K: Financial and Insurance Services

ASX slips for a third day, US worry lingers

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Original article by Jessica Sier
The Australian Financial Review – Page: 26 : 4-Nov-16

The S&P/ASX 200 index closed 0.1 per cent lower at 5,225.6 points on 3 November 2016. The All Ordinaries index declined 0.1 per cent to 5,306.5. Investors are concerned about the chaotic US presidential election. Shares in Warrnambool Cheese & Butter Factory rose 5.2 per cent to $A6.85 following the announcement of a profit of $A20.8 million in the six months to 30 September and a 10 per cent rise in revenue to $A325.9 million.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, WARRNAMBOOL CHEESE AND BUTTER FACTORY COMPANY HOLDINGS LIMITED – ASX WCB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UNITED STATES. FEDERAL RESERVE BOARD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BORAL LIMITED – ASX BLD, SOUTH32 LIMITED – ASX S32, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

ANZ shrinks to reduce rising risks

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Original article by James Eyers
The Australian Financial Review – Page: 1 : 4-Nov-16

The ANZ Bank has announced a fall of 18 per cent in cash profit to $A5.9 billion for 2015-16. Return on equity fell to 12.2 per cent, from 13.8 per cent a year ago. The cost to income ratio for the year declined to 44.8 per cent. ANZ CEO Shayne Elliott said the bank reduced its workforce by 3,600 jobs over the year to 30 September 2016. The stock rose 0.6 per cent to $A27.35 on 3 November 2016.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

RBA likely to cut again but not in a hurry

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Original article by Jessica Sier
The Australian Financial Review – Page: 35 : 3-Nov-16

Financial markets now consider that there is an eight per cent chance that the Reserve Bank of Australia will reduce official interest rates in December 2016. However, there is now seen to be a 36 per cent change that rates will be cut by May 2017. Michael Blythe of the Commonwealth Bank anticipates another rate cut during the June quarter, while Paul Dales of Capital Economics says there is potential for the next change in monetary policy to be an increase in the cash rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CAPITAL ECONOMICS LIMITED

Trump’s surge spooks markets

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Original article by Cameron Stewart, David Rogers
The Australian – Page: 1 & 10 : 3-Nov-16

Sharemarkets in Australia and Asia were sold down on 2 November 2016, after an ABC News/Washington Post poll showed that US presidential candidate Donald Trump now has a one percentage point lead over Hillary Clinton. The RealClear Politics average of polls also shows that Trump has significantly narrowed Clinton’s lead in the last week. Westpac economists have warned that a Trump victory could have a bigger impact on global financial markets than the UK’s Brexit referendum.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, NIKKEI 225 INDEX, HANG SENG INDEX, SHANGHAI COMPOSITE INDEX, KOSPI INDEX, WESTPAC BANKING CORPORATION – ASX WBC, WILSON ASSET MANAGEMENT, REPUBLICAN PARTY (UNITED STATES), DEMOCRATIC PARTY (UNITED STATES)

ANZ’s Whelan will divest Asian bank stakes next

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Original article by Lisa Murray
The Australian Financial Review – Page: 13 & 17 : 2-Nov-16

The ANZ Bank will further scale back its presence in Asia after securing a deal to offload some of its retail banking and wealth management assets in the region. Mark Whelan, the head of institutional banking, says ANZ is making progress on selling some of its minority stakes in four Asian banks. He says these stakes are deemed to be non-core assets, but he stresses that ANZ is "reshaping" its Asian operations rather than withdrawing from the region. ANZ CEO Shayne Elliott has signalled that institutional banking will be the focus of its Asian operations.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, SHANGHAI RURAL COMMERCIAL BANK, BANK OF TIANJIN COMPANY LIMITED, PT BANK PAN INDONESIA TBK, AMMB HOLDINGS BHD, DBS BANK LIMITED

Cashed-up fund cools on property

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Original article by Daniel Palmer
The Australian – Page: 24 : 1-Nov-16

