- Telecom stocks gain as TPG-Vodafone deal shakes up sector
- Big Four banks lead peers lower; Westpac down despite rate move
- NZ slips after hitting record high on Wednesday
(Updates to close)
Australian shares ended flat on Thursday after the country's third and fourth-largest telecom operators announced a merger, creating a heavyweight challenger to the top two providers.
A merger of TPG Telecom (TPM) and Hutchison Telecommunications (Australia) (HTA) , a Vodafone Group VOD.L unit, would create a combined entity with an implied enterprise value of A$15 billion ($11 billion).
TPG's shares climbed 18 percent, while Hutchison sky-rocketed 44 percent and Telstra shares added 2.9 percent.
Despite the likelihood of increased competition from the merger, "the market seems to have taken the total opposite view to that for some reason," said James McGlew, executive director of corporate stockbroking at Argonaut.
"This is going to lead to a decrease in competition for Telstra and either way the market is embracing a sector that has been in the doghouse for a while. It just shows you how contrarian markets can be at times."
Weaker financials offset gains from the merger news, with the 'Big Four' banks all in the red. Commonwealth Bank of Australia (CBA) led the losses, down 1.5 percent.
Westpac Banking (WBC) fell 0.8 percent after it the raised its key mortgage rates on Wednesday to preserve its profit margins, first major lender to do so.
The bank's shares gained 2.7 percent on Wednesday. Westpac's decision lays open the field for its Big Four peers, which together control about 80 percent of Australia's deposit and home loan markets. The move also sparked speculation the central bank will be forced to keep policy accommodative to offset such rate increases.
New Zealand's benchmark S&P/NZX 50 index (nz50) slipped 0.2 percent to 9,339.88, yet hovered around the record highs it hit in the previous session.
Index heavyweight a2 Milk Company (ATM) fell 1.8 percent, while stock exchange operator NZX Ltd (NZX) lost 3.2 percent.
An ANZ Bank survey found New Zealand's business confidence sunk to a decade-low in August, sparking fears that firms would hold off investment and dampen economic growth.
The survey result comes after Prime Minister Jacinda Ardern announced the formation of a council to advise on major issues facing the economy amid concerns over declining business confidence.
