MS: Four headwinds for banks

From Morgan Stanley: We have a negative stance on Australian banks given the prospect of worse than expected capital requirements, an unbalanced housing market, a challenging operating environment, flat dividends and full trading multiples. NAB (EW) is our preferred major bank, while we have UW ratings on WBC and ANZ. Key Issue #1: New Capital

Latest posts


China services PMI slows sharply

From HSBC: HSBC China Composite PMI™ data (which covers both manufacturing and services) pointed to a further rise in total business activity in China during June. However, the rate of expansion eased to a marginal pace that was the slowest recorded since May 2014. This was signalled by the HSBC Composite Index posting only slightly


Iron ore comedy turns to tragedy for Colin Barnett

By Leith van Onselen The situation has gone from bad to worse for the Western Australian Government, and its leader Colin Barnett. After delusionally forecasting high iron ore prices as far as the eye can see in the 2014-15 Western Australian State Budget, along with surging royalty revenues: The 2015-16 Budget announced a horror $2.7


Services sector expands but jobs slide

The Australian Industry Group (AIG) has released its Performance of Services Index (PSI) for June, which reveals that Australia’s services sector finished the year in expansion mode, recording a reading of 51.2, up 1.6 points from May: The services sector expanded in June 2015 after two months of broadly stable conditions. The seasonally-adjusted Australian Industry


How much money is laundered through Aussie homes?

By Leith van Onselen Back in April, the Paris-Based Financial Action Task Force (FATF) on money laundering released its report on Australia, which found that Australian residential property is a haven for international money laundering, particularly from China. The report also recommended that Australia implement counter-measures to ensure that real estate agents, lawyers and accountants


Grattan debunks property lobby’s negative gearing lies

By Leith van Onselen John Daley and Danielle Wood from The Grattan Institute have written an excellent article in The Australian today debunking the Property Council’s and the Real Estate Institute of Australia‘s latest report, prepared on its behalf by ACIL Allen Consulting, defending Australia’s negative gearing and capital gains tax (CGT) discount (debunked by


Coalition to further tighten foreign investor rules

By Leith van Onselen As reported in The Australian this morning, the Abbott Government is set to further strengthen Australia’s foreign investment rules by banning sales to non-residents for the purchase and knock-down of an established dwelling, as well as extending penalties to migration agents marketing Australian temporary residency so that foreigners can buy established


Is Australia still a developed country?

By Alpha Beta Strategy and Economics, republished with permission Resource exports still tanking Australia’s trade data released yesterday shows that our resources exports are in serious trouble. The news coverage has positively reported that our ‘trade deficit shrank in May’. But the lift in our exports this month was less than 1% and a blip


US jobs decent but no cigar

The June US jobs report is out and was decent: Total nonfarm payroll employment increased by 223,000 in June, and the unemployment rate declined to 5.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing. …


Daily iron ore price update (crash)

Here are the iron ore charts for June 2, 2015: Do not adjust your television set. Spot iron ore crashed yesterday. Benchmark Tianjin fell $3.10 to $55.80 and Qingdao spot fell $3.57, or 6.03%, to $55.63 a tonne. That’s a nice head and shoulders top in place with a busted neckline suggesting (on technicals) much more downside. Singapore


Anglo to slash and burn jobs

From The Times: Anglo American is planning to cut between 5 and 20 percent of staff at head offices around the world, sources close to the matter said, in an effort to keep shareholders on side and respond to a commodity price rout that has hit profits. The mining company, which employs some 151,200 staff


China property stablised but at risk

Cross-posted from Investing in Chinese Stocks. Developers are not planning to expand but run down inventory: Developers will focus on reducing inventory in the second half of the year. The average firm completed only 41.4% of its sales target for the year, with some under 40% that will be under pressure in the second half.


Links 3 July 2015

Global Macro / Markets / investing: Raging Bull Markets: How Young Men’s Hormones Unsettle Finance – Bloomberg How major asset classes performed in June 2015: in short not so hot – Capital Spectator North America: Puerto Rico’s Pain Is Tied to U.S. Wages – Wall Street Journal Why Congress Should Let Puerto Rico Declare Bankruptcy


ASX at the close

Chris Weston, Chief Market Strategist at IG Markets IG’s Greek referendum playbook For traders, chaos presents opportunities and the current conditions are certainly conducive for many traders. The key themes remain around Greece, data-dependent US policy and the recent swings in Chinese equities. Figures out of the US have been positive heading into non-farm payrolls


Lower AUD good news for tourism industry

By Leith van Onselen Fairfax is reporting this afternoon that Australia’s tourism operators remain concerned about the elevated Australian dollar, which is making life more difficult that it should be: The latest industry sentiment survey released by Tourism & Transport Forum and MasterCard found the level of the exchange rate remained the chief concern among


Off-market home sales fuelled by Chinese social media

By Leith van Onselen From Domain today comes fresh insight into how Australia’s real estate agents are offloading homes to the Chinese, some of whom are likely non-residents: Agents are posting an increasing number of properties on Chinese social-media platforms such as WeChat before advertising them to the general market, meaning many of them are being snapped up behind closed


Trade deficit fails to recover from last month’s shocker

By Leith van Onselen The Australian Bureau of Statistics (ABS) today releasing trade data for the month of May, with Australia’s trade deficit improving to $2,751 million after last month’s record blow-out. The result still missed analyst’s expectations, who had expected a trade deficit of only $2.23 billion. It was the 14th monthly trade deficit


How Australia’s Budget is eating our Children

By Leith van Onselen Following on from my post earlier today on the Grattan Institute’s new report, Fiscal Challenges for Australia, which examines Australia’s weakening budgetary position and some of the revenue measures needed to address it, Grattan’s CEO, John Daley, has appeared in The AFR warning of a huge hit to living standards for