Midday market movers: BHP’s special dividend delight

Santa is down but not out with ASX stocks defying weak offshore leads to claw back into the black during lunch time trade today.

The S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index is trading just above breakeven at the time of writing following a 0.3% morning drop with the mining-heavy materials sector doing most of the heavy lifting.

The BHP Billiton Ltd (ASX:BHP) share price jumped 1.7% to $32.94 after it announced a special dividend and the results of its US$5.2 billion share buy-back, while the Rio Tinto Limited Fully Paid Ord. Shrs (ASX:RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price are also higher in sympathy.

BHP Billiton Limited (ASX: BHP) Chart

The BHP share price is on track to exit 2018 with gains of around 17% and news that the world’s biggest mining company will cough up a special dividend of US$1.02 (or circa $1.42) per share that will be paid in January is adding to the buzz.

BHP also reported overwhelming demand from investors to sell-back their shares to the company through the off-market buyback tender.

The maximum discount of 14% has been applied, resulting in the final buyback price of $27.64 per share, and the miner will apply a 58.7% scale-back as it was offered more shares than it could buy.

Meanwhile, it’s also notable that the strongest outperformers during the midday trade are the beaten-down and out-of-favour ASX stocks.

This could give hope to value investors that shares trading at a big discount to their historical valuation could finally play catch-up to growth stocks in 2019.

The Mineral Resources Limited (ASX:MIN) share price surged 5.8% to $15.13 – making it the best performer on the ASX 200 at the time of writing, while embattled theme park operator Ardent Leisure Group Limited (ASX:ALG) share price is a close second with a 5.3% jump to $1.60.

Mineral Resources (ASX: MIN) Chart

The relief rally isn’t extending to the depressed banking sector though with the Australia and New Zealand Banking Group (ASX: ANZ) share price leading the big banks lower with a 1.9% loss to $24.33.

Valuations in the banking sector are starting to look interesting and there’s even the prospect of capital returns, although investors may be reluctant to dip their toe in until after the final report from the Hayne Royal Commission is published in February.

However, once that is out of the way, and if we see early signs that the house price declines are decelerating, this sector could enjoy a significant re-rating.