K: Financial and Insurance Services

World hunkers down for fight against virus

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Original article by David Rogers
The Australian – Page: 29 : 6-Mar-20

Investors have responded positively to the announcement of economic stimulus measures in Australia and the US in response to the coronavirus. Wall Street and sharemarkets across the Asia-Pacific region rallied on 5 March, while the yield on 10-year Australian government bonds rose six basis points to 0.78 per cent. Meanwhile, financial markets expect further official interest rate cuts in both Australia and the US in coming months.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, NIKKEI 225 INDEX, HANG SENG INDEX, KOSPI INDEX, TAIEX INDEX

More capital raisings on the cards: Goldman

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Original article by Melissa Yeo
The Australian – Page: 27 : 6-Mar-20

Matthew Ross of Goldman Sachs says the coronavirus outbreak is likely to prompt more listed companies to undertake capital raisings in coming months, particularly ones that are close to breaching their debt covenants. Ross notes that the supply chains of many companies will be impacted by the virus, given the high level of dependence on imports from China, especially in the consumer goods sector.

CORPORATES
GOLDMAN SACHS AUSTRALIA PTY LTD

Analysts cut bank earnings forecasts

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Original article by Gerard Cockburn, Joyce Moullakis
The Australian – Page: 21 : 5-Mar-20

JP Morgan expects the net profits of Australia’s major banks to fall by 3-4 per cent over coming years after they moved to reduce their mortgage interest rates by 25 basis points, in line with the latest official interest rate cut. JP Morgan adds that the prospect of lower profit margins may prompt banks to reduce their dividend payouts. Macquarie has reiterated its ‘underweight’ recommendation on the banking sector, while UBS has downgraded its earnings-per-share forecast for bank stocks.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD

Lower rates won’t help: AFIC boss

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Original article by Cliona O’Dowd
The Australian – Page: 17 & 28 : 3-Mar-20

The Australian Financial Investment Company’s MD Mark Freeman argues that official interest rates are already at a historically low level, so further monetary policy easing is unlikely to stimulate the economy or stabilise financial markets. The Reserve Bank is widely tipped to reduce the cash rate on 3 March, and there is growing speculation that it could pursue quantitative easing later in the year. However, Freeman has questioned the merits of quantitative easing. He adds that the sharemarket’s recent pullback has created some good buying opportunities.

CORPORATES
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED – ASX AFI, RESERVE BANK OF AUSTRALIA

$A catches coronavirus, plummets to 11-year low

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Original article by Tom Richardson
The Australian Financial Review – Page: 27 : 3-Mar-20

The Australian dollar reached a low of $US0.654 in local trading on 2 March, ahead of the Reserve Bank of Australia’s monthly board meeting. Financial markets have priced in a near-97 per cent chance that the central bank will reduce the cash rate on 3 March, and a 67 per cent chance of a second rate cut in May. Morgan Stanley expects the cash rate to remain on hold until April, giving the RBA time to assess GDP data to be released on 4 March. The Commonwealth Bank says the economic impact of the coronavirus could prompt the Australian dollar to fall further in coming days.

CORPORATES
RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Rate cut tipped amid virus crisis

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Original article by Richard Gluyas
The Australian – Page: 17 & 20 : 2-Mar-20

Financial markets have now priced in an 87 per cent chance that the Reserve Bank of Australia will reduce the cash rate on 3 March. This compares with an 18 per cent chance on 28 February. The case for further easing of monetary has been strengthened by the local sharemarket’s 9.8 per fall in the last week of February, amid global bearish sentiment as the coronavirus outbreak continued to spread beyond China. Shane Oliver of AMP Capital says the RBA would probably have preferred to wait a bit longer to act. Federal Reserve chairman Jerome Powell has also flagged the possibility of interest rate cuts to stimulate the US economy.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, UNITED STATES. FEDERAL RESERVE BOARD

Regulator confident plans are in place

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Original article by Michael Roddan
The Weekend Australian – Page: 26 : 29-Feb-20

The Australian Securities & Investments Commission is working with the Australian Financial Markets Association and large institutions to ensure that the coronavirus outbreak does not stop financial markets from remaining open. ASIC chairman James Shipton notes that it has a pandemic response plan in place, while ASIC’s executive director of markets Greg Yanco says the economic impact of the virus is uncertain. Shipton says ASIC has set up an internal working group to monitor the potential threat that the coronavirus poses and to work with other regulators.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN FINANCIAL MARKETS ASSOCIATION INCORPORATED

Investors rush to safe havens as stocks slide, dollar dives in coronavirus rout

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Original article by David Rogers
The Australian – Page: 17 & 26 : 28-Feb-20

The Australian sharemarket has fallen by seven per cent since reaching a record high of 7,197.2 points on 20 February, slashing its capitalisation by $150bn. The benchmark S&P/ASX 200 reached an intra-day low of 6,630.5 points on 27 February, its lowest level in three months, while the Australian dollar tested an 11-year low. Mikhail Sprogis of Goldman Sachs has forecast that the gold price will top $US1,800 an ounce in the next 12 months, amid a flight to safe-haven investments.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, THE GOLDMAN SACHS GROUP INCORPORATED

APRA probes bank, insurer virus plans

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Original article by Michael Roddan
The Australian – Page: 17 & 26 : 28-Feb-20

The Australian Prudential Regulation Authority has not updated its guidelines on pandemics since 2013, but the coronavirus outbreak has prompted it to activate Prudential Practice Guide CPG 233 – Pandemic Planning. APRA has asked financial institutions such as banks, insurers and superannuation funds to demonstrate that they are sufficiently prepared for a global pandemic. Westpac has responded to the outbreak by imposing a ban on employees travelling to China for business purposes, while AMP is requiring some employees in coronavirus epicentres to work from home.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, WESTPAC BANKING CORPORATION – ASX WBC, AMP LIMITED – ASX AMP

Market sinking in a sea of red

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Original article by David Rogers
The Australian – Page: 17 & 27 : 27-Feb-20

The Australian sharemarket has shed 6.3 per cent since reaching a record high of 7,197.2 points on 20 February, slashing its capitalisation by $136bn. Richard Coppleson of Bell Potter believes that a further sell-off is likely amid growing concern about the spread of the coronavirus beyond mainland China. Wall Street and Asian sharemarkets have also retreated, while the Australian dollar fell to an 11-year low in local trading on 26 February.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, BELL POTTER SECURITIES LIMITED