K: Financial and Insurance Services

Moore claims Macquarie pay model is better than the majors

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Original article by Joyce Moullakis
The Australian – Page: 24 : 23-Nov-18

Macquarie Group CEO Nicholas Moore has told the banking royal commission that its remuneration model is superior to those used by Australia’s major banks. Moore said its model provides more accountability, and that profit share is more powerful than bonuses. Commenting on the issue of the commissions paid to mortgage brokers, Moore said he would be reluctant to see them abolish and replaced with a flat fee, as consumers might be reluctant to pay the latter.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, KPMG AUSTRALIA PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

ASIC antithesis of tough attitude

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Original article by James Eyers, James Frost
The Australian Financial Review – Page: 14 : 23-Nov-18

Australian Securities & Investments Commission chairman James Shipton appeared before the royal commission on 22 November. He conceded that ASIC should have taken steps against National Australia Bank’s home loan "introducer" program some years ago. He was also queried about a July email in which it was suggested that NAB should only be required to make a "community benefit payment" as penalty for the program; Shipton stated that the views expressed in the email were not his.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BT FINANCIAL GROUP PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

We should have cut bonuses: CBA chair

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Original article by Joyce Moullakis
The Australian – Page: 2 : 22-Nov-18

The Commonwealth Bank of Australia’s executive remuneration came under scrutiny by the financial services royal commission on 21 November. CBA chair Catherine Livingstone has conceded that the bank failed to reduce or withhold bonuses in 2016, despite a series of compliance breaches. She also acknowledged that it might have been appropriate for CBA to note in its latest annual report that former chairman David Turner had declined the board’s request to repay 40 per cent of his directors’ fees as a result of the compliance breaches.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Challenge emerges to inflation target regime

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Original article by Vesna Poljak
The Australian Financial Review – Page: 27 : 22-Nov-18

The Bank of Canada has signalled that it will undertake a review of alternatives to its inflation target of two per cent. Options that the central bank will consider include increasing the inflation target, targeting aggregate prices or nominal income, and adding a full employment objective. The move may increase pressure on the Reserve Bank of Australia to reappraise its own inflation target of 2-3 per cent. Some economists have argued that the RBA’s inflation target is too high, although many advocate the status quo.

CORPORATES
BANK OF CANADA, RESERVE BANK OF AUSTRALIA, BETASHARES CAPITAL LIMITED, UNIVERSITY OF TECHNOLOGY, SYDNEY

Reasons to be grateful amid rout: Citi strategist

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Original article by David Rogers
The Australian – Page: 27 : 22-Nov-18

The Australian sharemarket shed 6.1 per cent in October, while bearish sentiment in the US saw the S&P 500 fall seven per cent. However, Tobias Levkovich of Citigroup is upbeat about the outlook for US equities in the year ahead, noting that the "sentiment metric" indicates a high probability that the S&P 500 will be higher in 12 months’ time. David Kostin of Goldman Sachs also expects the S&P 500 to rise over the next year.

CORPORATES
STANDARD AND POOR’S 500 INDEX, CITIGROUP INCORPORATED, THE GOLDMAN SACHS GROUP INCORPORATED, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, GROUP OF TWENTY (G-20)

CBA bosses share shame blame

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Original article by Joyce Moullakis
The Australian – Page: 19 & 23 : 21-Nov-18

Commonwealth Bank of Australia CEO Matt Comyn and chair Catherine Livingstone appeared before the financial services royal commission on 20 November. Comyn conceded that the bank should have been aware of its legal obligations regarding antimoney-laundering laws, while Livingstone said the CBA board had failed to act on audit reports which had raised concerns well below Austrac took legal action. Comyn also told the inquiry that predecessor Ian Narev had dismissed his concerns about the sale of so-called "junk" consumer insurance products.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, MORGAN STANLEY AUSTRALIA LIMITED

AUD surges to near 3-month high on trade war optimism – November 19, 2018

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The Australian dollar has reversed early session weakness to leap through technical resistance and trade above 0.7300 to the highest level since late-August.  The moves came after US President Donald Trump said he is optimistic about resolving the trade war with China ahead of his meeting with Chinese President Xi Jinping at the G20 meeting this month.  Whilst Trump was positive with his remarks, he also was quoted as saying “hopefully, we will make a deal, and if we don’t, we are doing very well just the way it is right now,” which suggests the onus is on China to meet Trump’s demands, or else the current tariffs will remain in place.

For now though the comments were enough to send the AUD surging higher, where it leapt from a session low of 0.7250 to touch 0.7337, before closing the week at 0.7330.  It was a good week for the Aussie, building off momentum generated from the US mid-terms and local employment data released by the ABS which showed continued growth in jobs added and the unemployment rate held steady at 5.00%.

This week the economic calendar is quite thin, with the RBA monetary policy meeting minutes and US core durable goods orders the highlights.  This could be the catalyst for a week of consolidation for the Aussie dollar in the absence of any major announcements.  Looking at the charts, there appears to be resistance at 0.7360 and 0.7380, representing trading highs in August.  If there is a break back below 0.7300, 0.7250 is the next key level of support.

