Australian Business News and Times

Business News ,Reports and Times of Australia

Stock Market

Investing in mutual funds

by Leave a Comment

Mutual funds are an investment fund that pools the financial resources of a variety of investors and buys a diversified portfolio of stocks and bonds. At inception, the board of directors for the fund set the goals and strategies for the fund. Then, a fund manager is hired to ensure that their directives along with the fund manager’s expertise work in sync for the best returns possible for the fund. Investors have the ability to enter the fund for relatively low up-front investments and have the flexibility to add additional financial resources or sell shares as they desire.

fund finance mutual funds australia honk kong

Mutual Funds: What Are They?

The fund manager allows for investors to relax and let a highly qualified expert do the buying and selling as needed for the fund without having to worry about individual stock and bond purchases and sales.

The mutual fund manager is responsible for the buying and selling of bonds and other securities and reports to the board of directors of the fund. Mutual funds area available both as an “Actively Managed” and “Passively Managed” fund. A passively managed fun is one where the fund manager sets the investment criteria with direction from the board and then buys and sells investments to match the strategy. A passively managed mutual fund is the most reasonable type of fund for an investor to own as the costs associated are less than those of an actively managed fund.

In an actively managed mutual fund, the fund manager is much more intricately involved in the research of companies, markets, industries, and the economy to more fully manage the fund on a day-by-day, and hour-by-hour basis. Actively managed funds have highly educated and experienced fund managers that focus their energies on analysis and keep up-to-date with industry and economic news. While the annual expenses of an actively managed fund may be significantly higher than a passively managed fund, often times, greater returns are seen.

Advantages of Investing In Mutual Funds

1. Experienced fund manager trades stocks and bonds as market, industry and economy requires.

2. Diversified portfolio as many mutual funds contain hundreds of different stocks and bonds.

3. Investors don’t have to invest in individual securities which can be cost prohibitive for some investors.

4. Low up-front minimum investment requirements for mutual funds can be as low as $500.

5. Shares can be sold for cash.

Investors can sell all or part of their shares in mutual funds at the Net Asset Value (NAV) rate. This is the actual mutual fund price that is set at the end of each trading day and is the buy/sell price until the following NAV rate is set.

There are tens of thousands of mutual funds for investors to choose from; in fact, there are actually more mutual funds in the United States than there are individual stocks or securities. Well-balanced mutual funds tend to own a balance of bonds and stocks, often times with stocks slightly outweighing the bonds. Analysts agree that mutual funds are one of the best ways to invest money with minimal risk while enjoying moderate and good returns. For a truly balanced portfolio, experts agree that investments in mutual funds provide the right balance of risk and reward.

About Us: When you are searching for information about retail investments and funding choices, you will find that there are a few choices that can really help to improve your portfolio performance. When you have questions about your investments, you might consider turning to Trustnet, Hong Kong’s premier site for information about fund investment.

Guest Post : Visit their website at www.trustnet.hk for more information.

Gold– Past and future of Investing in gold for profit

by Leave a Comment

Gold as an investment

Gold is the most popular form of investment of all precious metals. It is the preferred investment medium used as a hedge against political, economic or man-made currency crises which include declines in investment markets, inflation, escalating national debt, currency failure, social unrest and war. Like other markets, the gold market is subject to speculation especially because of futures derivatives and contracts.

gold_bars-300x249

Various historical factors and current events suggest that gold is more akin to a currency rather than a commodity and analysts says the bullion gold investment might be profitable in the short term due to the global economic outlook

Gold through the ages

Until recently, gold has traditionally been used as money, and has also been the relative standard for currency comparisons relative to countries or economic regions. Gold standards were implemented by many European countries in the latter half of the 19th century. During the financial crises in the wake of World War I these were temporarily held in abeyance. The Bretton Woods system post World War II pegged gold to the United States $ at the rate of US$35 per troy ounce. This practice continued till 1971 when the United State suspended unilaterally direct convertibility of the $ to gold and transitioned to a flat currency system. The Swiss Franc was the last currency to be divorced from gold.

Current factors that impact gold prices

Like most other commodities, bullion gold investment price is determined by supply, demand and speculation. However with gold, unlike other commodities, savings and disposal rather than consumption have a significant role to play in driving the price of gold. Much of the gold mined since inception still exists in bullion or bulk produced jewellery form, and can potentially return to the market when the price is right. The current weak global outlook has also made people invest in gold as a safe bet  which has been driving the price of gold

Considering the enormous quantity of gold above-ground in comparison with annual production, price is driven more by sentiment or demand instead of fluctuations in annual production or supply. According to World Gold Council figures, about 2,500 tonnes are mined annually, of which roughly 2,000 tonnes go into jewellery or industrial production/dentistry and only the remainder to exchange traded gold funds and retail investors.

