When markets retreat and share trading volumes are light, talk often turns to takeovers. Sometimes it is a case of hedge funds trying to generate interest in a stock to talk up their book, and other times it is because the share price has fallen so low that it becomes cheap enough to attract interest.
In the local equities market, volume at midday was $1.3 billion, which is well below the daily average $4 billion that usually goes through, and the $6 billion to $7 billion at the peak.
Light volumes and falling markets turn the spotlight on stocks that have either had a sudden share price surge or above-average turnover.
This morning Perpetual attracted headlines when it was queried by the ASX over a share-price spike and rumours that a private equity fund was looking at making a bid. In response to the ASX, Perpetual said it was unaware of any explanation for the price rise other than the market reaction to media speculation about an interested buyer.
The other stock in focus today is Fairfax Media, when 42 million shares, or 1.8 per cent of the share register, was put through at 12.28 pm (AEST) by Southern Cross.
The share bulge naturally raised speculation that the company’s biggest shareholder Gina Rinehart might be increasing her stake beyond 13 per cent to improve her chances of getting a seat on the Fairfax board. (Fairfax is publisher of this website.)
Other companies are the subject of market speculation, including Qantas and Echo. In some cases a bid will emerge. In others, though, it will be an attempt to inflate the share price as hedge-fund activity increases around certain stocks.
But the one constant will be that markets remain volatile until Europe sorts itself out.
The hope the Greek elections on Sunday will produce a stable government that will help settle investor fears. But that isn’t necessarily the case.
There is still the problem of Spain which wasn’t helped by the decision by Moody’s overnight to downgrade it rating on Spanish government debt by three notches to Baa3 from A3, saying the newly approved eurozone plan to help the nation’s banks will increase the country’s debt burden.
While it is good that there has been a bailout of Spain’s banks, there is scepticism about what conditions have been attached.
Spain has said there will be minimal conditions but few believe such statements. Conditions will be announced later.
A cynic could be forgiven for thinking the bailout was announced to encourage the Greeks to vote sensibly at the weekend.
As one observer said: “the bailout announcement would no doubt encourage Greek voters to elect candidates this weekend who would keep Greece in its austerity program. That is, look how bad things are – even Spain needs a bailout.”
The upshot is the Greeks will learn about the Spanish rescue conditions after they have voted. If they are not to their liking, watch out Europe.
This story Administrator ready to work first appeared on Nanjing Night Net.