Australian shares unmoved as financials offset gains from TPG-Vodafone deal; NZ slips

[BENGALURU] Australian shares ended flat on Thursday after the country's third and fourth-largest telecom operators announced a merger, creating a heavyweight challenger to the top two providers.

A merger of TPG Telecom and Hutchison Telecommunications (Australia), a Vodafone Group unit, would create a combined entity with an implied enterprise value of A$15 billion (S$14.9 billion).

TPG's shares climbed 18 per cent, while Hutchison sky-rocketed 44 per cent and Telstra shares added 2.9 per cent.

Despite the likelihood of increased competition from the merger, "the market seems to have taken the total opposite view to that for some reason," said James McGlew, executive director of corporate stockbroking at Argonaut.

"This is going to lead to a decrease in competition for Telstra and either way the market is embracing a sector that has been in the doghouse for a while. It just shows you how contrarian markets can be at times."

Weaker financials offset gains from the merger news, with the "Big Four" banks all in the red. Commonwealth Bank of Australia led the losses, down 1.5 per cent.

Westpac Banking fell 0.8 per cent after it raised its key mortgage rates on Wednesday to preserve its profit margins, first major lender to do so.

The bank's shares gained 2.7 per cent on Wednesday.

Westpac's decision lays open the field for its Big Four peers, which together control about 80 per cent of Australia's deposit and home loan markets. The move also sparked speculation the central bank will be forced to keep policy accommodative to offset such rate increases.

New Zealand's benchmark S&P/NZX 50 index slipped 0.2 per cent to 9,339.88, yet hovered around the record highs it hit in the previous session.

Index heavyweight a2 Milk Company fell 1.8 per cent, while stock exchange operator NZX Ltd lost 3.2 per cent.

An ANZ Bank survey found New Zealand's business confidence sunk to a decade-low in August, sparking fears that firms would hold off investment and dampen economic growth.

The survey result comes after Prime Minister Jacinda Ardern announced the formation of a council to advise on major issues facing the economy amid concerns over declining business confidence.

REUTERS