Drops in Australian shares considerable – again
News out of the Australian session Monday was bleak especially for property trusts, which seem to remain quite bleak from the outset.
The largest concerns are with the drop in key markets around the globe, especially the UK, US and European markets. Additionally, higher funding costs are also causing damage here.
Morning trade shows a sell off on Wall Street, mainly due to the nonfarm payrolls reports released Friday which confirm a weaker than expected return.
Additionally concerns centre on the lessened demand for Australian property from the traditionally heavily investors from Asian markets.
News from Centro Properties did not help, either. After the close of markets on Friday, the company reported its inability to extend interest rate hedges. This positions the funds to variations in the interest rates. Problematic here is that the group will be unable to refinance the 3.9 billion dollars of debt over their heads. Centro Properties is the second largest shopping centre property ownership company after Westfield Group.
Investors fear that Australia's listed property trusts will outright miss the market on earnings forecast for 2008. The largest risk list property trusts include, Goodman Group, Centro Retail, Macquarie DDR, and Valad Property Group.
With worries of US December retail sales expected to be lower than the previous year's sales, companies with deep shares in US retail sector face losses. This is coupled with higher fuel and energy costs and the looming recession.