Asia watch

By THIS IS MONEY
Updated:

 

London-listed resources giant Rio Tinto today launched a hostile A$2.8bn (£1.12bn) bid for Australian miner North, a move that would make Rio the world's second-largest producer of iron ore.

Rio's surprise bid is at a 30% premium to North's closing price yesterday, and yet North shares spiked 34% to trade at A$3.92 after a trading halt, 12 cents higher than the Rio bid. North rejected the offer as inadequate.

Australian mining analysts are speculating that the Rio move may flush out another bidder, with many looking to Western Mining Corporation.

Shares in WMC were also upwardly mobile, ahead more than 3%, with some observers predicting the company could itself be a takeover target. Rio shares were up 1% to A$25.25. There is talk that Rio may be forced to raise its bid, given the possibility of rival suitors and the opposition of the North board. Rio built a 14.5% stake in North before revealing the bid.

North's chief assets are 53% of the Robe River iron ore mine in Western Australia, and a 56% stake in the Iron Ore Company of Canada. The company also produces uranium, copper, gold and zinc.

The North bid boosted Australian resources stocks, but Sydney's All Ordinaries was off 5.1 to 3118.5. A 2.4% fall for Rupert Murdoch's News Corporation put pressure on the index.

In Seoul leading conglomerate Hyundai said it was on the verge of making an announcement on an equity alliance between its carmaking division and US-German giant DaimlerChrysler.

A Hyundai spokesman said the two companies had 'agreed on major points of the deal'. He added: 'I'm sure there will be no turning back.' There was no mention of a joint bid for failed Daewoo Motor, considered the original motivation for the tieup.

Hyundai Motor shares were up 4.3%, while other Hyundai group shares moved higher in the aftermath of yesterday's deal for US insurer AIG to take a major stake in the group's investment arm. The Kospi index was down 11.10 to 771.14.

Tokyo's Nikkei 225 Average rose 80.09 to 17,186.10 before closing down 142.80 at 16,963.21.

A weaker dollar against the yen, hovering around 104.70 against the Japanese unit, weighed on exporting blue-chips such as Sony, down 1% to 10,000 yen. Rumours of intervention by the Bank of Japan weakened the currency from its overnight highs, and helped limit the damage.

Mobile phones group NTT Docomo was off 1.3% amid speculation it was set to join the bidding for third-generation mobile licences in Britain. On the new Nasdaq Japan, the closely watched debut of investment information provider Morningstar was a success, the shares trading at 10 million yen against the seven million yen issue price.

The slide on US markets overnight soured sentiment in Hong Kong, and the Hang Seng index was down 101.60 points to 15,850.76. Yesterday's debutant, China Unicom, fell 3.87% after rising 8% yesterday, the shares at HK$16.15 against the HK$15.58 institutional issue price.

Taiwan's Composite index fell 51.34 to 8720.43, Malaysia's Composite was down 10.67 to 811.92, and Jakarta's Composite slipped 5.50 to 496.30. Thailand's SET was a marginal 0.77 better at 334.80.

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