K: Financial and Insurance Services

Confession season to give rally a reality check

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Original article by David Rogers
The Australian – Page: 27 : 30-Apr-19

The Australian sharemarket has had its best start to a calendar year since 1991, despite retreating on 29 April. However, the banks’ reporting season will be the next key test for the local bourse, along with trading updates from other listed companies. Meanwhile, the consensus forecast for growth in earnings per share in 2019 is 2.8 per cent, compared with 8.4 per cent at the same time in 2018.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, MORGAN STANLEY AUSTRALIA LIMITED, CITIGROUP INCORPORATED

McEwan’s RBS exit fuels NAB CEO talk

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Original article by Richard Gluyas
The Australian – Page: 17 & 20 : 26-Apr-19

There is growing speculation that Ross McEwan is a contender to succeed Andrew Thorburn as CEO of National Australia Bank, following his resignation as CEO of the Royal Bank of Scotland. McEwan has been CEO of RBS since 2013, and it has returned to profitability and reinstated dividends under his leadership. Mike Baird and Anthony Healy are widely seen as the leading internal candidates to replace Thorburn, who resigned in February.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ROYAL BANK OF SCOTLAND GROUP PLC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RUSSELL REYNOLDS ASSOCIATES INCORPORATED, MEDIBANK PRIVATE LIMITED – ASX MPL

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