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Colin Lea
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The author is Australian with a long term interest and personal stake in financial planning and management. He works within the Financial Services Industry, is a member of the FPA Australia, and is a Certified Gold Seeking Alpha Contributor. Prior professional background of 20 years in military... More
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Carey Group
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  • Utilities Purchase For Sun Tzu Portfolio

    I have made a decision to allocate the remaining portion of cash in the Sun Tzu Portfolio to a utilities BUY for PPL Corporation (NYSE:PPL).

    250 x PPL @ $29.185 p/s @ 12:30pm = $7296.25

    I will outline the reason for the purchase in Part V of my Sun Tzu Series.

    Disclosure: I am long PPL.

    Additional disclosure: This advice is general advice only. You should seek independant financial advice prior to making any investments of your own.

    Sep 07 1:08 PM | Link | Comment!
  • China Unleashes $158B Infrastructure Spend

    Interesting article on China's latest infrastructure spend. Makes me wonder what Australia got from the Labor Government's 'stimulus' during the GFC....

    (Financial Times) -- China has approved plans for Rmb1tn ($158bn) in infrastructure spending, an investment push that analysts say will help support growth in the stuttering economy.

    The money will be rolled out over several years and the government has not described the investments as a stimulus package, but the announcements nevertheless fuelled renewed optimism about China's prospects.

    The domestic stock market surged more than 4 per cent in early trading on Friday, reflecting the hope of investors that China could be on the verge of turning the corner after two years of consistently slower growth.

    "With clear signs of a worsening slowdown of economic growth, China's central government finally took real actions," said Lu Ting, an economist with Bank of America Merrill Lynch.

    China's growth fell to 7.6 per cent in the second quarter, its lowest in three years, and data in recent months has pointed to an even steeper slowdown this quarter. Economic indicators for August, to be published over the weekend, are expected to show sluggish industrial output.

    Analysts had long predicted that the government would intervene with more fiscal spending and monetary easing to cushion the slowdown, but the nation's top leaders have been very cautious and have only made mild moves so far.

    Fear of overstimulating the economy, as happened in 2009, has been one major constraint. Officials also appear to have been preoccupied with politics as a once-in-a-decade leadership transition is set to take place later this year.

    In the announcements over the past two days, the National Development and Reform Commission, a top central planning agency, has approved 25 urban rail projects, 13 highway construction projects, seven waterway projects and nine waste water treatment plants. The total cost of the projects is estimated to be about Rmb1tn, or 2 per cent of gross domestic product.

    "We believe implementation of these projects will begin in the coming months, which will cause fixed asset investment growth to rise. The impact should start to be reflected in GDP numbers in the fourth quarter of 2012," said Zhang Zhiwei, an economist with Nomura Securities.

    Projects spearheaded by the NDRC are seen by analysts as much more credible spending commitments than those announced by a series of local governments in recent months.

    Local officials are keen to prop up growth, but they are struggling to find the means to do so, because their tax and land-sale revenues are flagging and they are effectively barred from borrowing money. By contrast, once projects have received the NDRC's stamp of approval, funding is usually a formality, with either banks providing the financing or the government arranging for bond issuances.

    Disclosure: I am long BHP.

    Additional disclosure: This is a Financial Times article.

    Sep 07 9:50 AM | Link | 1 Comment
  • Fortescue Stays Confident On China As H2 Profit Rises

    Following report in Reuters today.

    Wed Aug 22, 2012 10:47pm EDT

    * H2 net profit up 8 pct to $758 mln vs $716 mln consensus

    * Sees benefits from mining boom continuing for some time

    * Says selling all ore, sees price recovery to $120-150/T

    * On track to ramp up production to 155 mln T/yr by mid-2013 (Adds comments)

    Aug 23 (Reuters) - Australia's Fortescue Metals Group remained confident about the prospects for a pick-up in Chinese demand and prices for iron ore after posting a stronger-than-expected 8 percent rise in second-half profit on Wednesday.

    With iron ore prices having sunk to their lowest levels since December 2009 on worries about Chinese growth, investors are nervous Fortescue may face a funding shortfall for its $9 billion project to triple its annual operating rate to 155 million tonnes by July 2013.

    Australia's no.3 iron ore miner put on a brave face, saying it remains confident China's demand for the key steel-making ingredient will improve later this year as steel output picks up on the back of government moves to boost infrastructure spending.

    "In the short term we have seen an overrun of steel supply capacity and that has driven a reduction in steel prices," Chief Executive Nev Power told reporters.

    "We expect to see iron prices return to the $120 to $150 range in the short-term to medium term."

    Iron ore with 62 percent iron content .IO62-CNI=SI, the industry benchmark, fell 2.7 percent to $106.40 a tonne on Tuesday, its weakest since Dec. 16, 2009, based on data from the Steel Index.

    The slowdown in China and corresponding falls in prices for iron ore, coal and other resources has prompted major miners including BHP Billiton and Xstrata to scale back projects, with BHP shelving a planned $20 billion expansion of its Olympic Dam copper and uranium mine.

    On Thursday, Australia's resources minister said the boom that had shielded the country's economy from the global financial crisis had ended.

    Fortescue sounded a more upbeat note, hailing a "spectacular" year and saying the boom was not over by any measure.

    "There is a boom and it's continuing and those volumes will continue in the future, bringing enormous benefits to Australia," Power said

    Net profit for the six months to June rose to $758 million from $705 million a year earlier, as calculated by Reuters off full-year figures. Analysts had expected a second-half profit of $716 million, according to Thomson Reuters I/B/E/S.

    Fortescue shares steadied at A$4.15 on Thursday, valuing founder Andrew "Twiggy" Forrest's holding of about one billion shares at more than A$4 billion.

    The stock has slumped by about a third from a high of A$6.18 in March against a 2 percent gain in the broader market due to concerns about soft iron ore prices sapping the miner's capacity to fund its ambitious expansion. (Reporting by Sonali Paul in Melbourne and Lincoln Feast in Sydney; Editing by Edwina Gibbs)

    Disclosure: I am long BHP.

    Additional disclosure: This is a shared story from

    Aug 23 11:36 AM | Link | 3 Comments
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