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Re: Australia

Postby helios » Mon Sep 22, 2008 11:01 pm

ASIC bans all short-selling

September 22, 2008 - The Australian Securities and Investments Commission has dramatically widened its crackdown on short-selling, banning the practice across the entire sharemarket for at least a month as a "circuit breaker" to restore confidence.

But the stance has stunned local investors, who warned that market turmoil was likely to follow
, given the ban could effectively shut down options and derivatives trading.

The Australian position goes further than US and British regulators, which last week detailed measures to ban short-selling on financial stocks only as part of efforts to prevent wild swings on global bank shares.

Australian and other European regulators followed with their own bans on short-selling on financial stocks, helping to spur the international rally in shares, including a 3.3% surge on Wall Street on Friday.

But last night ASIC widened its ban to include all shares, fearing that restrictions on short-selling on other exchanges would intensify risks on the Australian market.

Short-selling — the practice by hedge funds and other speculators selling shares they don't own in the hope of buying them back later at a lower price to create a profit — has been blamed for creating excessively volatile market conditions and undermining the price of bank and other financial equities.

ASIC chairman Tony D'Aloisio said the speed at which global capital travelled and the relatively small size and the structure of the Australian market meant that it was necessary to extend the prohibition to all shares.

"To limit the prohibition to financial stocks, as has been done in the UK, could subject our other stocks to unwarranted attack given the unknown amount of global money which may be looking for short-sell plays," Mr D'Aloisio said.

It is believed ASIC had also been concerned about the blurred nature of local financial shares such as Babcock & Brown, which would not have been covered by a direct ban on financial stocks.
Mr D'Aloisio said a circuit breaker was needed to boost confidence.

ASIC said it would reassess in 30 days whether to permit short-selling for non-financial shares. But the ban on financial shares would remain until limits imposed by other international regulators were removed.

Tom Elliott, a hedge fund manager with MM&E Capital, warned: "A lot of firms have positions they need to hedge. If they can't hedge them they will have to dump them into the market."

Treasurer Wayne Swan last night backed the ban, describing the measures by ASIC as an appropriate response to global financial market turbulence. "They will help protect investors as well as the integrity of our financial markets," he said.

Securities and Derivatives Industry Association head of policy Doug Clarke said the market was likely to treat the ban with caution.

"It's an extraordinary move," he said. "The speed in which it came through — especially on the back of Friday night's exemptions — is a surprise."

Source: TheAge.com
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Re: Australia

Postby helios » Mon Sep 22, 2008 11:08 pm

Lifelines put some buoyancy back into the markets

September 23 - A Co-ordinated assault on short-selling and a $US700 billion ($A840 billion) US Government plan to quarantine a financial meltdown fuelled the resurgence in local stocks, but left hedge funds and traders scrambling to understand the new market landscape.

The Australian Government defended the Australian Securities and Investments Commission in its hardline ban on short-selling, with Treasurer Wayne Swan declaring the move as appropriate in the face of extreme market volatility.

But the measures caught many unaware, including the Australian Stock Exchange, which for the first time in decades delayed its opening by an hour.


"Financial markets melted down last week," Mr Swan said. "And in response to that, governments around the globe … moved to change their position on short-selling because of the carnage that was going on in stockmarkets," he said.

On Sunday, ASIC widened its crackdown on short-selling, banning the practice across the entire sharemarket for at least a month.

ASIC's position goes further than that of US and British regulators, who unveiled measures last week to ban short-selling on financial stocks only as part of efforts to prevent wild swings on global bank shares. ASIC had feared a partial ban would leave the Australian market vulnerable.

The stance and a pledge by the US Government to establish a $US700 billion fund to buy bad debts crippling banks, drove the benchmark S&P/ASX 200 Index to surge 4.5% to 5020.5.

The rally makes a total gain of nearly 9% over the past two sessions, rubbing out last week's savage losses.

Most of the gains came in downbeaten financial stocks such as Macquarie Group and Babcock & Brown, which short-sellers had heavily targeted.

Macquarie Group deputy director Richard Sheppard expects short-selling to eventually return to the Australian market, but with greater disclosure.

Shares in under-pressure Babcock shot up as much as 126% on opening, before finishing the session 55% higher at $1.23.


It is believed ASIC had initially proposed its wholesale ban on short-selling to be maintained for three months, but wound this back to 30 days.

