Aldi Home Deliveries is here … sort of

Monday, 30. July 2018

BRISBANE, AUSTRALIA – OCTOBER 22: ALDI store signage at the Forest Lake shopping complex on October 22, 2014 in Brisbane, Australia. (Photo by Bradley Kanaris/Fairfax Media) *** Local Caption *** ALDIAldi Home Deliveries is here. But not as you might expect.
Nanjing Night Net

A Sydney mushroom supplier has registered the name “Aldi Home Deliveries” with the corporate regulator, ASIC.

David Collins admits it was cheeky to register the name without the German discount supermarket’s permission.

But the CEO and owner of Country Fresh Mushrooms, and self-described “master of exotic mushrooms”, said he wanted to strike a deal with Aldi to do its home deliveries.

“If I spoke to Aldi and they were agreeable, I’d find a way to do it,” Mr Collins told Fairfax Media.

“A lot of people out there are time poor or not well enough to struggle to the supermarket on a weekly basis.

“And in theory, why would they not want to get more sales?” he asked of Aldi.

Mr Collins said it cost “very little to register a name under an existing ABN [Australian Business Number]”.

Country Fresh Mushrooms supplies supermarket giant Woolworths as well as cafes and restaurants. It says its ideal customers are “coffee shops and restaurants within 12 kilometres of Parramatta”.

Aldi does not do home deliveries in Australia, and is not believed to be interested in setting it up.

A spokeswoman for the chain declined to comment on whether it would agree to strike a deal with Mr Collins, or would pay him for the company name.

Grocery home delivery has come under the spotlight in Australia with the confirmation that US retail giant Amazon will expand in Australia, including offering Amazon Fresh, its online grocery delivery service.

Australia’s biggest supermarkets, Woolworths and Coles, do home deliveries but there are question marks about whether it is profitable.

Australia’s high labour costs and low population density outside certain suburbs in the big cities are real challenges for profitability.

US retail giant Costco encourages people to set up businesses to deliver its products to customers.

This story Administrator ready to work first appeared on Nanjing Night Net.

AMP Captial’s 33 Alfred Street set for a facelift

Monday, 30. July 2018

The country’s first skyscraper, 33 Alfred Street, owned by AMP Capital, in the prime position at Circular Quay, is to get a much-needed facelift as part of the $1 billion redevelopment of the Quay Quarter.
Nanjing Night Net

While it was seen as “cutting edge” when it opened 55 years ago, the grey H-shaped structure needs some revitalisation.

Once completed, Quay Quarter will showcase a newly-built 50 Bridge Street, behind 33 Alfred Street, public spaces, retail outlets and low-rise residential. It will form the northern bookend of the upgraded Circular Quay precinct with the proposed hotel and apartments near George Street, being developed by the Chinese Wanda group.

Part of AMP Capital’s design is to give Circular Quay’s laneways a Melbourne-style makeover. There are also plans for new ferry terminals and a new-look Cahill Expressway.

AMP Capital has submitted the development application (DA) to revitalise 33 Alfred Street, which being heritage-listed, the design must be sensitive in its renewal of the building’s fa??ades. There will also be increased activation of the street-level frontages and an upgrade of the building’s services and interior.

Pending necessary approvals, construction is earmarked to start once nearby Quay Quarter Tower is completed in 2020.

According to Chris Freeman, Savills Australia national head of Capital Strategy, while the landlocked nature of the CBD continues to hinder net supply, “we estimate there is approximately $7.9 billion worth of new construction and infrastructure earmarked for the circa-one kilometre radius between George, Phillip and Bridge Street, which continues to improve the area’s amenity and appeal”.

“In addition to the Light Rail and Circular Quay Ferry, Bus and Rail Interchange upgrade, upcoming developments such as 1 Alfred Street by Wanda, Quay Quarter by AMP Capital, Circular Quay Tower by Lend Lease and Sandstone Precinct by Pontiac, are seeing a major renaissance for the CBD core,” Mr Freeman said.

