Australia shares rise as bank stocks surge on new capital rules, NZ flat

By Hanna Paul

July 19 (Reuters) – Australian shares moved back into the
black on Wednesday as gains by the ‘Big Four’ banks, who
declared comfort with new capital rules, outweighed a tumble for
BHP Billiton.

The S&P/ASX 200 index rose 37.91 points, or 0.7
percent, to 5,725.3 at 0237 GMT. The benchmark fell 1.1 percent
on Tuesday.

The ‘Big Four’ banks, which account for more than 80 percent
of the country’s lending, leapt between 2.9 to 3.8 percent to
touch their highest intra-day peaks in eight months after the
Australian Prudential Regulation Authority (APRA) unveiled new
rules designed to make the banks “unquestionably strong”.

The authority said they were required to raise common equity
Tier 1 ratio, a key gauge of a lender’s strength, to at least
10.5 percent by January 2020.

The banks said they were well placed to meet the capital

Ric Spooner, chief market strategist at CMC Markets, said it
was positive that banks get options for raising equity capital,
“creating a bit of certainty for the market.”

“This removes some of the worse concerns about the
possibility that the banks will have to go to shareholders for
additional capital in the near future,” he said.

Financial stocks accounted for nearly three-quarters of the
gains on the bourse and the benchmark index of financial stocks
at one point was up 2.7 percent, its biggest intraday
gain in nearly 36 weeks.

Weighing down the benchmark the most was global miner BHP
Billiton. At one point, it dropped 2.6 percent to its
lowest in four weeks, after reporting output declines in coal
and petroleum for the year and flagging exceptional items of
$546 million for the second half.

Material stocks sagged as Rio Tinto extended
losses, falling as much as 1.9 percent from the previous day
after reporting disappointing production results.

New Zealand’s benchmark S&P/NZX 50 index inched up
4.14 points, or 0.1 percent, to 5,725.5 at 0237 GMT.

The benchmark was little changed as losses consumer staples
offset gains in financial and industrial sectors. A2 Milk
was the biggest decliner while Australia and New
Zealand Banking Group and Westpac Banking Corp
led gainers.
(Reporting by Hanna Paul; Additional reporting by Urvashi
Goenka; Editing by Richard Borsuk)