Fortescue Leads The Way With 8% Gain On An Up Day To Start Year

The Age

Thursday January 3, 2008

Vanessa Burrow

INVESTORS' interest in resource stocks crossed over into 2008, with Fortescue Metals proving the most favoured stock on the first day of trading.

The company, which has propelled founder Andrew Forrest to the top of Australia's rich list, added 60?, or 8%, to $8.10. The iron ore explorer has soared more than 500% in the past year (see comparative graph below).

And in another nod to resources, and iron ore in particular, BHP Billiton added 16? to $40.30.

Overall, the S&P/ASX 200 Index inched up 13.4 points, or 0.2%, to 6353.2. At one stage it was up 0.7% on news that Centro Properties Group had put itself up for sale.

Centro, along with related entity Centro Retail Trust, has called for expressions of interest for a full acquisition, or for the acquisition of the group's stake in its Australian and US wholesale funds.

Centro Properties shot up 23?, or 23%, to $1.24 but by the close was only 3? higher, at $1.04. Centro Retail, however, rose 5?, or 5.3%, to $1.

Another factor behind the market's rise was last month's strong Australian manufacturing data. The Australian PMI index, put together by the Australian Industry Group and PricewaterhouseCoopers, rose 3.8 points to 57.6 points, well above the level that distinguishes growth from contraction.

Manufacturers said domestic demand was solid, and Ai Group chief executive Heather Ridout said the strong domestic economy was responsible for the "remarkably resilient" result.

US manufacturing figures were due for release overnight, with economists predicting growth in the sector would be the slowest in 11 months.

US sharemarket growth has also slowed: during 2007 the Dow Jones Industrial Average gained 6.4%, the S&P 500 rose 3.5% and the Nasdaq Composite added 9.8%.

In Europe, London's FTSE 100 rose just 2.5% but Germany's DAX 30 Index climbed 20.6%.

Joseph Palmer & Sons director Alex Moffatt said that despite the threat of a US recession, he expected the Australian sharemarket to achieve moderate growth of 7% in 2008, with the S&P/ASX 200 Index reaching 6800 points by the end of the year.

He said resource stocks with a proven track record would continue to perform while food stocks would benefit from growing demand, particularly in Asian countries.

Chosen food stocks include salmon and ocean trout producer Tassel Group, Australian Agricultural Co (AAco) and Clean Seas Tuna. Tassal rose 10?, or 2.4%, to $4.30 yesterday while AAco gained 4? to $3.24. Clean Seas Tuna added 1? to $1.61.

As for the biotechnology sector, Biotech Daily editor David Langsam said seven of the country's top biotechnology companies more than doubled in value during 2007.

But the top 40 companies, excluding the large-capitalisation CSL, Cochlear and ResMed, were down 0.4% for the year, whereas the S&P/ASX 200 Index gained almost 12%.

"The single outstanding performer for the year was Living Cell Technologies, up 208.7% from $23 million to $71 million," Mr Langsam said. The company has announced positive results in treating type 1 diabetes. Living Cell added 1?, or 2.7%, to 37.5? yesterday. CSL, which ended 2007 67.6% higher, gained 21? to $36.57 and Cochlear which climbed 31.1% last year, added 10? to $75.

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© 2008 The Age

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