The Australian dollar has also garnered support against the British pound, where on Friday it reached a 3-month high.  Political woes surrounding the UK’s exit from the European Union are weighing heavily on the pound, with PM Teresa May under extreme pressure from within her own party, with many of her colleagues criticising the handling of the divorce negotiations and there are rumours that a leadership challenge could be launched at any moment.

Economically speaking the sterling probably should be trading higher than it currently is, however all of this political uncertainty is preventing any sustained move higher.  Expect Brexit to dominate the headlines this week too whilst Teresa May tries to keep her party aligned and progress Brexit proceedings.

AUD/GBP closed the week at 0.5708, now up 6.5% from the October 11 low.  There appears to be resistance at 0.5750 followed by 0.5775, representing trading highs in June and August respectively.  Support starts at 0.5650 but given the wide trading range seen in recent time, it wouldn’t surprise if we see further moves beyond 0.5650 if the UK parliament can approve the Brexit divorce bill.

James King
Head of FX Dealing, AFEX
www.afex.com

Battered bourse ready for a recovery

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Original article by David Rogers
The Australian – Page: 29 : 16-Nov-18

The S&P/ASX 200 reached an intra-day low of 5,686.8 points on 15 November, before recovering to post a modest gain for the session. The recent sell-off means that with some exceptions, the Australian sharemarket now offers quite good value. The market’s forward price-earnings ratio is now slightly above its long-term average, while the dividend yield of five per cent is at its highest level in almost three years. Meanwhile, the benchmark index has recorded an average gain of 2.1 per cent in December over the last five years.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CREDIT SUISSE (AUSTRALIA) LIMITED

Blue-chip beating adds to rout

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Original article by David Rogers
The Australian – Page: 17 & 27 : 15-Nov-18

The Australian sharemarket has now shed more than 10 per cent since it peaked at a 10-year high in August. The 3.5 per cent decline in the last two trading sessions followed a rebound in recent weeks, after the local market fell 6.1 per cent in October. Blue-chip stocks in particular have been heavily sold down, and traders suggest that offshore selling has been a major driver of the pullback. Richard Coppleson of Bell Potter says this could potentially result in a rebound in the next week or so.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, BELL POTTER SECURITIES LIMITED, TELSTRA CORPORATION LIMITED – ASX TLS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESFARMERS LIMITED – ASX WES, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, WOODSIDE PETROLEUM LIMITED – ASX WPL, SOUTH32 LIMITED – ASX S32, CSL LIMITED – ASX CSL, FORTESCUE METALS GROUP LIMITED – ASX FMG, SANTOS LIMITED – ASX STO, COCHLEAR LIMITED – ASX COH, SEVEN WEST MEDIA LIMITED – ASX SWM, NINE ENTERTAINMENT COMPANY HOLDINGS LIMITED – ASX NEC, PACT GROUP HOLDINGS LIMITED – ASX PGH, RAMSAY HEALTH CARE LIMITED – ASX RHC, BINGO INDUSTRIES LIMITED – ASX BIN, AUSNET SERVICES LIMITED – ASX AST, COMPUTERSHARE LIMITED – ASX CPU, MEDIBANK PRIVATE LIMITED – ASX MPL, SHANGHAI COMPOSITE INDEX, HANG SENG INDEX, NIKKEI 225 INDEX, KOSPI INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, AUSTRALIAN LABOR PARTY, CREDIT SUISSE (AUSTRALIA) LIMITED

Fund managers count the cost of Red October meltdown

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Original article by Melissa Yeo
The Australian – Page: 28 : 14-Nov-18

Platinum Investment Management CEO Andrew Clifford notes that October 2018 was the most challenging month for global markets since February 2009. The Australian sharemarket lost 5.4 per cent during October, extending its losses since an August peak to more than 10 per cent. The Platinum Global Fund and Monash Capital’s Absolute Investment Fund posted losses of 5.9 per cent and 5.69 per cent respectively, although hedge fund VGI Partners posted a modest gain of 0.8 per cent.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, PLATINUM INVESTMENT HOLDING PTE LTD, PLATINUM GLOBAL FUND, MONASH CAPITAL PTY LTD, MONASH ABSOLUTE INVESTMENT FUND, VGI PARTNERS PTY LTD, GRYPHON CAPITAL INCOME TRUST – ASX GCI, L1 LONG SHORT FUND LIMITED – ASX LSF, OPHIR ASSET MANAGEMENT PTY LTD, CONTANGO INCOME GENERATOR LIMITED – ASX CIE, K2 GLOBAL EQUITIES FUND, WCM GLOBAL GROWTH LIMITED – ASX WQG, CARSALES.COM LIMITED – ASX CAR, VIVA ENERGY GROUP LIMITED – ASX VEA, THE STAR ENTERTAINMENT GROUP LIMITED – ASX SGR, GWA GROUP LIMITED – ASX GWA, PERPETUAL LIMITED – ASX PPT, VIRTUS HEALTH LIMITED – ASX VRT, AMAZON.COM INCORPORATED, CORPORATE TRAVEL MANAGEMENT LIMITED – ASX CTD, BLOOMBERG LP, MSCI WORLD INDEX