Guest post Written by Ktkoh

Australia and Investing In bonds

by 2 Comments

Investing in bonds australia

So what are bonds , well its definetly not this ( Bonds  ) nor is it this  (Bond J) but according to investinginbonds.com “A bond is a debt security, similar to an I.O.U. When you purchase a bond, you are lending money to a government, municipality, corporation, federal agency or other entity known as an issuer.* In return for that money, the issuer provides you with a bond in which it promises to pay a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it matures, or comes due”.

One of the very first questions that investors who are familiar with  shares and funds but not bonds ask is: “Where do I buy bonds?” The bond market is not centralized and there is no bonds freely available like for the stock market. There is no equivalent of the ASX for trading bonds in Australia . Bonds are mostly  an over-the-counter (OTC) market where third parties, known as brokers, connect  the buyers with sellers.

FREE Online : Paper on Australian Bond markets

Investors wanting capital stability, reliable returns and protection against cyclical downturns are often advised to consider adding bonds to their portfolio.  Bonds are a very popular form of investment in the us by the general stock market investors as well as  the big managed funds. Investing in Equity is easy, you either buy off the prospectus or off the secondary market (ASX, NSX etc)

bond investment australia

After you decide to invest in bonds, you then need to decide what kinds of bond investments are right for you.

Depending on your goals, your tax situation and your risk tolerance, you can choose from municipal, government, corporate, mortgage-backed or asset-backed securities and international bonds. Within each broad bond market sector you will find securities with different issuers, credit ratings, coupon rates, maturities, yields and other features. Each one offers its own balance of risk and reward.

Australian Bond investment Options

There are also a number of large, well-managed banks with diverse global operations, higher capital levels. The high credit quality of these banks, in particular the four major Australian banks( CWB,WBC, ANZ, NAB), HSBC and Rabobank, represent a very low credit risk for investors looking to build a bond portfolio.

Until recently, most bonds were only available in face value parcels of $500,000 but often they can be also be traded through a fixed interest fund. There are a few retail bonds available for less, but the broader market was closed to most retail investors. Some brokers, including FIIG, now offer a service whereby investors can access bonds in parcels of $50,000 each offering more choice, control and diversification without the need to access fixed income through managed funds.

Hybrid/preference shares Australia

A lot of bank issuing “hybrid/preference shares”, which pay a coupon like a bond, and have a fixed face value like a bond. But are actually classed as equity, so if the company decides not to pay a dividend, you get nothing. So these could be more risky then a bond. Government bonds are like no other security in that they are not linked to performance of the economy and so provide diversification and a hedge against economic downturn in a portfolio. “Australian Commonwealth Government bonds” are considered “risk-free” important for those investors that want capital certainty and a regular income.

You can get 7-10% return from bonds, that beats a bank account, and it is a lot safer then shares.
Also if interest rates are falling, then bond prices will be going up, so you will get “capital growth” as well. (You do not get this on hybrids, as the interest rate is not fixed.)

What is a bond ? ( for dummies)

Companies and governments issue bonds to fund their day-to-day operations or to finance specific projects. When you buy a bond, you are loaning your money for a certain period of time to the issuer, be it General Electric or Uncle Sam. In return, bond holders get back the loan amount plus interest payments.

When interest rates fall, bond prices rise, and vice versa. If you hold a bond to maturity, price fluctuations don’t matter. You will get back the original face value of the bond, along with all the interest you expect.

bond markets australian company bonds

Only Bonds will shine – get your golden bullet now

Buying and selling bonds

You will need to find a broker or financial intermediary to trade because the bond market is largely over-the-counter (OTC). Wholesale bonds, like the Rabobank bond  or the HSBC bond  trade in minimum face value parcels of $500,000.

While there are a few retail bonds that can be traded in $5000 face value parcels, some brokers have access to a range of bonds that can be traded in $50,000 or $100,000 parcels, providing greater opportunities for diversification. Commonwealth Government bonds and semi-government bonds can be traded in small parcels of just $1000.
There are no fees involved in buying or selling bonds, rather the broker makes a margin between the bid price and the offer price when the transaction is agreed. Buyers and sellers are quoted prices inclusive of the margin , but this can differentiate between brokers.

Insurance bonds in australia

Referred to as tax-paid investments, insurance bonds in Australia are taxed by the fund manager at the corporate tax rate of 30% subject to being held for a minimum of 10 years and do not need to be reported on an investor’s tax return.  Where insurance bonds (or investment bonds) are withdrawn within ten years of the investment initially being made, additional tax may be payable by the investor. Investment bonds typically have entry fees of 3%-4%, charged on every contribution including regular savings plans

Potash Mining and Australia

by 3 Comments

Is potash the next big mining commodity in Australia ?

Potash is a group of potassium minerals (oxides, chlorides, sulphates, nitrates and carbonates) used for fertilizer production with the most commonly extracted being potassium chloride salts deposited as sedimentary salt beds formed by the evaporation of ancient seas.

