M&A activity fuels record run

Investors savoured one of their best weeks this year as a spate of merger and acquisition activity and continued strength among resource stocks pushed the sharemarket to record highs on four out of five days.
The market's performance is again forcing brokers to rewrite their predictions as the passing of the milestone 5000-point mark early last week - which many believed would not occur till year's end - becomes a distant memory.
Despite records continuing to tumble, investors show few signs of shying away from buying highly valued stocks as the fundamentals - a strong world economy, high commodity prices and a falling Australian dollar - remain strong.
On Friday, the sharemarket posted its third consecutive weekly gain. The bourse has gained more than 7 per cent in the first quarter, compared with a 6 per cent jump for Britain's FTSE and a rise of 4.6 per cent for the US Dow Jones blue-chip index.
The heavyweight mining companies were responsible for much of the gains as the benchmark ASX 200 index rose 14.7 points to 5129.7 on Friday - up 89.6 points, or 1.8 per cent, over the week. The All Ordinaries closed 15.6 points higher at 5087.2 on Friday, up 86 points over the week.
BHP Billiton surged more than 8 per cent over the week - spurred by speculation its buyback of the Australian stock will rise from $1.5 billion to $2 billion. It closed up 40c at a record $28 on Friday. The miner surpassed $100 billion in market capitalisation, a first for an Australian company.
Rio Tinto also soared almost 5 per cent over the week on expectations of positive outcomes for iron ore prices. The stock was up 89c on Friday to an all-time closing high of $78.85.
Colonial First State's head of investment markets research, Hans Kunnen, said the bourse's gains over the week were "breathtaking" in both speed and magnitude thanks to the M&A activity and strong commodity prices, especially for gold, which reached a 25-year high.
"We'd have to shoot ourselves in the head to foul up the current economic environment," he said.
Telstra rose 4c over the week as speculation mounted that the Government would bow to the telco's regulatory demands, but was unchanged on Friday at $3.74.
Transpacific Industries was the best performer of the top 200 companies as the waste disposal company leapt more than 40 per cent over the week after its launch of a friendly takeover bid for a New Zealand company. The stock closed up 48c at $8.70 on Friday.
Among the biggest losers was the Ten Network, which fell more than 5 per cent over the week after posting a disappointing profit. The stock closed steady at $2.93.
Macquarie Equities' private client adviser, David Halliday, said the fall in the dollar was a boost for the market, as it translated into higher earnings for export-orientated companies, especially resource stocks, which generate most of their earnings from overseas.
While the bourse was unlikely to repeat its gain of 22 per cent last year, Mr Halliday said "at this pace it looks pretty evident that we are going to do 15 per cent or better" in 2006. "It's hard to see too many clouds on the horizon," he said.