ASX CLOSE: Market closes higher on broad based gains

Tuesday 29th December 2009

Across Asia, regional indices are broadly lower despite the relatively positive leads from US markets overnight. The Kospi is the region's worst performer, lower by 0.9% while the Shanghai Composite is weaker by 0.6%. Elsewhere, the Hang Seng is flat while the Nikkei 225 is higher by 0.1%.

It's certainly been a different story in Australia today, with the ASX 200 closing higher by 1.1% at 4845.1 on broad based gains. All of our heavyweight sectors saw solid buying interest with the financial, materials, and energy sectors firmer by more than 1%. Solid percentage gains were also seen across the consumer (staples and discretionary), telecommunications and utilities sectors.

Amongst the most widely held and popularly traded stocks, miners BHP and Rio Tinto closed up 1.1% and 1.3% respectively, gold plays Newcrest Mining and Lihir Gold were both higher more than 0.3% on a stabilising gold price, and the Big-4 banks all finished well into positive territory led by the National Australia Bank which ended up 1.8%.

In corporate news, the big story of the day was Nufarm rebuffing Sinochem's lower revised takeover offer of $12 per share, instead announcing a strategic alliance with Sumitomo Chemical Co. who will buy a 20% stake in the company through a tender offer to shareholders at a price of $14 per share.

This is a great result for Nufarm shareholders. Heading into Christmas they were contemplating a lower offer price from Sinochem and the likelihood of the share price getting smashed all the way back to the $8 range had the Board rejected the bid with no other suitors in sight. As is were, Sumitomo turned out to be the white knight waiting in the wings, happy to give shareholders the opportunity to sell out part of their stake (up to 20%) at $14 per share, while retaining a decent percentage to benefit from a turnaround in performance. Christmas certainly came twice this year for Nufarm shareholders. Nufarm shares closed higher by 2.8%

Elsewhere in the M&A space, we today saw midcap gold miner Avoca Resources make an unconditional $1.25 per share offer for the 55% of Dioro Exploration shares it doesn't already own. On the news Avoca and Dioro shares both finished higher by 0.8%.

This transaction is just one example of the ramp-up in consolidation that is expected in the resources sector next year as corporates become more comfortable in pursuing growth by acquisition and as market conditions continue to improve.

Volumes were again light as you would expect, so it may not be until the second half of January, when normal market depth returns, that we will have a true read on the conviction behind the buying we have seen in recent sessions.

Prices are in AUD unless otherwise stated.
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