China backflip sends export stocks soaring amid broader ASX falls

China backflip sends export stocks soaring amid broader ASX falls
  1. China backflip sends export stocks soaring amid broader ASX falls
    China's e-commerce backflip lit a fire under major export stocks, providing the ASX with some spots of strong growth on a day dominated by blue chip…

News that China would indefinitely delay laws that make it difficult for Australian exporters to sell to Chinese consumers online put a fire under Australia's major export stocks on Tuesday, providing the market with some spots of strong growth on a day dominated by blue-chip losses.

In choppy trade, the market twice almost touched Monday's close but couldn't quite match it. The benchmark ASX200 index shed 4 points to 5774.6, while the broader All Ordinaries was flat at 5819.5.

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Shares in supplements company Blackmores soared 13.1 per cent to $113.69 on Tuesday, after China surprisingly ... Shares in supplements company Blackmores soared 13.1 per cent to $113.69 on Tuesday, after China surprisingly backflipped on laws.  Photo: John Woudstra

Late on Friday, the Chinese Commerce Ministry announced it would return to classifying goods purchased online in China as "personal" packages, meaning they are no longer required to adhere to local registration and labelling laws. The backflip comes after the tough new laws were announced in April last year.

The laws have been a major lag on the share prices of Australian exporters, which popped higher on the good news. Blackmores surged 13.1 per cent higher, Bellamy's Australia added 15.7 per cent while A2 Milk rose 4.5 per cent.

Some of the price rises could partly be seen as a correction, said Argonaut's executive director of corporate stockbroking James McGlew. "On Blackmores and A2, I think both of them were well and truly, from a technical perspective, oversold if you believe the basic fabric of the companies is in place" he said

While the market edged lower, this was driven by general defensiveness, rather than any particularly bad news, Mr McGlew added. 


"The defensive parts of the market have gotten a fair bit of attention."

TPG jumped 5.4 per cent on a strong earnings upgrade. SEEK also had a good day, after announcing it was upping its stake in education provider OES on Monday. It closed up 4.1 per cent. Spotless surged 49 per cent after Downer EDI confirmed a takeover offer.

Retailers Premier Investments, owner of Smiggle, and Kathmandu Holdings also released interim profits, earning them only marginal share price bumps.

On the negative side of the market, financials, telecommunications and the materials sector were the major drags. Iron ore futures fell 4.9 per cent, driving a materials sector sell-off that was the largest drag on the ASX 200. Fortescue Metals shed 1.2 per cent. Rio Tinto had the biggest negative impact on the index, falling 1.3 per cent, while BHP shed 1 per cent. South32 also fell, down 2.2 per cent. 

Aurizon fell 0.8 per cent after being cut to a 'sell' by UBS. APN News and Media was upgraded to a 'buy' by Canaccord, and rose 0.8 per cent. In other broker news, Ramsay Healthcare was raised to 'outperform' by Credit Suisse, and ended the day 2.4 per cent higher - the second biggest net gain on the index. 

The banks were mixed: Westpac fell 0.7 per cent, while NAB shed 0.1. ANZ added 0.5 per cent, and CBA was flat. 

Stock watch: Blackmores

Shares in supplements company Blackmores soared 13.1 per cent to $113.69 on Tuesday, after China surprisingly backflipped on laws introduced last year intended to crack down on cross-border e-commerce. The tough new restrictions would have delayed the flow of Australian vitamins, milk, powder and cosmetics to China. While many companies stand to benefit from the reduced hinderance on trade, Blackmores was a major gainer. It comes after a tumultuous time in China for the company - earlier this week, it was fined $65,000 by authorities in China for misleading advertising, prompting it to toughen up its own internal procedures. Half of the analysts who cover Blackmores rate it a 'hold', with the rest evenly split between 'buys' and 'sells'. 

RBA minutes

The Reserve Bank highlighted threats in the property market and an acceleration of domestic household debt even as it lent credence to the global reflation story. "Data continued to suggest that there had been a build-up of risks associated with the housing market," it said in minutes of this month's meeting, where it held interest rates at a record-low 1.5 per ce…

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