LORD, HERE COMES
THE FLOOD
If you’re wondering what is going to drive Australian equities throughout the third quarter of this year, than wonder no more, for the answer is plain liquid cash in search for a destination. GSJB Were’s institutional trader Richard Coppleson has calculated that dividend payments in July were 17.7% higher than in July last year and that makes for a very good omen for the coming
months. The main stocks paying dividends in July 2005 distributed $4.43bn to the market, while the same stocks last year in July 2004 paid out just $3.76bn. Thus dividends last month were 17.7% more, representing an extra $666m (biblical reference?).
Cash remains a big factor in Australia with Coppleson estimating the market could easily get swamped by more than $27bn seeking an investment return between July and the end of October. Institutions and retail will get at least $17bn in dividends (but probably more than $20bn) over the period, Coppleson believes, and then there are the $2bn from News Corp’s fi nal sell down, a probable $2bn from the Foodlands takeover, plus $7.2bn in monthly superannuation infl ows - so just those events could see the market swamped with $27bn in cash over the period. And it doesn’t stop here yet, as there’s still the extra money that is expected to fl ow into super from
the abolishing of the excess super tax from June 30 onwards plus the government’s Future Fund that kicks of with $16bn in the December quarter.
GSJBW believes that large resources and energy companies will this year pay out 60% more than last year. Has everyone brought his swimmers?