K: Financial and Insurance Services

RBA’s election rate cut no done deal

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Original article by Matthew Cranston, William McInnes
The Australian Financial Review – Page: 4 : 26-Apr-19

The futures market has priced in a 67 per cent chance that the Reserve Bank of Australia will reduce the cash rate in May. IFM’s chief economist Alex Joiner says the central bank is more likely to leave rates on hold until June, so it can take into account the latest employment and wages data. Michael Blythe of the Commonwealth Bank in turn says the RBA would not be concerned about adjusting the cash rate during an election campaign. However, he notes that the central bank has made it clear that the timing of any change in monetary policy will depend on the outlook for unemployment and inflation.

CORPORATES
RESERVE BANK OF AUSTRALIA, IFM INVESTORS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, QIC LIMITED, HSBC AUSTRALIA HOLDINGS PTY LTD

Bank loan losses to reduce dividends

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Original article by Richard Gluyas
The Australian – Page: 21 : 24-Apr-19

Citigroup has downplayed investors’ concerns about the high dividend payout ratios of Australia’ major banks. Brendan Sproule of Citigroup says banks are likely to absorb one-off costs rather than reduce their payout ratios. Instead, a sharp increase in loan losses is seen to be the main threat to continued high dividend ratios. Sproules adds that the Reserve Bank of New Zealand’s review of its bank capital framework is unlikely to impact on Australia’s major banks.

CORPORATES
CITIGROUP PTY LTD, BELL POTTER SECURITIES LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF NEW ZEALAND

FOMO or TINA? Stocks hit seven-month high but rocky road ahead

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Original article by David Rogers
The Australian – Page: 17 & 24 : 24-Apr-19

The S&P/ASX 200 has gained 12 per cent so far in 2019, making its best start to a calendar year in two decades. The benchmark index is now trading on a 12-month price-to-earnings ratio of 15.75 times, compared with a long-term average of around 14 times. Although ‘fear of missing out’ has been a key driver of the domestic market, ‘there is no alternative’ to shares has probably also played a role in the recent rise. However, investors should also be mindful of the adage ‘sell in May and go away’.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, MACQUARIE GROUP LIMITED – ASX MQG, ALUMINA LIMITED – ASX AWC, SOUTH32 LIMITED – ASX S32, FORTESCUE METALS GROUP LIMITED – ASX FMG, UBS HOLDINGS PTY LTD, BHP GROUP LIMITED – ASX BHP, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CITIGROUP PTY LTD, CREDIT SUISSE (AUSTRALIA) LIMITED

Industry funds to back Murray for AMP chair

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 13 & 18 : 23-Apr-19

It is understood that the Australian Council of Superannuation Investors will conditionally back the appointment of David Murray as AMP chairman at its AGM in May. Proxy advisers have recommended that Murray be appointed. However, there is some controversy about private comments supposedly made by Murray. He is understood to have said that if there is a big vote against his appointment as a result of the controversy regarding the sale of AMP’s life business, the other two directors who were on the board when the decision was made would resign.

CORPORATES
AMP LIMITED – ASX AMP, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, CGI GLASS LEWIS PTY LTD, INSTITUTIONAL SHAREHOLDER SERVICES INCORPORATED, OWNERSHIP MATTERS PTY LTD

Australians embracing robo-advisers

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Original article by Luke Housego
The Australian Financial Review – Page: 20 : 23-Apr-19

A survey of more than 1,000 Australians has found that 30 per cent would be willing to receive financial advice from ‘robo-advisers’. The survey was commissioned by consulting firm Thinque, with company founder Anders Sorman-Nilsson suggesting that consumers have become less willing to trust human financial advisers as a result of the banking royal commission. Around 80 per cent of respondents stated that financial services is the sector in which they are most worried about digital fraud.

CORPORATES
THINQUE, IRESS WEALTH MANAGEMENT SOLUTIONS (RSA) PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Boutique funds emerge as top performers

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Original article by David Rogers
The Australian – Page: 26 : 18-Apr-19

Data from Mercer shows that the median long-only Australian share fund achieved a return of 10.9 per cent in the March 2019 quarter, on the back of a 9.5 per cent gain for the S&P/ASX 300 index. Smallco Broadcap Fund, Collins Opportunistic Value Investing and CBG Australian Equities delivered the best returns for the quarter, while the ECP AM All Cap fund was the top performer in the year to March. BlackRock achieved the best return among long-short funds over both three months and 12 months.

CORPORATES
MERCER INVESTMENTS PTY LTD, SMALLCO BROADCAP FUND, COLLINS OPPORTUNISTIC VALUE INVESTING FUND, CBG AUSTRALIAN EQUITIES FUND, ECP ASSET MANAGEMENT ALL CAP FUND, BLACKROCK INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED

Feast of double-digit super returns is over

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Original article by James Kirby
The Australian – Page: 26 : 17-Apr-19

New data shows that both balanced and growth superannuation funds achieved a return of just 0.8 per cent in March. The low returns mean super funds may struggle to deliver strong returns for the financial year, after global financial market volatility weighed on returns in the December quarter. Super funds have returned an average of just 3.2 per cent so far in 2018-19, and balanced funds are now unlikely to maintain their recent track record of double-digit returns for the full year.

CORPORATES
SUPERRATINGS PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, RESERVE BANK OF AUSTRALIA

Reserve Bank ready to cut rates

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Original article by David Rogers
The Australian – Page: 19 & 26 : 17-Apr-19

The minutes of the Reserve Bank of Australia’s monthly board meeting indicate that the central bank still expects gradual progress in lifting the inflation rate to its target range and reducing the unemployment rate. However, the minutes show that the RBA would be prepared to reduce the cash rate if inflation remains low and unemployment increases. The Australian dollar fell to a two-week low of $US0.714 in local trading in response to the release of the RBA’s minutes.

CORPORATES
RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, JP MORGAN AUSTRALIA LIMITED

CBA underpays 8000 staff after HR tech system failure

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Original article by James Eyers
The Australian Financial Review – Page: 18 : 17-Apr-19

The Commonwealth Bank of Australia has advised that current and former employees have received some $4.8m in back pay to date, including interest. Problems with the bank’s human resources technology systems resulted in about 8,000 employees being underpaid. Julia Angrisano, the national secretary of the Finance Sector Union, says the bank and its Bankwest subsidiary may ultimately have to repay between $10m and $15m, although CBA believes that the final figure will be much lower. Some employees are also believed to have been paid at below-award rates.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BANKWEST, FINANCE SECTOR UNION

Industry funds to reach $2trn within 10 years

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Original article by Joanna Mather
The Australian Financial Review – Page: 3 : 16-Apr-19

KPMG has forecast that Australia’s superannuation industry will boast $5.4trn worth of funds under management by 2029, compared with just $2.7trn at present. The firm’s 2019 Super Insights report also forecasts that industry funds will manage $2trn in 2029, up from $631bn in 2019. Paul Howes of KPMG says union-backed industry funds must ensure that they comply with the ‘sole-purpose test’ as their dominance of the super industry increases.

CORPORATES
KPMG AUSTRALIA PTY LTD, AUSTRALIANSUPER PTY LTD, SUNSUPER PTY LTD, HOST-PLUS, AUSTRALIAN WORKERS’ UNION-FEDERATION OF INDUSTRIAL, MANUFACTURING AND ENGINEERING EMPLOYEES, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. DEPT OF THE TREASURY, MLC LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BT FINANCIAL GROUP PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, BHP GROUP LIMITED – ASX BHP