BHP Billiton Ltd., the world’s largest mining company, said in recent days it agreed to acquire Athabasca Potash Inc. for about C$341 million ($322 million) to add to assets in Canada containing the crop nutrient potash.

Australian potash mining

Potash is far from the most glamorous product of the global mining industry, it is  however, one of the most important commodities mining provides to the world.

Mining  Growth in Australian & Global potash sector

Athabasca has one of the largest potash exploration permit areas in the so-called Saskatchewan basin, covering approximately 6,900 square kilometres (2,664 square miles), BHP said in a separate statement.

 

The Athabasca deal will give BHP access to a total exploration area of more than 14,000 square kilometres in the so-called Saskatchewan potash basin, BHP said. Saskatchewan represents approximately one-third of the world’s potash production capacity and has approximately 53% of global potash reserves. It is big business. Potash Corp of Saskatchewan is worth more than Barrick Gold – the market caps are $US39 billion and $US33 billion respectively.

Potash is the common name for potassium carbonate and various mined and manufactured salts that contain the element potassium in water-soluble form. In some rare cases, potash can be formed with traces of organic materials such as plant remains.

minerals and commodity miningpotaqsh

POTASH TECHNICAL INFO

The main potash mineral of potential economic interest on the Colorado project is sylvite – a high-potassium chloride salt (KCl) containing 63% potassium (K2O) by weight.  Sylvite is water soluble and the most favoured salt mineral for potash solution mining.

The sylvite-bearing rock is called sylvinite and typically contains about 10-50% sylvite mixed with halite, minor shale beds and other salts.  The main saleable product after mining and processing of the sylvinite is muriate of potassium (MOP) a sylvite and halite mix containing greater than 95% sylvite.

 

Potash and mining in australia

Potash is a source of potassium which, in fertilisers, raises yields and disease resistance for plants. The potash price has doubled in the past three years. Potash production rates are related to demand projections whilst salt output is roughly determined by the development required to achieve the potash target.

Potash is a general term covering several types of potassium salts, of which the most important is potassium chloride, the mineral sylvite.

Potash is a nutrient essential for plant growth, and is a cornerstone of modern agricultural fertilizers. Roughly 95 per cent of world potash production goes into fertilizer, while the other five per cent is used in commercial and industrial products – everything from soap to television tubes.

 

It is well-known that Australian soils are low in phosphorus. What is not so well-known is that many of our soils are also low in potassium. As a result, the animal manures that we increasingly use on our gardens in place of chemical fertilizers are also low in potassium. This has led to an increase in the incidence of plant diseases.

Australia now imports all its potash, but Reward is hoping to fill a large part of that demand. There’s just that native title barrier and, of course, further drilling before Reward can cross the production bridge. Although potash could never be described as a fungicide, its correct use can certainly minimize diseases such as blackspot, rust and powdery mildew. These appear most visibly on the leaves and fruit of affected plants, but can affect any part.

In 2005, these three emerging countries (China, India and Brazil ) consumed just 42% of the level of potash scientifically recommended for them. Now these three countries, “require a combined 25-million more potash tons annually to meet scientifically recommended application levels.”  On existing farmland, China should increase its potash consumption by more than 100%, while India should increase its consumption by more than 6-million tons, and Brazil by 5-million tons, annually.

The top producing country is Canada, followed by Russia, Belarus, Germany, and the US, while other important potash producers are Israel, Jordan, Brazil, and China.

mining wa

In fact, there are just 13 global competitors in the sector. They are (from biggest to smallest): Potash Corporation (PotashCorp) of Canada, Belaruskali (Belarus), Mosaic (Canada, US), Silvinit (Russia), Uralkali (Russia), ICL (Israel, Spain, UK), Kali+Salz (Germany), Sinofert (China), APC (Jordan), Agrium (Canada), Intrepid (US), Companhia Vale do Rio Doce (Brazil), and SQM (Chile).

DRILLING FOR POTASH

Solution mining costs are directly related to drilling cost and the quantity of potash produced from each well.  A variety of production well configurations for solution mining are available dependent upon the geology of the deposit.  Most solution mining has involved extracting potash-bearing solutions from flooded underground mines or used well designs which access the potash with vertical drill holes (technique recommended for the Colorado Potash Project).

These extraction techniques are the lowest cost solution mining operations and enable large tonnages to be mined.  With improved controlled drilling methods horizontal well designs are being employed that enable thinner, high-grade beds to be cost effectively extracted but these are generally higher cost, lower tonnage operations compared to the vertical well configurations.

