Hedge funds drive Oz stocks down under

Dealers said as long as investors remained worried about Europe’s growth prospects and new financial regulations and with no big earnings announcements to help shine a light on the stronger Australian economy,sentiment would remain shaky.

But they said the market’s slump offered some good buys.

It’s overdone absolutely,said UBS managing director,institutional sales George Kanaan. We’re starting to see good value in the miners and even the banks.

The benchmark S&P/ASX 200 ended down 70.6 points at 4,316.5,taking the week’s loss so far to 6.4 percent.

New Zealand’s benchmark NZX 50 index lost 10.5 points to close at 3,111.4.

The banks suffered heavy losses,with Westpac Banking Corp sliding 4 percent to A$21.80,a 10-month low,on more than double its normal volume.

National Australia Bank fell 2.3 percent,slightly less than its peers as its UK earnings would look better when translated into the weaker Aussie dollar.

The top miners were not sold off as heavily as the banks,with BHP Billiton down just 0.6 percent and Rio Tinto down 1 percent.

Blood products and vaccines maker CSL,which makes most of its revenue offshore,had a double boost with the Aussie dollar’s slide and with investors moving into defensive stocks. Its shares rose 1.8 percent.

Another defensive stock to climb was Singapore Telecom,which surged 1.2 percent to A$2.50 on five times its normal volume.

Companies that hedge funds had seen as takeover targets were whacked as funds unwound their risk arbitrage plays.

Wealth manager AXA Asia Pacific dropped 3.4 percent,while its suitor AMP,also seen as a takeover target if it does not bid for AXA Asia Pacific,fell 2.3 percent.

Macmahon Holdings,seen as a target for Leighton Holdings was the market’s biggest loser,sliding 12 percent to A$0.51.

In the coal sector,former target Macarthur Coal and perennial for M&A speculators Whitehaven Coal plunged 7.8 percent and 9.9 percent.

All the risk arbs are getting out,said a dealer who declined to be named as he is not authorised to speak to the media.

One takeover target that rose was private hospital operator Healthscope,which jumped 2.9 percent to A$5.33 after its private equity suitors raised their offer to $1.5 billion.

With Healthscope’s board yet to recommend a bid and no other likely suitors seen,the shares held well below the A$5.75 a share offer.

The belief in the market is no one’s going to come in over the top,the dealer said.