Medibank Private to Dominate

After a welcome relief rally yesterday, Asia Pacific share markets are looking at a more subdued trading day following mixed leads from overseas markets. While European and US shares rallied, falls in energy and metals prices suggest not all is well with the global growth outlook.

In Australia, resource stocks are likely to give up some of yesterday’s gains. However, the debut of Medibank Private, Australia’s largest IPO since Telstra, will take centre stage. Analysts concerns about stretched valuations may be swept aside by investor enthusiasm, given the high level of subscriptions for the various tranches of the float.

While vendors generally seek to extract maximum value from a business sale, government sellers also have an interest in ensuring voting investors enjoy good returns. This alignment of interests between seller and buyers could see trading substantially higher than the $2.15 per share institutional price.

An increase this morning in the weekly read on consumer confidence is may also support shares today. The effect of a weaker Australian dollar is harder to predict. Some international investors may step up on the basis of a cheaper foreign currency price for Australian shares. However, a fall through four year lows around 0.8540 may see them hold off on expectations of further AUD falls.

For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.