The Match Out: UBS rescues CS, but market concerns remain

The daily Match Out for Monday 20 March with Market Matters' James Gerrish.
James Gerrish

Market Matters

The Sunday night of UBS’s takeover of Credit Suisse helped the market stem losses early in the session, however, the afternoon showed there are still plenty of nerves around the current market and the banking crisis. At midday, the ASX200 was 40pts above its early session low before the sellers returned once most Asian markets opened, all falling in unison to take the index to the lowest level in more than 4 months to close below 6900. Gold was once again the place to hide, making up the bulk of the winners today, though the materials sector still closed -0.79% lower. In total 7 of the 11 sectors on our market were down by more than 1%, while Telcos bucked the trend to close higher.

  • The ASX 200 finished down -96pts/ -1.38% at 6898
  • Telcos (+0.39%) were the best on ground and the only sector in the black.
  • Energy (-3.01%) was the worst performer today, followed by Real Estate (-2.49%). Staples, Financials, Consumer Discretionary, Tech and Industrials were all worse off by more than 1%.
  • UBS has agreed to buy Credit Suisse for $US3b (~$A4.5b) in a Government backed deal. Worrying investors is the total wipe out of Credit Suisse’s ~$US17b hybrids causing significant concern in debt markets
  • Amidst the turmoil, gold equities were strong performers today, proving their worth as a risk hedge after a strong rally in precious metals on Friday night. Gold Road Resources (ASX: GOR) and Evolution Mining (ASX: EVN) were both up over 10%.
  • Healius (ASX: HLS) +8.27%, jumped after Australian Clinical Labs (ASX: ACL) made a takeover offer, though the stock closed above terms.
  • AMP (ASX: AMP) +0.51% another amendment to terms with the sale of Collimate to Dexus (ASX: DXS) with AMP to receive $175m now, with the remaining $50m tied to completing the handover by September.
  • Iron Ore was ~1.3% lower in Asia today weighing on the space with Fortescue (ASX: FMG) -2.89% the hardest hit
  • Gold rallied to an 11-month high on Friday before easing somewhat in Asia today. It is currently down $US12/-0.64% at $US1976/oz
  • Asian stocks struggled, Nikkei -1.21% and the Hang Seng is down ~2.50%.
  • US Futures are mixed with small gains in the S&P and Nasdaq futures while the Dow Futures are down -0.12%

ASX 200 Chart

Market Matters In the Media

Market Matters Portfolio Manager Harry Watt joined Ausbiz this morning for a timely chat about the UBS takeover of Credit Suisse and some other M&A dealings in the works.

Click here to watch.

Harry Watt on Ausbiz

Healius (ASX: HLS) $3.01 & Australian Clinical Labs (ASX: ACL) $3.68

HLS +8.27%: Healius jumped today after a takeover bid from competitor Australian Clinical labs was announced pre-market. The deal would see Healius shareholders receive 0.74 ACL shares for each HLS owned, which represents no premium to Friday’s close price, but Healius shareholders would end up with 68% of the combined group. The strange deal, where the smaller ACL is the aggressor, is banking on becoming the largest pathology company in Australia with significant synergy upside in the range of ~$95m in EBIT, nearly as much as consensus estimates have Healius pencilled in for in FY23. While a deal makes sense, it's unlikely to see a stamp of approval on current terms given Healius closed at a ~10% premium to the offer.

Broker Moves

  • Kelsian Group Raised to Outperform at Taylor Collison
  • Synlait Milk Cut to Underperform at Macquarie; PT NZ$2.61

Major Movers Today

Have a great night

The Market Matters Team

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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