K: Financial and Insurance Services

Fed chief Powell stays put with policy for now

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Original article by David Rogers
The Australian – Page: 27 : 19-Jul-18

US Federal Reserve chairman Jerome Powell has signalled that the central bank will retain its stated policy of increasing interest rates gradually, at least for now. The potential for a full-blown trade war with China appears to be the main reason for Powell’s caveat of "for now". Meanwhile, UBS forecasts that the Reserve Bank of Australia would most likely delay tightening monetary policy until beyond 2020 in the event of a full trade war.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, STANDARD AND POOR’S 500 INDEX

RBA flags risk of record household debt

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Original article by David Uren
The Australian – Page: 2 : 18-Jul-18

The minutes of the Reserve Bank of Australia’s board meeting for July indicate that although the central bank expects to begin tightening monetary policy, it is in no hurry to do so. The minutes also show that high levels of household debt continues to be a concern for the central bank. It noted that while an increase in the cash rate could be expected to reduce consumer spending, the high level of debt means a rate cut may not necessarily result in increased spending.

CORPORATES
RESERVE BANK OF AUSTRALIA

Perpetual motion: Lloyd to lead NAB wealth spin-off

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Original article by Cliona O’Dowd
The Australian – Page: 17 & 21 : 18-Jul-18

National Australia Bank has advised that Geoff Lloyd will become CEO of its MLC wealth business on 1 September. Lloyd recently stepped down as CEO of Perpetual after six years, a period which saw strong growth in its profits and share price. NAB plans to divest MLC via a sharemarket float or trade sale, and Lloyd says the opportunity to grow the business as a stand-alone wealth manager was a key reason for his decision to take on the role. The spin-off will include NAB’s superannuation and financial planning businesses.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MLC LIMITED, PERPETUAL LIMITED – ASX PPT, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, IOOF HOLDINGS LIMITED – ASX IFL, JBWERE LIMITED, NABTRADE, AMP LIMITED – ASX AMP, LEND LEASE GROUP LIMITED – ASX LLC, NIPPON LIFE INSURANCE COMPANY LIMITED, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Funds in black for ninth year in a row

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Original article by Cliona O’Dowd
The Australian – Page: 21 : 17-Jul-18

Preliminary data shows that Australia’s median growth superannuation fund achieved a return of nine per cent in 2017-18, compared with the S&P/ASX 200’s gain of 8.3 per cent. Data from Chant West shows that the median growth fund’s return since fiscal 2009 has averaged 9.5 per cent, for a cumulative return over the period of more than 130 per cent. The funds with the highest returns are expected to have gained at least 12 per cent in 2017-18. Meanwhile, MLC Super’s chief investment officer Jonathan Armitage says returns are likely to be lower in the next several years.

CORPORATES
CHANT WEST HOLDINGS LIMITED – ASX CWL, MLC LIMITED, AUSTRALIANSUPER PTY LTD, HOST-PLUS, REST SUPER PTY LTD, STANDARD AND POOR’S ASX 200 INDEX

Westpac to quit SMSF lending

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Original article by Duncan Hughes, Joanna Mather
The Australian Financial Review – Page: 6 : 17-Jul-18

Westpac will cease offering new loans to self-managed superannuation funds that wish to invest in property at the end of July. Chris Balalovski of BDO notes that there does not seem to be any problems with losses in the SMSF sector as regards property, and that Westpac’s decision could be more to do with negative regulatory or consumer sentiment towards loans to SMSFs. Jordan George from the SMSF Association says it is his understanding that the Commonwealth Bank and Macquarie still provide loans to SMSFs, but that the National Australia Bank and the ANZ Bank do not lend to the sector.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, BDO AUSTRALIA LIMITED, SMSF ASSOCIATION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MACQUARIE GROUP LIMITED – ASX MQG, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, BANK OF MELBOURNE LIMITED, ST GEORGE BANK LIMITED, BANK OF SOUTH AUSTRALIA LIMITED

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