K: Financial and Insurance Services

Competition ‘is not appropriate for super’

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Original article by Sally Patten
The Australian Financial Review – Page: 15 : 11-Jul-17

Australia’s retail superannuation funds argue that fees would be lower and there would be more product innovative if there was increased competition in the default super sector. Nicholas Barr, the professor of public economics at the London School of Economics, argues against allowing more competition in the case of complex financial products, as many consumers lack the time or skills to fully assess such products and decide which is most suitable for them.

CORPORATES
LONDON SCHOOL OF ECONOMICS, FINANCIAL SERVICES COUNCIL, AUSTRALIA. PRODUCTIVITY COMMISSION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

NAB acts to reduce riskiest lending

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Original article by Michael Roddan
The Australian – Page: 22 : 7-Jul-17

National Australia Bank will begin assessing the ability of interest-only mortgage borrowers to repay their loan when deciding whether to approve such applications. NAB already takes into account a customer’s loan-to-income ratio when assessing all loan applications, but it will reject applications from people with high loan-to-income ratios from 8 July. The major banks have increased the interest rates on interest-only loans in recent months.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, ING DIRECT

Global bull market still charging ahead

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Original article by Myriam Robin
The Australian Financial Review – Page: 15 & 20 : 7-Jul-17

Sentiment among Wall Street’s sell-side equity analysts rose by 2.4 per cent to a five-year high of 56.4 in June 2017, according to Bank of America Merrill Lynch. Australian fund managers are also upbeat about the outlook for shares. AMP’s Shane Oliver notes that the long-running global bull market is unlikely to be affected when major central banks begin to increase interest rates. Citigroup also believes that the bull run will continue, with just two of its 18 risk indicators pointing to a bear market in the near-term.

CORPORATES
BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, AMP LIFE LIMITED, CITIGROUP INCORPORATED, STANDARD AND POOR’S ASX 200 INDEX, AUSTRALIANSUPER PTY LTD, PERPETUAL INVESTMENTS, MORGAN STANLEY AND COMPANY INCORPORATED, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, UNITED STATES. FEDERAL RESERVE BOARD

Party over with bondcano ready to erupt

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Original article by David Rogers
The Australian – Page: 27 : 6-Jul-17

The yield on 10-year US Treasuries peaked at 2.35 per cent in early July 2017, compared with a record low of 1.32 per cent in mid-2016. Credit Suisse forecasts that the yield will reach 2.8 per cent by the end of 2017, as some of the world’s leading central banks begin tightening monetary policy. Hasan Tevfik of Credit Suisse warns that Australian-listed "bond proxy" stocks in particular are vulnerable to rising bond yields.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, SYDNEY AIRPORT – ASX SYD, APA GROUP – ASX APA, WESTFIELD CORPORATION – ASX WFD, DEXUS PROPERTY GROUP – ASX DXS, ASX LIMITED – ASX ASX, SONIC HEALTHCARE LIMITED – ASX SHL, MEDIBANK PRIVATE LIMITED – ASX MPL, TATTS GROUP LIMITED – ASX TTS, AUSNET SERVICES LIMITED – ASX AST, HEALTHSCOPE LIMITED – ASX HSO, TABCORP HOLDINGS LIMITED – ASX TAH, MACQUARIE ATLAS ROADS GROUP – ASX MQA, CHARTER HALL GROUP – ASX CHC, INVESTA OFFICE FUND – ASX IOF, BWP TRUST – ASX BWP, COMPUTERSHARE LIMITED – ASX CPU, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, SOUTH32 LIMITED – ASX S32, QANTAS AIRWAYS LIMITED – ASX QAN, CALTEX AUSTRALIA LIMITED – ASX CTX, GRAINCORP LIMITED – ASX GNC, ECLIPX GROUP LIMITED – ASX ECX, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, EUROPEAN CENTRAL BANK, BANK OF ENGLAND, BANK OF CANADA, INSTITUTE FOR SUPPLY MANAGEMENT

‘Savers the big losers’ from rate rises

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Original article by Myriam Robin
The Australian Financial Review – Page: 31 : 6-Jul-17

Data from Canstar shows that just 15 out of 75 Australian lenders have increased their term deposit interest rates since the last official interest rate cut in August 2016. Steve Mickenbecker of Canstar says term deposit rates have fallen to an unprecedented low, and he warns that rates are unlikely to rise while inflation remains low. He adds that savers can adopt a number of strategies to obtain higher term deposit rates, but this requires a lot of effort. Meanwhile, banks are increasing their rates on interest-only and investor mortgage loans.