AMP Capital’s Stage 2 DA lodgement follows two years of consultation with the City of Sydney and the New South Wales government.

The chief operating officer of real estate at AMP Capital, Louise Mason, said while it is still some time away, “the work will breathe new life into this office tower while paying tribute to its history, heritage and place at Sydney’s global gateway”.

“The building’s unique place in history and its distinctive design make 33 Alfred Street an important part of Sydney’s and Australia’s cityscapes. Along with being Australia’s first skyscraper, the building was cutting edge in its time, incorporating many other ‘firsts’ and innovations in its design,” Ms Mason said.

“The proposed redevelopment will restore the building to its rightful status as a premium-grade office tower in keeping with this history, and its prominent place at Circular Quay.”

Ms Mason said due to the building’s local heritage listing, the work will focus on reinstating lost features, such as bringing back its former gold tiles down the front, new paint, while refurbishing internal spaces and significantly improving the environmental performance of the building to bring it in line with premium commercial office standards.

“The property, 33 Alfred Street, was developed by AMP 55 years ago. We are committed to leading the way and ensuring the project is an exemplar of sensitive and sustainable renewal,” Ms Mason said.

The facelift will not fundamentally alter its structure or create any additional floor space, but will focus in a major interior refurbishment and upgrade of the building’s services, and a complete “modernisation” of the tower fa??ade,.

AMP Capital has appointed architect JPW for the project. 33 Alfred Street is jointly owned by investors in the AMP Capital Diversified Property Fund and the AMP Capital Wholesale Office Fund.

This story Administrator ready to work first appeared on Nanjing Night Net.

Crackdown? What crackdown? The truth about home loan rates

Monday, 30. July 2018

Most interest-only and investor loans from the big four banks are cheaper than a year ago despite a series of rate hikes and a regulator crackdown aimed at cooling the housing market.
Nanjing Night Net

Banks are being forced to tighten their lending standards amid booming house prices under a new policy unveiled by the regulator, the Australian Prudential Regulation Authority (APRA) last month. In the regulator’s sights are loans to property investors and interest-only loans, which the regulator says puts people at risk of “payment shock” when the loans revert to principal and interest.

But data collected by research group Canstar shows that, despite a series of rate hikes from the banks in response to the regulatory change, interest rates on many interest-only and investor home loans are still significantly lower across the big four banks compared with a year ago.

This includes some loans that apply to new borrowers and are designed to dampen demand in the housing market.

Commonwealth Bank’s standard variable interest rate for customers taking out an interest-only loan as an owner-occupier is 5.22 per cent, compared with 5.6 per cent in April last year -0.38 per cent lower.

While National Australia Bank’s one-year fixed interest-only rate for owner occupies is currently 3.99 per cent – 0.60 per cent lower than it was in April 2016.

The period takes into account two official rate cuts by the Reserve Bank of Australia in May and August last year. The data assumes the borrower has a 20 per cent deposit and buying a $350,000 property. Weak measures

Economist Saul Eslake said the data showed the weakness of macroprudential measures designed to cool the market compared with changes to government policy such as abolishing tax incentives for property investors or adjusting the official RBA cash rate.

“The impact of recent supervisory measures has been overwhelmed by the impact of the two rate cuts in May and August last year,” he said.

“But doing the third best thing is better than doing nothing at all.”

Chris Richardson, partner at Deloitte Access Economics, said it showed that money remained “incredibly cheap” in Australia and that more may need to be done to cool the market.

“At some stage you’re going to have to switch to different tools,” he said.

In the minutes of its April meeting, the RBA said the Council of Financial Regulators regulators could clamp down on home loans and “consider further measures if needed” to maintain financial stability.