And, it must be noted, PotashCorp holds 32% of SQM, 28% of APC, 22% of Sinofert, and 11% of ICL. All told, PotashCorp controls 22% of global potash capacity. The first ten of the companies listed above jointly hold more than 95% of global capacity

Other potash projects

Caldera Resources In

(Caldera is engaged in diamond exploration in Australia. Three projects are located in the Pilbara region of northern Western Australia, one of which is joint ventured with Mr. Ronald Winston. The Company also has one project located adjacent to the Ellendale Lamproite Field in the Kimberley region of Western Australia. Caldera also has three base metal/gold projects in South Australia.)

 

Potasio Rio Colorado (PRC) potash project in Argentina

AusPotash

Aus Potash is now a wholly owned subsidiary Sirius Exploration Plc. For further information, please go to: www.siriusexploration.com …
www.auspotash.com

Corumbá iron ore mine in Brazil

Passport Metals Inc

Talon Metals Corp

Sainik Coal Mining Pvt. Ltd., an India Company

Asia Pacific Potash Corporation’s Udon Potash Project in north-eastern Thailand

Australian Potash Company Pty Ltd

( Carnarvon Basin Project, an exploration property covering approximately 4,280 square kilometers of prospective potash horizons in an extensive evaporate basin known as the Southern Carnarvon Basin in Western Australia. Previous drilling, consisting of three widely spaced oil and gas wells over a distance of 25 kilometers, has indicated the potential for significant potash and other sodium and magnesium salts)

Boulby Potash Mine, United Kingdom

In the 1960s, with fertiliser demand growing and the UK reliant on imported potash, ICI decided to develop reserves 40km from its Cleveland facilities in north-east England. The 200ha mine site is at Boulby, half-way between the Tees estuary and the port of Whitby. The design capacity is now over 1.0Mt/y of potassium chloride (KCl) product, sufficient to maintain a 55% UK market share and substantial export sales

Fertilizers Related to potash which could see some interest at some stage :
Nitrogen (urea, ammonium nitrate, ammonium sulphate), phosphate fertilizers (superphospahte, dap, map) ,potassium (muriate of potash, sulfate of potash) , compound fertilizers (npk granulated, bulk blended)

Australian stock market today

by Leave a Comment

Australian stock market update today

It looks like the stockmarket got bitten by a huge aussie croc today with the market in freefall today.

  • Stocks hitting a new 52 week low include: Alesco Corp(ALS), AWE Ltd(AWE),Bannerman Resources(BMN), Elders(ELD) and Santos(STO)
  • Lihir Gold (LGL) Chairman Ross Garnaut said he has received “encouraging results” from testing the market for alternative bidders to Newcrest (NCM). He added that discussions are with more than one party and are at “various stages”. On the current NCM price the bid is worth 376c. LGL down 7c to 372c.
  • Origin Energy (ORG) announced the super tax could delay the timetable of their proposed APLNG LNG JV with ConocoPhillips. Both ORG and Conoco want to make a final investment decision on the project by the end of the year. ORG down 2.7% to 1513c.

      • Macarthur Coal (MCC) announced they are waiting on Peabody to consider the tax impact of their takeover and have extended their Gloucester Coal offer to May 27. MCC down 4.26% to 1304c.

    SENSEX SLUMPS 172 PTS ON WEAK GLOBAL CUES
    Markets were down owing to weak global cues after Beijing tightened its monetary policy over the weekend. Sensex ended at 17386.08 points. read more

    • Gindalbie Metals (GBG) in a trading halt pending a project update. GBG was down 6c to 102c before the halt.
    • Building Approvals up 15.3% in March, its highest percentage move in 6 and a half years.
    • Sales of new carsand trucks in Australia increased by a seasonably adjusted 12.9% in April from March.
  • Tabcorp (TAH) had an analyst’s presentation this morning. They say revenue has grown by 1.6% in the year to April 30, trading conditions remain uneven in the short term and that they are encountering pressure in Victoria and QLD from contracting gaming markets. TAH down 6c to 677c.
  • Westpac Bank (WBC) – 1st Half Profit Result – 1st H cash profit has come in at $2.983bn, up 30% from $2.3bn last year. Analysts were expecting on average the figure to come in at $2.857bn and have said this morning the result lacked some quality. WBC down 3.1% to 2647c.
  • News Corp (NWS) – 3rd Q Profit Result – Net profit came in at $US839m. The result has been described as good. NWS shares closed 3% lower overnight in the US but were up 4% in after market hours. NWS down 5.4% to 1873c.
  • ——————————————————————————-
  • U.K. stocks fell, led by commodity producers, amid concern Australia’s tax on resources companies will crimp profit at BHP Billiton Ltd. and Rio Tinto Group and BP Plc’s costs to clean up an oil spill will escalate
  • ———————————————————————————-
  • Australia’s central bank increased the benchmark interest rate for the sixth time since early October after policy makers raised their outlook for inflation and judged the nation is insulated from Greece-sparked debt woes.