close
Ashanti Mailing List

Join our distribution list for direct access to exclusive corporate opportunities

* Indicates a required field
Logo
Please enable images to view this content
26 June 2019 06:50 AM
Overseas Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Dow Jones Industrial Average26,54826,728-179.00-0.673.76
S&P 5002,9172,945-28.00-0.953.23
NASDAQ7,8858,006-121.00-1.513.24
FTSE 100 Index7,4227,4176.000.081.99
DAX 3012,2280-46.00-0.381.81
CAC 40 Index5,5155,522-7.00-0.133.73
Nikkei 225 (Japan)21,19421,286-92.00-0.430.36
HKSE28,18628,513-327.00-1.153.04
SSE Composite Index2,9823,008-26.00-0.874.52
S&P/TSX Composite Index16,37116,523-152.00-0.920.87
NZ 5010,42410,4185.000.051.97
US Volatility (Vix)16
Overseas Market Report

US sharemarkets were weaker on Tuesday. Shares in home builder Lennar fell on weaker profit guidance. Traders also were disappointed that the US Fed chief wasn't more forthright on the interest rate outlook. In the pharmaceutical sector, AbbVie Inc said it would buy Botox maker, Allergan Plc for about $63 billion. The Dow Jones index fell by 179 points or 0.7% after being down 200 points. The S&P500 index fell by 28 points or 1.0% and the Nasdaq fell by 121 points or 1.5%. 

Global oil prices were mixed on Tuesday. Investors are watching US-Iran tensions. Also OPEC and its allies, including Russia, meet to decide production curbs on July 1-2. And traders await the US China trade talks on June 28-29. The Brent crude price rose by US19 cents or 0.3% to US$65.05 a barrel. But the US Nymex fell by US7 cents or 0.1% to US$57.83 a barrel. 

Base metal prices rose by 1.3-1.8% on Tuesday with zinc doing the best. But tin fell by 0.2%. 

The gold futures price rose by US50 cents an ounce or less than 0.1% to US$1,418.70 an ounce. But the spot gold price was trading near US$1,423 an ounce in late US trade. Iron ore fell by US$2.55 or 2.2% to US$113.75 a tonne.

CommoditiesCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Oil Brent65.0564.860.190.29-5.30
Oil - West Texas crude58.7157.830.881.520.14
Gold Spot $/OZ1,417.001,423.00-6.60-0.4610.28
Silver Spot $/OZ15.3015.40-0.10-0.355.13
Iron Ore110.40111.30-0.90-0.7718.88
Thermal Coal Newcastle71.0070.600.400.50-15.18
APAC Hard Coking Coal FOB192.00192.50-0.50-0.26-5.88
Aluminium ($US/t)1,7911,76923.001.271.14
Copper Mar-18 ($US/lb)2.732.74-0.90-0.350.72
Lead ($US/t)1,9341,90727.001.406.53
Nickel ($US/t)12,23412,070165.001.36-0.92
Zinc ($US/t)2,6602,61347.001.78-2.26
Tin ($US/t)19,06519,095-30.00-0.16-2.68
Uranium ($US/lb)25.0025.000.000.202.07
Australian Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
ASX All Ords6,7356,745-11.00-0.162.89
S&P/ASX 2006,6586,665-7.00-0.113.13
ASX 24 Futures6,558
Australian Market Report

Tuesday 25 June - close. The Australian share market has closed marginally lower following a seesaw session. The benchmark S&P/ASX200 index closed down 7.4 points, or 0.11 per cent, to 6,658 points at 1615 AEST on Tuesday, while the broader All Ordinaries fell 11 points, or 0.16 per cent, to 6,734.5.

Ashanti Headlines

Industry Insight - Telco/tech: Huawei

Last Wednesday Ashanti's Sydney office hosted the CEO and Deputy CEO of Huawei Australia for lunch in Sydney. Something a little bit different but very topical and we were keen to find out what the company is doing amidst the US/China trade war, the rollout of 5G globally and the Australian government embargo on Huawei equipment in 5G networks.

 

Huawei is a $100bn revenue business globally and Australia represent ~$700m of that. The company’s view is that the decision by the government to embargo them as a product vendor will substantially increase the cost of the deployment in Australia and there are no prizes for guessing who will take the brunt of that… the consumer.

 

5G requires the rollout of new antennas on top of the existing towers that host the current 4G network. Contrary to our understanding Huawei hardware is actually more expensive than most of their competitors (Ericsson, Nokia etc) however is also considerably more efficient to install. Their hardware is smaller and lighter than those competitors. So why the additional cost? As an example, of the existing towers only half are actually able to be fitted with a 5G antennas. Of those ~50% the vast majority will need to be retrofitted at considerable cost to handle the weight of the non-Huawei antenna. Another example is the considerable power differential compared to competitor products. The company suggested based on their current rollouts/testing they are almost twice as efficient from an opex energy cost perspective and also means the power infrastructure will need to be modified/modernised to fit competitor products.

 

In our opinion, while Huawei is restricted from being involved in the 5G rollout, the biggest winner is Telstra. Optus/Vodafone have been vocal that Huawei’s embargo has not affected their 5G rollout plans and they have received some aggressive responses to their tenders with respect to capex costs but as we mentioned in Huawei’s view is this doesn’t reflect the ancillary costs of installing equipment from these vendors. With no Huawei, the deployment will be more expensive and slower than they are marketing to consumers/investors. However, Telstra have the balance sheet and scale advantage to carry the burden of these additional costs and rollout a network that nobody else will be able to compete with and have already started. Optus isn’t far behind them and Vodafone is touting a rollout in 2020 but the plan for them was always to use Huawei and now that has changed, can they build a network that can compete with Telstra.. we think not.

 

Please call the Sydney dealing desk on +61 2 9060 3001 or email Sam Christie @ sc@ashanticapital.com.au if you want to discuss further.


Have a question? admin@ashanticapital.com.au

ERA Communications