The RBA also appeared to take aim at “particular features of the tax system,” including negative gearing, which the Turnbull government has all but ruled out changing in the lead up to the May budget despite its influence on increasing loans to investors. Banks move

Westpac lifted its interest rates on fixed-rate, interest-only home loans on Monday, signalling the move was in response to regulatory changes.

It follows similar rate hikes by the Commonwealth Bank on Friday.

However several of the big four banks are still offering lower interest rates compared with last year on some of their fixed rate loans.

NAB’s three-year interest-only investor loan rate is 4.39 per cent compared with 3.59 a year ago. The same loan at ANZ is 4.54, compared with 4.69 in April 2016.

Variable interest rates for property investors looking to pay interest-only have risen only modestly across ANZ, NAB and Westpac, according to Canstar, with CBA still offering a 0.19 per cent discount year-on-year.

The new lending rules, announced by APRA last month, mean that interest-only lending can account for no more than 30 per cent of a banks’ new mortgage lending, compared with nearly 40 per cent of outstanding home loans currently.

This has prompted a series of rate hikes by the banks targeting investor and interest-only loans.

Steve Mickenbecker, head of research, product and strategy at Canstar, said the data showed that the latest rate hikes had not yet gained ground on the official cuts of last year.

“Over the period there has been a 0.5 per cent reduction in the RBA cash rate. If you look at the various rates here, a number of them have gone up but a lot of that clawing back has occurred in the last few months,” he said.

“Compared to the 0.5 per cent reduction there has not been a lot handed back.”

This story Administrator ready to work first appeared on Nanjing Night Net.

Savings at risk if funds don’t lift their game on climate change

Monday, 30. July 2018

Nanjing Night Net

Australian retirement savings could be put at risk unless regulators force the financial sector to be more transparent in managing the investment risks created by climate change.

That is is the view of former Liberal leader John Hewson, who is calling for regulators to take a much tougher line on how the financial sector handles the risks associated with global warming.

Dr Hewson, chairman of the Asset Owners Disclosure Project, made the call as new rankings showed many of the world’s 500 largest asset owners, including some of Australia’s biggest superannuation funds, were taking a more active approach to protecting their portfolios from climate change risks.

Even so, the AODP’s annual rankings still labelled many financial giants as “bystanders” in their response to climate risks, and Dr Hewson said mandatory disclosure of climate risks was needed to prevent an “Australian train wreck”.

Because of the country’s high carbon intensity at a time when vital trade partner China is also trying to shift towards renewable energy, he argued Australia was particularly exposed to “systemic financial risk” caused by climate change.

“With the Australian government missing in action, the RBA, APRA and ASIC must drive change in fund and company reporting. Failure to do so may cost us our retirement savings,” Dr Hewson said.

The AODP, a not-for-profit body that produces the annual ranking, is part of a growing international push among investors and regulators for greater action to avoid the risks of a “carbon bubble”.

Much of this activity is focused on greater disclosure, in the belief more information would allow markets to “price in” the risks created by climate change.

The survey by the AODP said there had been a 19 per cent increase in the number of pension funds, insurance companies and sovereign wealth funds that were taking action in response to climate change. Yet there were still 201 asset owners that were ignoring climate risk, and 187 judged “bystanders” – those taking only the first steps in acknowledging these risks.

Australian funds were ranked among global leaders, with the Local Government Super fund reclaiming the top position, First State Super in third place, and Australian Super ranked 18th.

For the first time, the survey also ranked the world’s 50 largest asset management businesses.

The only Australian manager included in this list was Macquarie Group, which the AODP report gave a D or “bystander” rating on its management of climate change risks. The bank did not complete its survey.

Macquarie said it “rejects any suggestion it does not recognise the financial risks of climate change”, pointing to its disclosure of carbon exposure, and its large investments in renewable energy.

“As a significant global asset manager, Macquarie is fully committed to ensuring environmental risks are identified and managed responsibly in our business activities and relationships, and each member of staff shares the responsibility for identifying and managing these risks as part of normal business practice,” a Macquarie spokeswoman said.

