Ore, Coal, Copper and Petroleum
Franking Credit Release; Obviously this is something that will add value, but a discussion BHP must have with the Aussie Govt. It’s not alone in having a high franking balance and other companies (HVN and TAH examples) are grappling with the same issue. HVN used an interesting way to address this last year by raising equity while at the same time issuing a fully franked dividend, however it appears the ATO was not a fan!
Anyway, it’s food for thought and BHP have appointed Goldman’s to help prepare a response. BHP shares closed down -1.24% today to $25.41, however we think the simple discussion around this proposal is a win win for shareholders. We remain bullish BHP
BHP Daily Chart
The interesting aspect to consider is around, RIO, given it satisfies 2 of the three ideas outlined above, yet didn’t rally yesterday. RIO played catch up today rallying +1.96% to $62.03. We own both BHP and RIO from lower levels.
RIO Tinto (RIO) Daily Chart
Have a great night,
The Market Matters Team
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