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New Australian tax to hit mining stocks hard - UBS
CANBERRA May 2 (Reuters) - Australian mining stocks face a sell-off on Monday as investors digest news that the government plans to slap a 40 percent tax on their profits, investment bank UBS said after the announcement on Sunday.
UBS chief strategist David Cassidy said the news would hit locally listed global giants BHP Billiton (BHP.AX)(BLT.L) and Rio Tinto (RIO.AX)(RIO.L), which dominate the country's hugely profitable iron ore industry, and also knock coal miners.
The new tax could send a chill through mergers and acquisitions in the mining sector, he said, adding that U.S. coal miner Peabody Energy (BTU.N) might now pause over its $3.7 billion bid for the Australian miner Macarthur Coal MCC.AX.
"I think it's clearly negative for the big miners. I expect them to be down fairly materially," Cassidy said.
"Obviously a fair amount will be influenced by what happened in the U.S. and Europe on Friday (which fell heavily) but I definitely think that this will be taken negatively even though to some extent it was getting priced in (beforehand)."
"You would think twice about an Australian takeover (in mining) if you are seeing this news," he added.
For story on tax reforms click on [ID:nSGE64100U]
(Reporting by Mark Bendeich; Editing by Ed Davies)
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