ASIC would not elaborate on the reasons for its decision.

Still, traders said the clampdown was likely to reduce liquidity on the ASX, with fewer stocks being borrowed and resold into the market.

"There's just been a lot of confusion — you could say not a lot of business took place," one hedge fund manager said yesterday.

Kim Ivey, the chairman of Alternative Investments Management Association — the umbrella body for hedge funds — was seeking talks with ASIC to discuss details of the ban. Mr Ivey, who supports greater disclosure surrounding short-selling, said the crackdown was alarming.

"Short-selling plays a crucial role in the market," he said. "It provides market participants with improved market liquidity and quicker pricing efficiency. It is a valuable tool for sophisticated investors who wish to protect their capital in overvalued situations."

The ASX is among the biggest losers from the new rules as it is expected to suffer a drop in derivatives trading volumes.

ASX was one of the few financial stocks to decline yesterday, falling 5.5%, to $32.60. But an ASX spokesman said the ban was unlikely to be a negative for ASX revenue.


Elsewhere, listed hedge funds, including HFA Holdings, were hurt. HFA lost 7.7%, despite assuring the market that it had little or no exposure to ASX-listed stocks.

But while ASIC emphasised there was a "legitimate place" for short-selling, Mr Swan condemned those who had profited at the expense of others.

"Some of these practices are, frankly, big investors manipulating the current circumstances to make money out of other people's misfortune," he said.

Source: TheAge.com
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Re: Australia

Postby helios » Wed Sep 24, 2008 6:40 pm

ASX feels the squeeze

September 24 - Australian Securities Exchange is under pressure on several fronts as it heads into its annual meeting this morning.

The market provider is feeling the heat over its role as a supervisor at the same time it is grappling to implement the crackdown on short-selling by the Australian Securities and Investments Commission.

But institutions are expected to back the re-election of director Russell Aboud, despite proxy advisory company RiskMetrics recommending against the move, in protest against the ASX's "shortcomings" as market supervisor.

RiskMetrics this month said the ASX had been "reactive, either to market events or external pressure", in discharging its supervisory duties.

The criticism comes at a sensitive time. The Government is considering if the ASX should continue as a markets supervisor, as part of a decision over whether to allow competition in parts of the institutional broking market, a key revenue stream for the ASX.

While most expect the Government to give the go-ahead to rivals such as the New Zealand Stock Exchange-backed AXE-ECN, it is believed the release of the findings will be delayed until global market volatility subsides.

A second ASX director, Trevor Rowe, is also up for re-election, although RiskMetrics has not opposed the appointment.

Among supervision concerns raised by RiskMetrics is the ASX decision to allow satellite funds of Macquarie or Babcock & Brown to operate under different disclosure obligations when it comes to external management agreements. The ASX yesterday said while it was supportive of the aim of full transparency to investors of the terms of management agreements, it differed with RiskMetrics' assessment on how to achieve "optimal transparency".

In terms of the disclosure of external management agreements, the ASX noted the Corporations Act required entities offering securities under a prospectus to make disclosures to prospective investors of information "that would reasonably be required".

The ASX said its guidance notes encouraged entities to disclose the full agreement on an "if not, why not basis".

"While the guidance note does not purport to be an exhaustive or a prescriptive list of things that must be disclosed, there is nothing in RiskMetrics' report that causes ASX to resile from the position expressed in that guidance note," the ASX said in a statement.

Meanwhile, ASX chief executive Robert Elstone is expected to play down the impact of the short-selling ban on the ASX's revenue.

Brokerage Goldman Sachs JBWere said the ban on short-selling "is a clear negative" for the ASX's earnings, with volumes on the exchange likely to fall away by as much as 5% to 10%.

Source: theAge.com
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Re: Australia

Postby winston » Tue Oct 07, 2008 11:49 am

The Australian stockmarkets has turned around and is up 1%.

This is because they have just cut interest rates by 100 basis point.

The talking heads on CNBC were expecting 25 to 50 basis points..
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Australia

Postby helios » Tue Oct 07, 2008 8:38 pm

07-Oct: AUSTRALIA'S big banks have moved to cut interest rates on home loans, although all have declined to pass on in full the RBA's shock one percentage point cut, with each of the big four favouring 80 basis point reductions.