“As one of the world’s largest investors in renewable energy, having invested or arranged over $14 billion into renewable energy projects since 2010, Macquarie is particularly aware of the opportunities and responsibilities that will continue to accompany the transition to a low-carbon economy.”

Macquarie was this month given the green light to buy the United Kingdom’s Green Investment Bank in a $3.9 billion deal, despite some critics doubting the bank’s commitment to carrying out the company’s environment goals.

The AODP ranked asset owners and managers on the basis of their governance and strategy, portfolio risk management, and their metrics and targets.

The report comes after a committee including Coalition, Labor and Greens Senators last week recommended several policy changes to improve how financial risks of climate change are disclosed to investors.

The Senate inquiry, which reported on Friday, said the corporate watchdog should review its guidance to directors on climate risks, while the Australian Securities Exchange should provide guidance on when disclosure of climate risks was needed.

The inquiry also said the government should review the Corporations Act to consider whether financial reporting obligations should be changed to force companies to make a “holistic” consideration of the viability of their business model.

In February, Australian Prudential Regulation Authority executive board member Geoff Summerhayes??? also said it would keep a closer eye on how banks, insurance companies and asset managers responded to the financial risks of global warming.

This story Administrator ready to work first appeared on Nanjing Night Net.

Stockland opens first stage of Green Hills mall revamp

Monday, 30. July 2018

Stockland will open the first section of its $412 million redevelopment and expansion of Stockland Green Hills mall, in East Maitland, NSW, on Thursday, which is the biggest revamp of a centre undertaken by the landlord.
Nanjing Night Net

It is part of Stockland’s ongoing multimillion-dollar development pipeline to upgrade older centres and make them the new town centre of the respective catchment area.

Upon completion in mid-2018, the centre will more than double in size to around 74,000 square metres and will feature the first new format David Jones department store in the Hunter, a new 900-seat Hoyts cinema and around 225 tenancies with a new dining and entertainment precinct that Stockland says “will be the biggest and best in the region”.

The new northern mall consists of 14 retailers, most of which are not as reliant on trade from the internet, including Cruise Travel, L’Amore Nails and Toto Sushi, which are new to the centre, with Blooms The Chemist opening its second store.

Ten other retailers will make their return or relocation to brand-new premises, including The Reject Shop, Best&Less and MyHouse.

The chief executive of Commercial Property at Stockland, John Schroder, said once completed, Stockland Green Hills will be “a leisure and entertainment destination that will soon be the pride of the Hunter”.

Mr Schroder said retail landlords must “curate” shopping centres to the local area and be “community focused”.

According to industry expert and Shopping Centre News’ (SCN’) publisher, Michael Lloyd, “Australian shopping centres are the most sophisticated in the world and the shopping centre industry leads the world in the development, management and marketing of its product”.

“The Green Hills trade area covers Maitland, Cessnock, Singleton and Tamworth and we have to provide, not just high quality traditional tenants, but medical services, beauty salons, new and diverse food courts and state-of-the-art entertainment. Malls must be relevant for all customers in order to survive and flourish,” Mr Schroder said.

The CEO of Stockland, Mark Steinert said the group identified Stockland Green Hills as a highly accretive redevelopment opportunity.

“It’s already one of the most productive centres in Australia and this expansion will enable us to capture a portion of the estimated $867 million of escape expenditure that leaves the primary trade area every year,” Mr Steinert said.

“The redevelopment is expected to achieve an incremental internal rate of return (IRR) of more than 12 per cent in the 10 years post-completion and an incremental, stabilised funds from operations (FFO) yield of just over 7 per cent.”

As part of the first stage opening on Thursday, Stockland will also open 300 new car parking spaces with park assist technology that illuminates available spaces and is on track to generate more than 2285 jobs; 1350 jobs during construction, 1250 direct, new, full-time jobs in retail, customer service and hospitality and an estimated 1200 indirect jobs for local suppliers and service providers within the regional economy.