The Future Fund has posted a return of 1.5 per cent for the September 2016 quarter. Its cash holdings rose by 0.4 per cent to 22.1 per cent, compared with just 15.1 per cent for the same period in 2015. The sovereign wealth fund lifted its portfolio’s weighting toward equities by 0.6 per cent to 29.4 per cent, while its exposure to property and private equity fell. MD David Neal says the Future Fund is likely to maintain its risk-adverse profile. Its assets under management totalled $A124.65bn at the end of the quarter.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, PORT OF MELBOURNE

Banks on S&P negative watch over hot property

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 11 & 15 : 1-Nov-16

Factors such as rising household debt and residential property prices have prompted Standard & Poor’s to downgrade Australia’s economic risk trends. The firm has also downgraded the credit rating outlook of 25 local lenders to "negative". S&P downgraded the major banks’ rating outlooks to "negative" in mid-2016, but it has not yet made any further changes. However, their "AA-" credit ratings could be reviewed, particularly if Australia implements new global regulations regarding bank bailouts.

CORPORATES
STANDARD AND POOR’S CORPORATION, MACQUARIE BANK LIMITED – ASX MBL, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, BANK OF QUEENSLAND LIMITED – ASX BOQ, RESERVE BANK OF AUSTRALIA

ANZ cuts back Asian footprint

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Original article by Michael Bennet
The Australian – Page: 21 & 24 : 1-Nov-16

CEO Shayne Elliot says the ANZ Bank will eventually offload more of its retail banking operations in Asia, after striking a deal to sell its retail and wealth assets in Hong Kong, Singapore, China, Taiwan and Indonesia. ANZ has not revealed the price of the transaction, although it says Singapore-based DBS Bank will pay $A110m more than the book value of the assets. ANZ will incur a $A265m net loss on the transaction, while it will also slightly affect its earnings per share and return on equity. ANZ expanded its presence in Asia under previous CEO Mike Smith.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, DBS BANK LIMITED, ROYAL BANK OF SCOTLAND GROUP PLC, MORGAN STANLEY AUSTRALIA LIMITED, MACQUARIE GROUP LIMITED – ASX MQG

Commodities up but $A stuck at US77c

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Original article by Jens Meyer
The Australian Financial Review – Page: 27 : 1-Nov-16

The rally in the price of coking and thermal coal since early August 2016 has bolstered Australia’s terms of trade. However, the Australian dollar has been largely range-bound over this period, and it has not been able to achieve a sustained rise above the $US0.77 level. The currency has not benefited from growing expectations that the Reserve Bank will leave official interest rates on hold in the near-term. Sean Callow of Westpac expects the currency to test the $US0.70 level by the December 2017 quarter.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. FEDERAL RESERVE BOARD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF NEW ZEALAND

Clinton victory and divided Congress ‘best for shares’

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Original article by Vesna Poljak
The Australian Financial Review – Page: 11 & 16 : 1-Nov-16

UBS suggests that in terms the outlook for equities, the best outcome of the US election would be if Hillary Clinton becomes president but neither party has control of Congress. Wingate Asset Management’s Chad Padowitz notes that health stocks in particular could be sold down if the Democrats control both houses. Historical analysis by AMP Capital shows that since 1927, US equities have delivered better returns when a Democrat has been in the White House but one or both houses of Congress have been controlled by the Republican Party.

CORPORATES
UBS HOLDINGS PTY LTD, WINGATE ASSET MANAGEMENT PTY LTD, AMP CAPITAL INVESTORS LIMITED, DEMOCRATIC PARTY (UNITED STATES), REPUBLICAN PARTY (UNITED STATES), STANDARD AND POOR’S 500 INDEX, SANOFI PHARMACEUTICALS, DELTEC ASSET MANAGEMENT LLC, WESTPAC BANKING CORPORATION – ASX WBC, CHICAGO BOARD OPTIONS EXCHANGE VOLATILITY INDEX, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL BUREAU OF INVESTIGATION