K: Financial and Insurance Services

Two strikes rule reining in exec pay

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Original article by Joanna Mather
The Australian Financial Review – Page: 3 : 24-Aug-17

The Australian Council of Superannuation Investors has released the findings of a survey which shows that the top listed companies have not significantly increased their CEOs’ salaries in the last 10 years. The annual fixed pay of S&P/ASX 100 CEOs has been steady at about $A1.9m, while bonuses have also been relatively steady. ACSI CEO Louise Davidson notes that the trend has coincided with the introduction of the "two strikes" rule.

CORPORATES
AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, STANDARD AND POOR’S 500 INDEX, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, CHALLENGER LIMITED – ASX CGF, MACQUARIE GROUP LIMITED – ASX MQG, JAMES HARDIE INDUSTRIES PLC – ASX JHX, WESTFIELD CORPORATION – ASX WFD, PREMIER INVESTMENTS LIMITED – ASX PMV, BT INVESTMENT MANAGEMENT LIMITED – ASX BTT, CSL LIMITED – ASX CSL, FORTESCUE METALS GROUP LIMITED – ASX FMG, QANTAS AIRWAYS LIMITED – ASX QAN

Wild ride for majors as profit season unfolds

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Original article by David Rogers
The Australian – Page: 27 : 24-Aug-17

The August 2017 reporting season has prompted large movements in the shares of some blue-chip stocks. Data from Bloomberg shows that 30 companies in the benchmark S&P/200 Index have experienced share price movements of at least five per cent on the day their latest financial results were released. AMP Capital’s Shane Oliver notes that a similar number of stocks have outperformed and underperformed the market, although investors have tended to react more savagely than usual to stocks that failed to meet earnings expectations.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, AMP CAPITAL INVESTORS LIMITED, BLOOMBERG LP, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, TELSTRA CORPORATION LIMITED – ASX TLS, HEALTHSCOPE LIMITED – ASX HSO, ACONEX LIMITED – ASX ACX, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, SIRTEX MEDICAL LIMITED – ASX SRX, WOOLWORTHS LIMITED – ASX WOW, MONADELPHOUS GROUP LIMITED – ASX MND, THE A2 MILK COMPANY LIMITED – ASX A2M, VIRTUS HEALTH LIMITED – ASX VRT, THE STAR ENTERTAINMENT GROUP LIMITED – ASX SGR, McMILLAN SHAKESPEARE LIMITED – ASX MMS, AVEO GROUP – ASX AOG, BEACH POINT CAPITAL MANAGEMENT LP, SEVEN GROUP HOLDINGS LIMITED – ASX SVW, FORTESCUE METALS GROUP LIMITED – ASX FMG, MACQUARIE GROUP LIMITED – ASX MQG

APRA can’t be enforcer and supervisor, NAB says

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Original article by James Eyers
The Australian Financial Review – Page: 13 & 16 : 23-Aug-17

Banks have raised concerns about the proposed Banking Executive Accountability Regime (BEAR) in submissions to the Federal Government. The role of the Australian Prudential Regulation Authority under the new regime is a particular concern for the banking sector, given that it will have powers to fine banks up to $A200m for non-compliance. National Australia Bank has questioned the appropriateness of APRA having the dual roles of supervising and regulating the bank sector, while the ANZ Bank said more clarity is needed regarding the roles of APRA and the Australian Securities & Investments Commission under the BEAR reforms.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIAN BANKERS’ ASSOCIATION, AUSTRALIA. DEPT OF THE TREASURY, FINANCE SECTOR UNION, CUSTOMER OWNED BANKING ASSOCIATION, OWNERSHIP MATTERS PTY LTD, AUSTRALIANSUPER PTY LTD

Investor U-turn amid signs the wheels are falling off Trump rally

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Original article by Philip Baker
The Australian Financial Review – Page: 27 : 23-Aug-17

The Dow Jones Industrial Average has gained 18 per cent since the US presidential election in November 2016. However, US investor and hedge fund manager Ray Dalio says the uncertainty surrounding the Trump administration may provide the catalyst for a sharemarket correction. The future of President Donald Trump’s much-touted corporate and personal income tax cuts in particular is uncertain, and a sell-off is likely if the reforms are not passed by Congress.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, DEMOCRATIC PARTY (UNITED STATES), REPUBLICAN PARTY (UNITED STATES)

Banks racing to lift their game: Hartzer

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Original article by Michael Roddan, Richard Gluyas
The Australian – Page: 21 : 22-Aug-17

ANZ Bank CEO Shayne Elliott says the Commonwealth Bank’s recent money-laundering problems have impacted the banking sector’s reputation as a whole. He also says the Federal Government’s new regulations governing bank executives are appropriate, as they need to be made accountable for their mistakes. Meanwhile, Westpac CEO Brian Hartzer says the banking major is working hard to ensure that its products, processes and policies are in line with community expectations.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

Near enough is good enough in season so far

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Original article by David Rogers
The Australian – Page: 28 : 22-Aug-17