“In addition to delivering a much-improved shopping experience for our customers, we’re proud to say that our $412 million investment is creating thousands of new jobs for the local region and creating an important multiplier effect on the regional economy. We hope customers will continue to embrace the new centre as the heart of their local community and make it their own,” Mr Schroder said.

“There’s an incredible buzz around the centre, and we can’t wait to deliver the next stage later this year delivering more exciting new retailers, more services, better entertainment and dining options, and easier access to the centre in the months ahead. We sincerely thank the community for their patience as we undertake these crucial works to fulfil our vision for a bigger and better Stockland Green Hills.”

This story Administrator ready to work first appeared on Nanjing Night Net.

Aussie breaks record, pays $850,000 for four Indian stamps

Monday, 30. July 2018

An Australian collector has set a new world record after paying a small fortune for one of the world’s rarest and most-mysterious stamps.
Nanjing Night Net

The collector bought the strip of four 1948 Gandhi 10-rupee purple-brown ‘SERVICE’ stamps for $855,000 last week.

Only 13 of the stamps exist in private collections around the world.

The price paid is a new high-water mark for Indian stamps. The most ever paid for a stamp was the $US9.5 million paid at auction for an 1856 British Guiana 1 cent magenta.

Stanley Gibbons, the collectables merchant that sold the stamp, said the Australian bidder was a private investor in world rarities who also owned Britain’s rarest stamp, a ‘plate 77’ Penny Red.

“I would love to know who it is – people keep asking me,” Brisbane-based Indian stamp dealer Troy Sequeira told Fairfax Media

He estimated there were less than 1000 serious stamp collectors in Australia, with very few having the ability to make such a large purchase.

“Let me put it this way, this is the most sought-after stamp in Indian collecting.”

Only two sheets of 50 were ever printed in 1948, with one sheet held in a museum in Delhi.

Of the remainder only 13 have been located, four of which are held in the Queen’s royal collection.

It is not known what happened to the rest of the stamps, with rumours abounding they are being secretly held in private collections, or have been sold by Indian government members. Or lost.

The stamp’s rarity, combined with an explosion in interest in Indian stamps, underpins the price paid.

Mr Sequeira said a large number of rich Indian collectors had started to enter the market. “So stamps that are rare, they are paying staggering prices.”

In the world of high-end stamp collecting, the most valuable stamps are those that have been used on an envelope – known as “on cover”.

None of the 13 existing stamps is an “on cover”, and most of the collecting community do not believe any exist, Mr Sequeira said.

But they are wrong.

“I have personally seen one. A distant relative of mine had it – I saw it at age 11.”

The relative was offered 40,000 rupees for the stamp back in 1972, “a royal sum in those days”, but turned the money down. Should that stamp ever be found, it would be easily worth more than $1 million, Mr Sequeira said.

This story Administrator ready to work first appeared on Nanjing Night Net.

Chinese investors target retail assets as $48m centre sells

Monday, 30. July 2018

A neighbourhood shopping centre in Melbourne’s south-east anchored by a Woolworths supermarket has sold to Chinese interests for $48 million, the latest in series of retail acquisitions by Asian investors.
Nanjing Night Net

Over the past 15 months, Chinese investors have spent more than $380 million acquiring retail shopping assets across Victoria.

The latest, the Arena Shopping Centre in Officer on the corner of Princes Highway and Cardinia Road, exchanged on an initial yield of 5.38 per cent, a price predicated on its larger than normal size compared to traditional neighbourhood shopping centres, CBRE’s Mark Wizel said.

Mr Wizel, Justin Dowers and Kevin Tong negotiated the sale to a mainland Chinese buyer from Shenzhen.

