Tens of billions of dollars’ worth of takeover action sent the ASX flying to new record highs – yet again.
The Australian sharemarket rocketed to yet another record high on the back of tens of billions of dollars’ worth of epic takeover action.
After hitting fresh all-time highs multiple times last month, the benchmark S&P/ASX200 index climbed above 7500 points for the first time ever in intraday trade on Monday, before closing 1.34 per cent higher at 7491.4.
The All Ordinaries Index strengthened 1.26 per cent to 7760.5.
OMG chief executive Ivan Tchourilov said huge announcements in mergers and acquisitions drove the market into “a sea of green across multiple sectors”.
Square Inc offered to purchase Australia’s buy-now-pay-later market leader, Afterpay, for $US29bn ($A39bn) worth of shares in the US company, sending the takeover target’s stock soaring 18.77 per cent to $114.80.
The bid was backed by Afterpay, with Square’s Cash App business lead Brian Grassadonia saying the deal would increase its customers around the world.
“The offer, at a 30 per cent premium to Afterpay’s close last week, is an escalation in the US buy-now-pay-later battleground, with big players Apple and PayPal hot on the heels of the Australian company,” Mr Tchourilov said.
RBC Capital Markets’ US-based technology analyst Daniel Perlin said Square’s investors had been wondering what the “killer app” was going to be to link the company’s two ecosystems more meaningfully together and it appeared that fully integrating BNPL via Afterpay was the answer.
RBC has a $150 price target on Afterpay, which CommSec noted had soared 303 per cent last year.
Other BNPL stocks rose, with Zip jumping 9 per cent to $7.24, Splitit soaring 8.7 per cent to 50 cents, Openpay adding 3.98 per cent to $1.17, Ioupay putting on 7.5 per cent to 21.5 cents and Sezzle lifting 3.75 per cent to $7.48.
CommSec analyst James Tao said the tech sector was the clear standout, noting Square was co-founded by Twitter’s Jack Dorsey.
Oil Search gained 4.72 per cent to $3.99 after its board unanimously backed a sweetened merger proposal from Santos of 0.6275 new Santos shares for each Oil Search share held.
If approved by shareholders, the tie-up will create a $21bn entity.
“The merger will likely put Santos in the top 20 companies listed on the ASX, as well as in the top 20 oil and gas producers worldwide,” Mr Tchourilov said.
Morgan Stanley said the offer looked “sensible for both sets of shareholders”.
“There is some risk of other approaches, but we have no knowledge of any such offer,” Morgan Stanley said.
Shares in Santos firmed 0.62 per cent to $6.49.
Mr Tao said a sharp drop in iron ore prices over the weekend – by 7.4 per cent to about $US180 per tonne – weighed on Aussie miners.
It comes amid concern of lower demand from China, which seeks to reduce steel consumption, mostly for environmental reasons.
Rio Tinto softened 0.14 per cent to $133.23, Fortescue dropped 2.09 per cent to $24.39, Champion Iron retreated 4.2 per cent to $7.28 and Mineral Resources sank 4.35 per cent to $60.27.
BHP, however, improved 0.39 per cent to $53.70.
Red Hill Iron had a staggering surge, rocketing an astonishing 269 per cent to $4.06 after announcing a deal to sell its 40 per cent stake in its namesake joint venture to Mineral Resources for $400m in cash.
Red Hill Iron said it first accelerated exploration at the project back in 2005 through the partnership with Aquila Resources and AMCI, which is 49 per cent owned by POSCO, but had “been unable to reach agreement on a way forward”.
“Your board believes that MinRes can provide the necessary impetus to get a mining operation underway,” Red Hill Iron said.
Ian Goldin, a one-time adviser to South African president Nelson Mandela, predicted in his keynote speech on the first day of the three-day Diggers & Dealers mining conference in Western Australia that the gold price would hover around $US2000 an ounce.
Lithium and nickel demand would increase “eight to 10 times at least” over the coming decade amid huge demand for electric vehicle batteries, the University of Oxford professor of globalisation and development said.
Lithium miner Pilbara Minerals surged 7.63 per cent to $1.90.
Among gold miners, Westgold rose 5.7 per cent to $1.85, St Barbara lifted 5.09 per cent to $1.86 and Ramelius appreciated 4.11 per cent to $1.77.
Professor Goldin also told delegates a cold war between the west and China was his biggest concern as it would “lead to excuses for protectionism and nationalism … the antithesis of global trade”. He advised against “sabre-rattling and talking up the tensions”.
ANZ added 1.8 per cent to $28.21, Commonwealth Bank strengthened 2.02 per cent to $101.66, National Australia jumped 2.39 per cent to $26.55 and Westpac improved 2.08 per cent to $25.03.
Biotech heavyweight CSL put on 1.88 per cent to $294.35.
The Aussie dollar was fetching 73.5 US cents, 52.8 British pence and 61.86 Euro cents in afternoon trade.
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