News Wrap

IN THIS morning’s News Wrap: Resources investors demand big payday; China economic growth slowing, says HSBC; and power companies warn Abbott on carbon.

Staff Reporter

Resources investors demand big payday

Investors are urging resources companies to return billions of dollars more capital to shareholders as they cut costs and scale back expenditure on new projects after Woodside Petroleum boosted its dividends, according to the Australian Financial Review.

Perpetual head of equities Matt Williams said the extra dividends were a positive development and called for fixed payout ratio targets to be adopted by other companies such as banks.

“I think a fixed payout ratio would instill a stronger culture of capital discipline within those companies,” Williams said. “There is also plenty of franking credit sitting idle that could be utilised by Australian shareholders.”

Rising costs and weaker commodity prices have forced global miners including Rio Tinto, BHP Billiton and Anglo American to install new management focused on capital management rather than expensive growth projects.

China economic growth slowing, says HSBC

After three decades of double-digit growth, China’s economy is slowing down to what policymakers are calling a more “normal” level, according to the Australian Financial Review.

Two economic reports released on Tuesday showed that business activity across the manufacturing and property sectors remained weak, with new export orders, factory hirings and construction all posting recent declines.

The HSBC flash purchasing managers’ index, an early snapshot of activity across China’s manufacturing sector, dropped to 50.5 this month, down from a final reading of 51.6 in March.

Separately, the Capital Economics China Activity Proxy, which tracks growth based on trade, transport figures, construction activity, electricity output and domestic freight, suggested the economy grew 6.5% in the first quarter, less than the 7.7% reported by the National Bureau of Statistics last week.

Power companies warn Abbott on carbon

Power companies are demanding the federal opposition rethink its “direct action’’ plan for reducing carbon emissions, warning that its company baseline approach could be more difficult to operate than Labor’s trading scheme, according to the Australian Financial Review.

The Energy Supply Association of Australia said falling demand for power meant the Coalition must review its energy and climate change policy if it gains power at the September 14 federal election.

The warning comes amid growing support by multinational companies and major business groups for a market-based scheme, such as an emissions trading scheme, linked to the currently low prices set in European and other international markets.