As well as a 4100-square-metre Woolies supermarket, the unusually large shopping centre has a BWS on a 20-year lease, 25 specialty retailers, and a freestanding McDonald’s and Caltex Service Station, both on 20 and 15-year leases respectively.

Only one other neighbourhood centre has sold this year in Victoria.

Earlier this month private syndicator Henkell Brothers Investment Managers paid $32.1 million for the Hastings Central Shopping Centre, on the Mornington Peninsula, on a 6.2 per cent yield.

The Hastings centre was anchored by a Kmart, Aldi supermarket and 13 specialty shops.

The scarcity of neighbourhood shopping centres offered to the market has underpinned stronger results.

“The limited supply of centres both in Victoria and nationally is ensuring those that do come to market are achieving sharp yields,” Mr Dowers said.

Mr Dowers said activity was likely to pick up this year as institutional investors moved to take advantage of prime conditions to reweight their portfolios, shed non-core assets and recycle the capital.

Late last year in December a Chinese investor paid $43 million to purchase the Springhill Shopping Centre on a 5.5 per cent yield.

Packington Strand Shopping Centre was offloaded two months earlier by diversified property group Charter Hall to a Chinese buyer for $31.8 million on a 4.92 per cent yield.

Mr Wizel said the Arena sale was a “strong statement for the overall confidence that buyers have for retail assets”.

“Only a few years ago, there were questions being raised around oversupply of retail centres in Pakenham … if anything, there is a widely accepted view in planning that more retail floor area is needed to service the booming population,” he said.

This story Administrator ready to work first appeared on Nanjing Night Net.

MUA, Patrick at battle stations as ‘peace deal’ looks to be in tatters

Monday, 30. July 2018

WATERFRONT DISPUTE;SYDNEY;980407;PHOTOGRAPH BY DEAN SEWELL;SMH;NEWS;PHOTOGRAPH SHOWS SECURITY GUARDS ASSEMBLING THEMSELVES AT PORT BOTANY PATRICK TERMINAL AROUND MIDNIGHT. Photo: Dean Sewell The dockside peace deal that saw the key waterfront union and one of Australia’s biggest shipping companies pledging to end years of running battles is under threat after just five months.
Nanjing Night Net

Tension between the Maritime Union of Australia and stevedoring giant Patrick are sharply rising again after the company accused its workers of illegal industrial activity at Sydney’s Port Botany terminal.

A stoush between the union and Patrick will reignite fears of yet another long-running dispute, the worst of which was the months-long 1998 waterfront dispute that impacted trade in Australia.

Shipping giant Patrick secured Federal Court orders last week to stop alleged industrial activity by 200 union members at Port Botany container terminal in Sydney. Those orders were again extended on Monday to May 1 when the matter will return to court.

The court orders reveal Patrick claims to have been hit with an alleged program of go-slows, stopworks and staff-led bans on certain tasks began last week.

It is alleged union members have been involved in unauthorised stopworks and have also allegedly stopped loading or unloading of trucks arriving at the rail yard of Port Botany terminal operated by Patrick.

Fairfax Media understands workers at the Port Botany allegedly refused to work on at least one entire day last week, though the full number of hours lost is at this stage unknown.

Sources said the matter could come to a head the next 24 to 48 hours when the next train arrives at the terminal and workers will have to choose whether to follow the court orders.

Union concerns centre on the recent sub-lease of a empty container park within Patrick Terminal to Patrick’s joint owner Qube. The Qube staff are not covered by the MUA’s workplace agreement.

Qube acquired a 50 per cent stake in Patrick following the takeover of Asciano in August 2016.

The dispute comes after the union and the company signed a landmark four-year workplace agreement in November last year which was trumpeted by both sides.

Already British singer Billy Bragg has thrown his support behind the union.

Representatives from the MUA declined to comment as the matter was before the courts.

Earlier in April, MUA Deputy National Secretary Will Tracey said the peace deal was now under “serious threat”.

