TWTW - Takeovers, Tariffs & Social Media

Hello!

We hope everyone is enjoying their weekend so far!

We're trying something a bit different with a weekend newsletter to help you stay on top of the important news stories you may have missed. We've handpicked the five most significant stories that shaped the markets this week.

Plus, we're spotlighting the week's biggest movers on the ASX.

We'd love to hear your thoughts on this new format. Enjoy!

#1 Australia Bans Social Media for Under 16s

Australia has become the first country to implement a comprehensive social media ban for users under 16, set to take effect in late 2025. The legislation, which passed the Senate with support from the Coalition, will require major platforms to prevent users under 16 from creating accounts.

The platforms affected by the ban include:

• Instagram

• Snapchat

• TikTok

• X (formerly Twitter)

• Facebook

• Reddit

The ban excludes certain platforms, such as YouTube (for video viewing), messaging apps (Whatsapp), online gaming platforms (Roblox), and educational services. The government plans to trial "age assurance" technology to determine the most effective methods for age verification.

The bill faced criticism from the crossbench and some Coalition senators, including Greens communications spokesperson Sarah Hanson-Young, who argues that excluding young people isn't the solution to platform safety. This legislation sets Australia apart from other jurisdictions like France and some U.S. states, which have implemented less stringent restrictions requiring parental permission rather than imposing an absolute ban.

#2 Trump Announces Major Tariff Plans for 2025

President-elect Donald Trump has announced plans to implement substantial tariffs against major trading partners.

The proposed Tariffs:

• 25% tariff on ALL products from Mexico and Canada

• Additional 10% tariff on Chinese imports (on top of existing tariffs)

Trump positions these measures as a response to illegal immigration and drug trafficking, particularly fentanyl. "This Tariff will remain in effect until such time as Drugs, in particular Fentanyl and all Illegal Aliens, stop this Invasion of our Country!" Trump stated on the social media platform Truth Social.

The blanket 25% tariff on Canadian and Mexican goods would represent one of the most substantial trade barriers between the three nations since before the NAFTA agreement, while the additional Chinese tariffs could further escalate existing trade tensions with Beijing.

The Chinese Embassy in Washington has already responded, emphasising the mutual benefits of U.S.-China economic cooperation and warning against trade wars. The proposed policy could significantly impact international trade relationships and consumer prices across North America.

#3 Deals and Takeovers

It was a busy week for takeover offers for ASX companies:

• SG Fleet confirmed on Monday that it's in discussions with Pacific Equity Partners (PEP) regarding a potential takeover bid at $3.50 per share. The company's board granted PEP exclusive due diligence rights until Friday, November 29, 2024, to facilitate a binding offer and negotiate a scheme implementation deed. On Friday, SG Fleet and PEP agreed to extend the exclusivity period by one week to agree on the terms of a Scheme Implementation Deed. SG Fleet shares finished the week up almost 24% to close at $3.31 per share.

• IAG and RACQ announced a major strategic alliance, with IAG set to acquire 90% of RACQ's insurance underwriting business for $855 million, plus an option to purchase the remaining 10% after two years. The 25-year exclusive agreement includes a $522 million payment for shares based on an NTA value and $333 million for the distribution rights. The deal is expected to add $1.3 billion to IAG's Gross Written Premiums and deliver annual synergies exceeding $50 million.

• AVJennings received a board-endorsed $370 million takeover bid from Proprium Capital Partners and AVID Property Group, offering shareholders $0.67 per share plus a potential 6¢ special dividend. AV Jennings shares ended the week 72% higher to finish at $0.62 per share.

#4 Oil Prices Drop as Middle East Tensions Ease

Brent crude and U.S. West Texas Intermediate (WTI) are set to end the week down more than 3.0%, with Brent falling 3.3% to $71.98/bbl and WTI dropping 3.8% to $68.14/bbl.

The decrease comes as concerns over potential supply disruptions from the Israel-Hezbollah conflict have eased despite both sides trading accusations of ceasefire violations. Despite ongoing tensions, oil supplies from the Middle East have remained largely unaffected by Israel's parallel conflicts with Hezbollah and Hamas.

OPEC+ has postponed its next policy meeting to December 5, where the organisation is expected to discuss extending production cuts. Market analysts BMI, a unit of Fitch Solutions, have adjusted their outlook, lowering their 2025 Brent price forecast to $76/bbl, citing bearish fundamentals and ongoing market weakness.

#5 Rate Cut Abandon

Leading economists from AMP, ANZ Bank, and Bank of Queensland revised their forecasts for Reserve Bank of Australia (RBA) interest rate cuts this week, abandoning earlier predictions of February easing in favour of May 2024. This shift aligns with several other major financial institutions, including Westpac and NAB.

Commonwealth Bank is the only major bank still predicting a February cut.

The revision follows RBA Governor Michele Bullock's recent statement that underlying inflation remains too high for near-term rate reductions. With October's trimmed mean inflation at 3.5%, up from September's 3.2%, figures remain well above the RBA's 2-3% target range.

Market data reflects this sentiment, with traders pricing only a 28% chance of a February rate cut.

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💰️ Weekly Movers & Shakers 👇️ 

Some of the ASX companies that saw sharp moves this week ⬇️ 

The Winners

1. SG Fleet received a takeover offer from Pacific Equity Partners (PEP) valued at $3.50 per share.

2. Web Travel Group reported half-year earnings on Wednesday, reporting a $52.5 million underlying net profit and $70 million EBITDA for the six months to September 30.

3. Opthea announced that Sozinibercept, a novel therapy for retinal diseases, will be presented at the FLORetina Congress in Florence this December.

4. Mesoblast - no key announcements this week; stock continues to have positive momentum, up over 330% in the last year.

5. Pro Medicus shares rose after it announced its largest-ever contract win on Thursday, a $330 million, 10-year contract with U.S.-based NGO Trinity Health.

The Losers

1. Boss Energy - The Uranium price remains under pressure, down 2.5% for the week and 14.7% YTD. Boss Energy is the second most shorted stock on the ASX at 14.63%

2. Pilbara Minerals - Has been on a steady downtrend in November. It traded flat on Friday, breaking a ten-day losing streak. Lithium prices fell by around 1% for the week. Pilbara Minerals lost the unwanted mantel of the most shorted stock on the ASX this week, dropping to #5 at 11.59%.

3. Paladin Energy - The Uranium price remains under pressure, down 2.5% for the week and 14.7% YTD. Paladin fell 5.02% on Thursday and a further 2.06% on Friday, the day of its AGM. Paladin Energy is the most shorted stock on the ASX at 14.74%.

4. Yancoal Australia - No key news driving this week’s share price performance. Coal prices were down 1.5% for the week. Fellow coal miners Whitehaven Coal (-5.60%) and New Hope (-4.08%) also saw sharp drops.

5. MA Financial Group - No key news driving down the share price this week.

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DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your research before making any investment.