Few would disagree that a strong regulator is required for a strong superannuation system. But APRA’s myopic focus on cost to members means its $70,000 Christmas party is unlikely to help its reputation.
Good investing requires real sacrifices, according to Oaktree’s Howard Marks, but you can’t expect to be compensated just for making them.
Aussie market catches mining fever
The benchmark S&P/ASX 200 index rose 86.5 points, or 1.3 per cent, on Tuesday to 6,806.4 points, while the broader All Ordinaries gauge added 81.4 points, or 1.2 per cent, to 7,030.
Nine of the ASX’s 11 sectors gained ground, with real estate and healthcare the only ones to retreat. The mining sector was the biggest gainer, rising 2.7 per cent, as the local bourse – in a touching nod to its 19th-century beginnings – caught mining fever.
The standout performance came from coal producer New Hope Corporation, which rode high coal prices to a record profit of $983 million, 12.4 times last year’s earnings, and more than triple the company’s previous record figure. Revenue was up 143 per cent, to $2.55 billion.
The company more than quadrupled last year’s 7-cent final dividend, to 31 cents, and added a special dividend of 25 cents a share, making 56 cents for the second half. On top of the interim dividend of 17 cents paid in April – which also had a 13-cent special dividend tacked-on to it – New Hope paid-out 86 cents a share for the 2021-22 financial year, for a dividend yield (at today’s closing price) of a staggering 14.5 per cent. After the full franking, that grosses-up to a stellar 20.7 per cent.
On the back of the outstanding result, New Hope shares gained 48 cents, or 8.8 per cent, to $5.94; for 2022 to date, the share price is up 156 per cent.
Fellow coal miner Whitehaven Coal added 32 cents, or 3.9 per cent, to a new record high of $8.63 – WHC has more than tripled in 2022. Emerging producer Bowen Coking Coal was also on the move, up 4 cents, or 11.8 per cent, to 38 cents: the stock is up 123 per cent this year. Steelmaking coal specialist Coronado Global Resources gained 9 cents, or 5.3 per cent, to $1.80.
Lithium producers are also on a one-way ticket for the time being: Pilbara Minerals added 14 cents, or 3 per cent, to $4.89; Mineral Resources was up $3.58, or 5.3 per cent, to $71.58; and Allkem closed 62 cents, or 4 per cent, stronger at $15.96. Rare earths producer Lynas Corporation rose 38 cents, or 4.9 per cent, to $8.14.
Among the bulk miners, BHP gained $1.37, or 3.6 per cent, to $39.18; Rio Tinto advanced $2.33, or 2.5 per cent, to $94.72; and South32 increased 11 cents, or 2.8 per cent, to $4.02. But iron ore heavyweight Fortescue Metals bucked the trend, easing 15 cents, or 0.9 per cent, to $17.30, after announcing plans to invest $9.2 billion to achieve net-zero carbon emissions by 2030.
In energy, Woodside Energy added 63 cents, or 1.9 per cent, to $33.06; Santos was up 12 cents, or 1.6 per cent, to $7.83; Beach Energy gained 3 cents, or 1.9 per cent, to $1.64; Origin Energy rose 15 cents, or 2.6 per cent, to $5.91; and AGL Energy up 6 cents, or 0.9 per cent, to $7.03.
AMP’s shame continues
In the big-bank world, Commonwealth Bank was up $1.87, or 2 per cent, to $96.53; National Australia Bank gained 52 cents, or 1.8 per cent, to $30.22; and ANZ up 28 cents, or 1.2 per cent, to $23.84; but Westpac closed down 34 cents, or 1.6 per cent, at $21.89.
AMP was down 2.5 cents, or 2.1 per cent, to $1.18, after the company was slapped with a $14.5 million penalty in a Federal Court decision that found it charged super fund members a fee without service.
The issue was reported to the corporate regulator ASIC and remediation completed in November 2019. About 25,000 customers were paid a total of $900,000, covering the fees and lost earnings. The fine was less than the $17.5 million penalty that ASIC was seeking.
Bond market making milestones
In the US, the major indices retreated, with the broad S&P 500 index losing 44 points, or 1.1 per cent, to 3,855.9 points, the 30-stock Dow Jones Industrial Average down 313.4 points, or 1 per cent, to 30,706.2 and the tech-heavy Nasdaq Composite Index surrendering 110 points, or 0.9 per cent, to 11,425. Markets are wary as the Federal Reserve is widely expected to lift rates by 75 basis points for the third straight time at the end of its policy meeting on Wednesday.
In the bond market, the benchmark U.S. 10-year Treasury yield hit 3.6 per cent, its highest level since April 2011, while the yield on two-year US Treasury notes, a rough guide to interest rate expectations, rose to almost a 15-year high on Tuesday. The two-year is highly sensitive to shifts in monetary policy expectations, and in trading overnight it hit 3.99 per cent. The last time its yield pushed above 4 per cent was October 18, 2007.
Brent crude oil eased US$1.38, or 1.5 per cent, to US$90.62 a barrel, while West Texas Intermediate crude shed US$1.28, also 1.5 per cent, to US$84.45 a barrel. Gold is trading down US$9.98, or 0.6 per cent, at US$1,665.35 an ounce, while the Australian dollar is buying 66.91 US cents.