“Why would Qube want to jeopardise future contracts at this commercially sensitive time by starting a dispute at this small container yard, when it is has just invested around $1 billion in Patrick’s and is seeking new business for its Moorebank Logistics Park?” Mr Tracey said at the time.

A Patrick spokesman said Patrick had been in talks with the national branch of the union since February.

Qube took out the sub-lease after rival DPWorld declined to extend the company’s existing sub-lease on land leased by DPWorld adjacent to that company’s Port Botany terminal.

“This sublease will be a short-term arrangement and no work currently performed by Patrick workers will be impacted by this arrangement now or in the future,” the spokesman said.

“Qube is currently building its own facility at another site, however this facility is not ready for operation as yet,” he added.

This story Administrator ready to work first appeared on Nanjing Night Net.

Investors cheer Europe’s political mood

Monday, 30. July 2018

The firming of independent Emmanuel Macron as heavy favourite to sweep the French presidential race marks what could be a significant turning point for European equities, which have been undermined by the threat of a break-up of the monetary union.
Nanjing Night Net

Heading for a second straight session of gains in Paris on Tuesday and poised to set a new post-financial crisis closing high overnight, the performance of the French bourse was notable for another reason: both the currency – the euro – and equities rallied in unison.

Stuart McAuliffe, chief investment officer of the listed macro fund manager Henry Morgan, predicted a Macron victory in an investor letter more than a month ago, and foreshadowed it would be the start of a 20 per cent “up year” in European stocks.

The blue-chip Euro Stoxx 50 Index is up 8.7 per cent year to date and 14.8 per cent over the past 12 months, and France’s CAC 40 Index is up 8.4 per cent this year after the 4 per cent rally on Monday, for an increase of 15.9 per cent over 12 months to 5268.85 points.

The S&P 500 is up 6 per cent year to date and 13.7 per cent over 12 months, but is still trading below its 2017 high of 2400.98 points on March 1, last closing at 2374.15 points. Rally expected

“Our take on European equities over the last six to nine months is they have been cheap on a relative basis, especially compared to US equities, but subject to one condition and that condition is that Italy, France or Germany do not leave the monetary union,” said Andrew Macken from Montgomery Investment Management. Now “the biggest near-term risk around a major nation leaving has dramatically subsided, I would expect a pretty strong rally in European equities for months to come”.

The fund manager had stayed out of financials in Europe because they are the most vulnerable to a break-up of the union, which would set in motion a sovereign default and significantly wipe out bondholders, including the financial institutions. “The downside risk is so enormous,” he said.

Montgomery swiftly increased its exposure to European equities on Monday.

“If Italy were to call an election, this risk would be back on the table. For the foreseeable future, I can’t see a world where this is completely off the table,” Mr Macken concluded.

With event risk out of the frame for the time being, investors believe valuations are much more favourable in Europe than the US.

“It’s a much more fundamental story [in Europe], whereas the US is really pinning their hopes on public policy which may or may not come. You’re really betting that Trump will ultimately be successful, whereas the bet in Europe is that you’re having a fundamental turn in the economy,” Mr McAuliffe said.

President Donald Trump will on Wednesday make public the broad outlines of his tax reform, targeting a lowering of the corporate rate to 15 per cent, as promised on the campaign trail. It is unclear how much of this is baked into US equity prices, which are trading at the upper end of their historical valuation ranges.

Mr McAuliffe thinks Europe has all the ingredients of a “multi-year” bull market, being cheap multiples, accommodative monetary policy, a cheap currency and shift in economic conditions as growth is upgraded.

“What’s interesting here is we’ve actually seen a lot of the radicals and nationalist parties not do as well as people suspected,” he said. With respect to depressed valuations: “A lot of it was bad debt in Europe, deflation, and a lot of those risks are coming off the table.”

This story Administrator ready to work first appeared on Nanjing Night Net.