CORPORATES
CANSTAR PTY LTD, RESERVE BANK OF AUSTRALIA

AusSuper optimistic on equity outlook

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Original article by Sally Patten
The Australian Financial Review – Page: 21 : 6-Jul-17

AustralianSuper has posted a return of 12.4 per cent for 2016-17, due to a strong performance by asset classes such as infrastructure, Australian shares and global shares. Chief investment officer Mark Delaney is upbeat about the outlook for sharemarkets in 2017-18, although he cautions that investors should expect lower returns than in 2016-17. He adds that share prices are unlikely to be significantly affected by the prospect of interest rate increases in countries such as the US.

CORPORATES
AUSTRALIANSUPER PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD, CHANT WEST FINANCIAL SERVICES PTY LTD

RBA douses talk of rate rises

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Original article by David Rogers, Adam Creighton
The Australian – Page: 17 & 25 : 5-Jul-17

Financial markets have priced in a nine per cent chance of a rise in Australia’s cash rate before the end of 2017 in the wake of the Reserve Bank’s July board meeting. The chances of a rate rise in the next 12 months have fallen from 84 per cent to 76 per cent. The central bank’s monetary policy statement was largely unchanged from May, although the Reserve Bank noted that a gradual strengthening of the Australia economy is likely. It also highlighted the need for the Australian dollar to remain low as the domestic economy completes its transition from the mining investment boom.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, JP MORGAN AUSTRALIA LIMITED, EUROPEAN CENTRAL BANK, BANK OF ENGLAND, BANK OF CANADA

SMSFs trail bigger funds by up to 16pc

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Original article by Sally Patten
The Australian Financial Review – Page: 3 : 5-Jul-17

Data from Rainmaker shows that Australia’s self-managed superannuation funds achieved an average annual return of 4.6 per cent in the 10 years to May 2017. In contrast, mainstream super funds had an average annual return of 4.5 per cent. However, Rainmaker forecasts that SMSFs underperformed mainstream funds in the year to May 2017, with respective returns of 7.7 and 9.2 per cent. Rainmaker MD Christopher Page says SMSF trustees should focus on the return over 10 years rather than one year.

CORPORATES
RAINMAKER INFORMATION SERVICES PTY LTD, CHANT WEST FINANCIAL SERVICES PTY LTD, AUSTRALIAN TAXATION OFFICE

Government pushes for progress on group life insurance code

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Original article by Alice Uribe
The Australian Financial Review – Page: 15 : 4-Jul-17

The Australian life insurance sector’s new code of conduct took effect in the week ending 30 June 2017. The code will be enforced by an independent committee, but it does not come under a legal or regulatory body. As yet, the code does not cover life insurance within superannuation, something that Financial Services Minister Kelly O’Dwyer wants addressed sooner than later. O’Dwyer notes that a working group had been looking at the issue for six months, but with seemingly little progress.

CORPORATES
AUSTRALIA. DEPT OF FINANCE, AIA AUSTRALIA LIMITED, FINANCIAL SERVICES COUNCIL, FINANCIAL SERVICES OMBUDSMAN LIMITED

New financial year ‘reset’ for investors

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Original article by Myriam Robin
The Australian Financial Review – Page: 27 : 4-Jul-17

Australia’s S&P/ASX 200 shed 3.4 per cent in May 2017 and 0.1 per cent in June, due to factors such as tax-loss selling in the lead-up to the end of the financial year. Ophir Asset Management’s Andrew Mitchell is upbeat about the outlook for local equities in July, noting that fund managers will begin reweighting their portfolios. Institutional investors may also buy into stocks prior to the reporting season in August.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, OPHIR ASSET MANAGEMENT PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, TPG TELECOM LIMITED – ASX TPM, ACONEX LIMITED – ASX ACX, SANTOS LIMITED – ASX STO, APN OUTDOOR GROUP LIMITED – ASX APO, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, AVEO GROUP – ASX AOG