K: Financial and Insurance Services

Tension may turn RBA dovish

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Original article by William McInnes
The Australian Financial Review – Page: 21 : 16-Jul-18

JP Morgan expects the Reserve Bank of Australia to leave official interest rates on hold at 1.5 per cent until at least June 2019. However, JPMorgan analysts have indicated that the US-China trade war could adversely affect global economic growth. A slowdown in global growth could in turn prompt a fall in the global manufacturing Purchasing Managers’ Index, which has traditionally influenced the Reserve Bank’s monetary policy decisions.

CORPORATES
RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, JP MORGAN ASSET MANAGEMENT INCORPORATED

Banks face $70b gap in funding

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 1 & 6 : 16-Jul-18

Australia’s banks have experienced an increase in the gap between bank loans and deposits, according to National Australia Bank analysis. The funding gap rose from $A390 billion in the June 2017 quarter to $A457 million in the March 2018 quarter. The increase was attributed to households needing to access more of their savings and superannuation funds shifting their cash into other asset classes. Banks increased lending by 4.8 per cent in the 12 months to May, but deposits rose by just over two per cent.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, TD SECURITIES, THE ASSOCIATION OF SUPERANNUATION FUNDS OF AUSTRALIA LIMITED, AMP LIMITED – ASX AMP, MACQUARIE GROUP LIMITED – ASX MQG

Strong US earnings growth tipped but it’s unlikely to last

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Original article by Timothy Moore
The Australian Financial Review – Page: 20 : 16-Jul-18

Expectations of earnings growth has been a major contributor to the rise of the S&P 500, which has gained 8.5 per cent since its February low. Market strategist Ed Yardeni notes that US corporate tax cuts in late 2017 have been the major driver of earnings growth. Analysts forecast earnings growth of 22.3 per cent in 2018 and 9.9 per cent in 2019. However, some analysts warn that earnings growth could come under pressure in the second half of 2018, due to factors such as the trade war with China and the rising US dollar.

CORPORATES
STANDARD AND POOR’S 500 INDEX, YARDENI RESEARCH INCORPORATED, FUNDSTRAT GLOBAL ADVISORS LLC, BLACKROCK INCORPORATED, LPL FINANCIAL LLC, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, JP MORGAN CHASE AND COMPANY, CITIGROUP INCORPORATED, WELLS FARGO AND COMPANY, FACEBOOK INCORPORATED, AMAZON.COM INCORPORATED, APPLE INCORPORATED, NETFLIX INCORPORATED, GOOGLE INCORPORATED, ALPHABET INCORPORATED, MICROSOFT CORPORATION, BHP BILLITON LIMITED – ASX BHP, RBC CAPITAL MARKETS, FACEBOOK INCORPORATED, EXPEDIA INCORPORATED, BANK OF MONTREAL

APRA’s stress test draws fire on detail

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Original article by Michael Roddan
The Australian – Page: 20 : 13-Jul-18

The Australian Prudential Regulation Authority has released the results of its latest stress test of the banking sector. Commenting on the results, APRA chairman Wayne Byres said banks need to get improved data on customers’ overall debt position, as well as coming up with better crisis plans. Digital Finance Analytics’ Martin North is critical of the lack of public detail in the stress test, while APRA has also been criticised by some economists for its very optimistic view of the state of Australia’s $1.7 trillion mortgage sector.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, DIGITAL FINANCE ANALYTICS, CLSA AUSTRALIA PTY LTD, LF ECONOMICS

Treasury boss warns against RBA rises

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 13-Jul-18

Economists have been urging the Reserve Bank of Australia to use the opportunity afforded to it by the nation’s strong economy to lift interest rates. They are concerned that failure to do so will leave it struggling to respond to any future financial crisis. RBA governor Philip Lowe has made it clear that rates will not go up until inflation rises, while outgoing Treasury secretary John Fraser has also warned against calls for rate increases.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

CBA accepts undertaking over BBSW

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 19 : 12-Jul-18

The Australian Securities & Investment Commission has advised that the Commonwealth Bank of Australia has agreed to an enforceable undertaking with regard to the bank bill swap rate. CBA will pay $25m in fines and costs to settle ASIC’s case over allegations that the bank manipulated the BBSW. National Australia Bank and the ANZ Bank both agreed to pay $50m in total to settle their BBSW cases.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FEDERAL COURT OF AUSTRALIA

Exchange-traded funds set for take-off

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Original article by Glenda Korporaal
The Australian – Page: 19 : 12-Jul-18

ETF Securities founder Graham Tuckwell is upbeat about the outlook for Australia’s exchange-traded fund market, which he expects to grow significantly in the next five years. Tuckwell says Australians have been slow to embrace ETFs while financial advisers have instead favoured actively managed funds, as they receive a commission for recommending such products to clients. He adds that active fund managers often underperform the market after their fees are taken into account.

CORPORATES
ETF SECURITIES LIMITED

Rates must rise, APRA veteran says

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 11-Jul-18

Jeffrey Carmichael is the latest monetary policy expert to have urged the Reserve Bank of Australia to begin increasing official interest rates. The inaugural chairman of the Australian Prudential Regulation Authority has warned of the economic risks of failing to begin raising the cash rate when other central banks are doing so. He has suggested that there may be a need for up to eight rate rises, but stresses the need to do so gradually. He adds that the domestic economy is strong enough to absorb rate rises without any significant risk. Carmichael worked at the RBA for two decades.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN NATIONAL UNIVERSITY, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK, PROMONTORY AUSTRALASIA PTY LTD

Dream run may be over as credit faces headwinds

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Original article by David Rogers
The Australian – Page: 28 : 11-Jul-18

The S&P/ASX 200 failed to reach a new 10-year high on 10 July, with the banking sector leading the market lower. Jonathan Mott of UBS notes that the Australian market had significantly outperformed its global peers between early April and early July, although this had followed a sharp fall in the March quarter. Meanwhile, a number of factors may weigh on the local bourse in the lead-up to the August reporting season, including the potential for the US-China trade war to escalate.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, UBS HOLDINGS PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA, TELSTRA CORPORATION LIMITED – ASX TLS, MACQUARIE GROUP LIMITED – ASX MQG, BANK OF QUEENSLAND LIMITED – ASX BOQ, SUNCORP BANK, AMP BANK LIMITED, PEPPER GROUP LIMITED, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

AMP warns planners on risky advice

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Original article by Alice Uribe
The Australian Financial Review – Page: 1 & 4 : 10-Jul-18

AMP appears reluctant to retain self-employed financial planners under its operating licence, as it continues to be impacted by the "fee for no service" scandal. AMP is understood to have given some self-employed planners just months to find a new operating licence. Meanwhile, the Australian Securities & Investments Commission has confirmed that plans to continue its investigation of AMP over the fees scandal.

CORPORATES
AMP LIMITED – ASX AMP, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, HILLROSS FINANCIAL SERVICES LIMITED, IPAC FINANCIAL CARE LIMITED, CHARTER FINANCIAL PLANNING LIMITED, AUSTRALIA. DIRECTOR OF PUBLIC PROSECUTIONS, ADVISER SOLUTIONS PTY LTD, CONNECT FINANCIAL SERVICES BROKERS