Looming bank profits require delicate handling

Monday, 30. July 2018

The Age, News 18/04/2017, picture by Justin McManus. Opposition Leader Bill Shorten visiting Qenos who is a manufacturer of polyethylene and relies on gas to power its plant. Shorten doing a doorstop in from of the Plant. Photo: Justin McManusSlowing loan growth, greater regulation and a gutsy call by UBS that the property market has peaked will put added focus on the banks when they release their interim results over the coming weeks.
Nanjing Night Net

The latest round of profit results – all expected to be higher than the previous corresponding period – will be steeped in politics as the banks hike interest rates on investment and interest-only loans.

This action, encouraged by authorities to cool the property market, has given the banks a free kick to boost profits and margins – something that will stick in the throat of some consumers who already perceive the big banks as greedy.

In March, Opposition Leader Bill Shorten castigated the banks for lifting interest rates and renewed calls for a royal commission.

According to UBS, Australia’s household debt-to-income ratio is one of the highest in the world, sitting at a record of 190 per cent. It says households have never been more sensitive to even a small rise in interest rates ahead.

If the Reserve Bank lifts interest rates too high too early, it could turn a “normal” housing correction into a slump, warns the investment bank. Discounts ending

For now the RBA is hoping that regulatory pressures will be enough to dampen the property market.

Indeed, Velocity Trade banking analyst Brett Le Mesurier believes the repricing of mortgages will be good news for the banks in the second half.

In this environment of low interest rates, greater capital requirements and higher wholesale funding costs the banks will have little option but to play the game and keep a lid on expenses. They will also need to retain their focus on returns, not growth.

In simple terms, the days of discounting to win market share are over. If they are to preserve their returns on equity they must target expenses and underperforming businesses.

To put it into perspective, 10 years ago, ANZ’s return on equity was 20 per cent, Westpac’s return on equity was 23 per cent, followed by CBA at 22 per cent and NAB at 18 per cent. Today, the return on equity of all four banks has gone backwards.

The changes occurred because credit growth is half the level of a decade ago, more households are distressed, funding costs are higher and capital requirements continue to rise. Reporting season

ANZ, which reports on May 2, is expected to report a fall in expenses by 3-4 per cent and a rise in income of 2 per cent, according to Bell Potter. It forecasts ANZ will report a cash net profit after tax of $3.6 billion, up 28 per cent on the previous corresponding period due to a series of charges booked in the previous period including software capitalisation and restructuring charges on its Asian investments.

In terms of pitch, the company will no doubt focus on the success of the run-off of some of its Asian businesses, the sale of non-core assets such as its wealth business and progress in turning around the mess Shayne Elliott inherited when he took the top job in January 2016.

NAB, which reports its interim results on May 4, is embarking on a continuous improvement strategy, unwinding past missteps, including spinning off its troubled British banking business and the bulk of its life insurance arm. It reported a 1 per cent rise in revenue in the first quarter of the 2017 financial year compared with the second half of 2016.

NAB is on track for a record interim result and full-year result for 2017.

Next on the list is Westpac, which reports on May 8, and is on target for a record interim profit and record full-year profit. Its message will be that it is steady, competent and reliable. Never quite the best – that is left to CBA – but unlike ANZ or National Australia Bank, it doesn’t make strategic mistakes very often.

Westpac has managed to lift its earnings per share since 2007 from $1.89 to $2.44, along with its dividend payout from $1.31 to $1.71.

Meanwhile, Macquarie Group, which reports its full-year result on May 5, has quietly been plugging away, hitting a record share price of $89.10, on the back of record profits, largely due to a doubling of income since the dark days of the GFC.

In a politically steeped atmosphere, banks reporting big profits will have to be deftly stage managed. iFrameResize({enablePublicMethods : true, heightCalculationMethod : “lowestElement”,resizedCallback : function(messageData){}, checkOrigin: false},”#pez_iframeA”);

This story Administrator ready to work first appeared on Nanjing Night Net.