Australia Reaches Compromise on Mining Tax

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello to our viewers all over China.

You're watching “Asia Market Daily”, co-produced by CCTV Business Channel and CNBC, first in business worldwide.

I am Saijal Patel with the top stories across Asia today.

Asian markets closed mixed at the end of the trading week, as concerns over global economic recovery lingers, reversing the early gains brought by the mining agreement in Australia.

We will bring you the closing market numbers in a while, but first down to Australia, - where Prime Minister Julia Gillard has reached an agreement with mining companies on a new resources tax and market watchers say this may pave the way for an early election

The government is dumping the controversial "super profits" tax for a lower resources rent tax regime.

CNBC's Matthew Taylor in Sydney, Australia with the details. Matthew?

Thanks Saijal. After 2 months of wrangling that cost the former Prime Minister Kevin Rudd his job - a deal has finally been inked between the big mining companies and the government over the resource super profits tax.

Prime Minister Julia Gillard made the announcement this morning after several days of talks with the miners with the headline tax rate dropped to 30 per cent - down from the previous level of 40 per cent.

The threshold at which the tax kicks in will also be lifted - from the previous level set at the long term bond rate of around 5 per cent to around 13 per cent.

(SOT) Julia Gillard, Australian Prime Minister:

"This will deliver better returns for the resources all Australians own and can only be dug up once. It will end uncertainty and division. It will invest a portion of our resources into better superannuation for our people. It will allow us to move forward together as a nation."

The new tax regime will no longer be called the super profits tax — instead the 30 per cent tax — called the Mineral Resources Rent Tax will apply to coal and iron ore.

The existing petroleum resources rent tax will apply to all off and onshore oil and gas production - as well as the coal seam gas sector.

So far — the big miners are welcoming the move.

(SOT) Martin Ferguson, Resource Minister, Australia:

"The argy bargy was always about the level of taxation and how you implement it and how it was collected... we've reached a landing point that was signed off last night... there will be a profit based tax with a headline rate of 30% and perhaps most importantly it represents a competitive international opportunity for ongoing investment in Australia"

That's resource minister Martin Ferguson there.

Xstrata says it will resume one of its copper projects in Queensland in response to the changes, while BHP Billiton and Rio Tinto says the new proposal is better than the previous option.

But some junior miners like Atlas Iron say a new tax regime will be damaging to smaller players. Fortescue Metals says further consultation is needed.

Saijal back to you.

We take a look now at the closing numbers as Asia ends the trading week.

In Japan the benchmark Nikkei 225 closed higher after a day of choppy trade.

The gains - despite news of Toyota's recall. Japan's Transport Ministry says the automaker plans to recall nearly 100 thousand cars as early as Monday.

Meantime, South Korea's KOSPI finished more than point-8 percent lower. On the M&A front, word is out that State-run Korea National Oil Corp has made a takeover offer for Britain's Dana.

In Australia, the S&P ASX 200 was 3-tenths of a percent lower. Australian shares lost early gains as global woes outweigh news on the resolution over the mining tax.

In Hong Kong, Bank of China shares were suspended on a news report that the bank is planning to raise up to 6-billion dollars from an H-share rights issue

Separately, BOC is also reported to be close to signing a memorandum of understanding with four Taiwan banks.

Today marks the first day of trade in the second half of the year for the Hong Kong market.

Castor Pang, Research Director Cinda International on where he sees the Hang Seng trading in the next 6 months.

(SOT) Castor Pang, Research Director, Cinda International

“The second half of the year, there's quite a volatile situation. the economic growth in china seems to have a chance to slow down, that may hammer the overall growth in the global markets. And I can see that there are quite a lot of fund managers trying to get the overall feeling for the first half results before they re-enter the market, and we can see that the first half of this month for June/July, it seems the overall trading volume is still thin.”

India's rupee headed for the biggest weekly loss in a month after a central bank report showed the nations current account deficit widened to a record.

The Reserve Bank of India says it current account balance posted a 13 billion dollar shortfall last quarter, that's more than twice the figure expected by market economists.

In the March- June quarter the rupee lost 3-point-2 percent, the second-worst performance among Asian currencies after South Korea's won.

We take a look ahead now with CNBC-TV 18 reporter, Reema Tendulkar on what to expect from the Indian markets next week.

Thanks so much. For the Indian markets it's really been a tussle between the local cues and the global cues. So one hand you've been proving domestic environment but the economic data, which is coming out for the rest of the globe is not very inspiring. That said, India has been fairly resilient this entire first half of the year. The FIF floats have especially been very robust in the month gone by, so people broadly believe that for our markets, the downside perhaps could be kept around 5000 level from the nifty, and the upside is going to be tough to go past the level of about 5300 or 5400 on the nifty.

In terms of the domestic improvement, improving scenario, the most important thing would be the oil and gas, what's the kind of subsidy sharing mechanism, so watch out for this entire space and whether you get to hear more on what the formula is going to be, and that will impact oil marketing companies, and also your upstream companies like ONGC.

Soon, we'll be talking about earnings, and the first one, which will be coming up from the mid-cap space will be Gujarat NRE Coke, and the other one would be IndusInd bank. In terms of individual stocks, Fortis will continue to be in focus yesterday it made a counter offer for Parkway at a slightly higher price and what Khazanah had actually made, and now Khazanah has closing date of 8th of July by when it would have to react to this, so Fortis of course will be in, it's a developing story, so this one will continue to be in focus.

In terms of the primary market action, Hindustan media ventures this IPO would open to subscription from the 5th to the 8th of July, and in terms of the macro scenario, we will be hearing about the inflation numbers of the week and the June 26th, and that will be detailed out on the 8th July. And also, there will be an update of how monsoon is panning out for India; this one will also come out on 8th July.

So not too much by way of cues, but these will be important things to watch out for. So let's see which way the markets go. Back to you.

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

Have a great weekend!

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