Analysts’ consensus earnings-per-share estimates for 2017-18 have been downgraded by 0.3 per cent so far in the August 2017 reporting season. Hasan Tevfik of Credit Suisse notes that this compares with EPS upgrades of 1.6 per cent in the February reporting season. Meanwhile, just 19 per cent of Australian-listed companies have exceeded consensus earnings estimates so far in the current reporting season, compared with an average of 40 per cent over the last two decades. Likewise, 38 per cent of companies have failed to meet consensus estimates to date, while the historical average is just 28 per cent.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, STANDARD AND POOR’S ASX 200 INDEX, GOLDMAN SACHS AUSTRALIA PTY LTD, BLUESCOPE STEEL LIMITED – ASX BSL, BEACH ENERGY LIMITED – ASX BPT, G8 EDUCATION LIMITED – ASX GEM, FORTESCUE METALS GROUP LIMITED – ASX FMG, APN OUTDOOR GROUP LIMITED – ASX APO, TELSTRA CORPORATION LIMITED – ASX TLS, TRANSURBAN GROUP LIMITED – ASX TCL, CSL LIMITED – ASX CSL, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, AGL ENERGY LIMITED – ASX AGL, FAIRFAX MEDIA LIMITED – ASX FXJ, DOMAIN.COM.AU, CITIGROUP PTY LTD

APRA refines ‘serviceability’ rules for loans

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Original article by Duncan Hughes
The Australian Financial Review – Page: 6 : 21-Aug-17

The Australian Prudential Regulation Authority has directed banks such as Westpac to be more rigorous when it comes to assessing the ability of borrowers to service their loans. Westpac will introduce new measures in this regard from 21 August, with further measures to be adopted in September. APRA’s move on loan serviceability is the latest in a number of measures by it and other regulators aimed at ensuring that borrowers are not taking on too debt and are in a position to repay loans.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, WESTPAC BANKING CORPORATION – ASX WBC, BANK OF MELBOURNE LIMITED, ST GEORGE BANK LIMITED, BANK OF SOUTH AUSTRALIA LIMITED, RESERVE BANK OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP

Norris supports Comyn for CBA

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Original article by Richard Gluyas
The Australian – Page: 17 & 18 : 21-Aug-17

Former Commonwealth Bank of Australia CEO Ralph Norris favours appointing an internal candidate to succeed incumbent Ian Narev. Norris argues that there is less risk associated with an internal appointment, despite calls from some analysts for CBA to recruit someone from outside the bank in order to pursue cultural change in the wake of the money-laundering scandal. Norris favours appointing the head of CBA’s retail banking division, Matt Comyn, to succeed Narev.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, FEDERAL COURT OF AUSTRALIA, MEDIBANK PRIVATE LIMITED – ASX MPL, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ROYAL BANK OF SCOTLAND GROUP PLC

Reporting season needs a real kick-along

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Original article by Philip Baker
The Australian Financial Review – Page: 20 : 21-Aug-17

To date some 76 companies in the S&P/ASX 200 companies have released their financial results so far in the August reporting season. Just 20 per cent of stocks to have issued guidance for 2017-18 have upgraded their earnings-per-share forecast. Blue-chip stocks such as Qantas and BHP Billiton will need to deliver solid earnings results in the next two weeks in order to bolster investor sentiment and boost the benchmark index. A major issue during the current reporting season has been the dearth of companies to have exceeded expectations.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, BHP BILLITON LIMITED – ASX BHP, QANTAS AIRWAYS LIMITED – ASX QAN, WOOLWORTHS LIMITED – ASX WOW, MACQUARIE WEALTH MANAGEMENT, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, TELSTRA CORPORATION LIMITED – ASX TLS, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, JANUS HENDERSON GROUP PLC – ASX JHG, JB HI-FI LIMITED – ASX JBH, IOOF HOLDINGS LIMITED – ASX IFL, ORIGIN ENERGY LIMITED – ASX ORG, SUNCORP GROUP LIMITED – ASX SUN, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, JAMES HARDIE INDUSTRIES PLC – ASX JHX, NEWCREST MINING LIMITED – ASX NCM, CROWN RESORTS LIMITED – ASX CWN, CHALLENGER LIMITED – ASX CGF, KOGAN.COM LIMITED – ASX KGN, THE A2 MILK COMPANY LIMITED – ASX A2M

Fund managers wind back expectations and hoard a little extra cash

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Original article by David Rogers
The Australian – Page: 28 : 17-Aug-17

Bank of America Merrill Lynch’s latest survey of fund managers shows that just 33 per cent expect a rise in global corporate profits in the next 12 months, compared with 58 per cent in February 2017. Chief investment strategist ­Michael Hartnett says the survey provides a "warning sign" of the likely performance of shares against bonds, as well as cyclical stocks against defensive stocks. The survey also found that the average cash balance of the 174 respondents is now 4.9 per cent, compared with an average of 4.5 per cent over the last decade.

CORPORATES
BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, STANDARD AND POOR’S 500 INDEX, MSCI WORLD INDEX, STANDARD AND POOR’S ASX 200 INDEX, NASDAQ, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK