Virgin Blue enters trading halt, Housing lending rises: Economy roundup

Low-cost airline Virgin Blue has been placed in a trading halt following a request from the company to the Australian Securities Exchange.

The statement said Virgin securities are in a halt until Wednesday, or when a further statement is released. The company has denied reports it will embark on a share issue to raise $400 million.

The halt may be related to plans announced last week to form a join venture with US carrier Delta, in order to increase competitiveness in the US, Australian and South Pacific markets.

Share market flat

The Australian share market has opened flat, following negative leads from Wall Street last week and ahead of economic data results in the US. The benchmark S&P/ASX200 index was down 21.9 points or 0.58% to 3772.2 at 12.05 AEST. The Australian dollar also opened lower at US77c.

Commonwealth Bank shares lost 0.6% to $37.21, while NAB also lost 1.5% to $22.05. ANZ lost 0.2% to $16, while Westpac also fell 0.2% to $19.12.

CSR looks for buyers for sugar business

CSR has said it is considering several options regarding the demerger of its sugar and renewable energy business, as rumours have surfaced that the company is looking for buyers to take a 20-25% share in its sugar business.

“CSR is considering a range of options for the structure of the two businesses on demerger. No decisions have yet been taken on the range of options available,” the company said in a statement to the ASX.

International wine and beer company Constellation Brands has recorded an 18% decline in first quarter profit due to lower margins. Profit fell to $268.7 million in the first quarter of the company’s financial year, compared to $329 million in the previous corresponding period.

The decrease was primarily due to an unfavourable mix of sales towards lower margin products, an unfavourable year-over-year foreign currency translation impact of $19.6 million and a decrease in gross profit of $15.3 million related to the sale of two businesses.

“The economic and consumer conditions in the company’s key markets and on a global basis are currently very challenging and are contributing to an increasing intensity of the competitive environment in the marketplace,” it said in a statement

Housing lending up

New figures from the Australian Bureau of Statistics show the total value of owner occupied housing commitments increased by a seasonally adjusted 2.3% during May.

The value of total personal finance commitments decreased by a seasonally adjusted 2.9%, while revolving credit commitments dropped 4.8%, and fixed lending commitments fell 0.8%.

In commercial financial, total commitments increased by a seasonally adjusted 4%, with fixed lending commitments up 4.1% and revolving credit commitments up 3.8%. Lease finance commitments also dropped by 1.9%.

ACCC backs new cartel laws

Chief of the Australian Competition and Consumer Commission, Graeme Samuel, has said new laws intended to regulate criminal cartels are not un-Australian.

Under the new laws, which come into effect on July 24, criminals participating in illegal cartels can no longer buy their way out of jail but can be given immunity from prosecution if they report their behaviour to authorities.

“Someone said to me … `that’s very un-Australian, isn’t it, encouraging business people to dob on their mates?'” Samuel told Sky News. “My response was to say no, it is far more un-Australian to be stealing from your fellow Australians’ through the operation of a cartel.

“And that’s what a cartel is, it is simply theft,” he said.

World Bank cautious on recovery

Meanwhile, World Bank president Robert Zoellick has said any predictions of a global economic recovery must be made with caution.

“It’s an environment of high uncertainty. We have to be careful with predictions,” Zoellick told reporters at the G8 summit. He also said more assistance is needed in developing nations.

“[It] started as a financial crisis in the developed world, then went to the real economy in the developed world. Then it went to the real economy in the developing world. And then it goes back to the financial sector,” he said.

“So now you get increasing non-performing loans in Africa. So you saw this a little bit in Brazil. Remember? At first people thought, ‘Oh, well, we’ll avoid it’. But it’s global. You can’t avoid it.”