While Westpac was first off the block, announcing its rate cut soon after the Reserve Bank, NAB, ANZ and Commonwealth all followed suit.

NAB reduced its standard variable home loan rate by 80 basis points to 8.56 per cent. ANZ said an 80 basis point cut was "the maximum" it could do in the current environment, while CBA said it would hope to reduce rates further if market volatility calmed.

"While we are not reducing our variable home loan rates by as much as the RBA reduction, we do expect global financial markets to normalise over time and once that does occur we will be able to reduce rates by more than the RBA adjustments," the CBA said.

The RBA slashed the official cash rate by one percentage point to 6 per cent this afternoon, after conditions in international financial markets "took a significant turn for the worse" in September, the RBA said.

The massive cut will have people rushing back to the property market, experts told NEWS.com.au.

Analysts had tipped a 50 basis point cut. The last time the central bank cut rates by one percentage point was May 1992.

"An unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers," RBA governor Glenn Stevens said.

Westpac first off the block

Westpac announced it will cut rates on its standard variable home loans by 80 basis points.

Commonwealth Bank said it would follow suit, reducing its standard variable rate to 8.53 per cent.

Non-bank lender Aussie Home Loans said it would cut its home loan rate by 75 basis points.

Australia's big banks had refused to confirm they would pass on any rate cuts prior the RBA's announcement.

Rate cut boosts share market

The share market gained more than 1 per cent immediately after the RBA made its announcement, after spending most of the day wallowing in the red.

At 2.53pm (AEDT) the benchmark S&P/ASX200 was up 73.9 points, or 1.63 per cent at 4614.3 and the broader All Ordinaries was up 46.6 points, or 1.03 per cent, to 4591.3.

The share market was lower at noon as the market anticipated a cut this afternoon, and after heavy losses on global share markets overnight.

At 12pm, the benchmark S&P/ASX200 was down 94.4 points, or 2.08 per cent, at 4446, while the broader All Ordinaries had lost 109 points, or 2.4 per cent, to 4435.7.

Another cut by Christmas?

Economists predict the RBA may cut rates again by Christmas, perhaps as early as next month.

"It's taken the market by surprise but it's a wise move given the deteriorating credit market that was occurring," St George chief economist Besa Deda said.

"They're just trying to get a firm handle on this and protect the economy.

"I wouldn't rule out another 25 basis point easing (in 2008) ... but it's more data dependent, depending on how the credit crisis works out."

Decision widely welcomed

Prime Minister Kevin Rudd welcomed the RBA's decision, saying it would help maintain the stability of the financial system and see Australia through "tough times ahead".

He said Australia was dealing with "extraordinary economic times".

RBC Capital Markets senior economist Su-Lin Ong said she was in a "little shock" after seeing the size of the RBA rate cut.

"I was not looking at a 100 point cut this afternoon," she said.

"The RBA has decided to move very aggressively.

"It is driven really by the sharp deterioration in the financial and credit markets over the last month, and the implication for global growth."

ANZ chief economist Saul Eslake welcomed the massive rate cut.

"I would describe today's move as extraordinary and bold," Mr Eslake said.

"They are clearly very concerned about the financial crisis and its potential impact on global growth, on Asian economies which they specifically mention, and on commodity prices.

"They've reduced their concern about the outlook for inflation and they are obviously much more concerned than they were a month ago about the downside risks to the Australian economy."

Mr Eslake said he hoped the RBA decision would not be interpreted as panic.

"I think it will be seen firstly as contributing to the health of the financial system and a big step to reducing the downside risks to economic growth, provided it isn't interpreted as panic," Mr Eslake said.

"There's a risk of that, but I hope it is not interpreted in that way and it is not a criticism on my part."

Source: NEWS.com.au
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Re: Australia

Postby iam802 » Fri Oct 24, 2008 12:17 pm

Job market worsening across Tasman

http://www.nzherald.co.nz/world/news/ar ... d=10539318

Australia's jobs market is in for a rocky ride over the next two years, with some economists predicting the unemployment rate rising as high as 11 per cent, as consumer spending is curtailed and economic growth falls.

Many economists think the federal government's $10.4 ($11.86) billion fiscal stimulus package and still strong Chinese economic growth would give Australia some protection from an expected global economic recession.

However, all agree jobs will be lost, as consumers struggle to pay off their debt burden.

The best case scenario is for a jobless rate of 11 per cent by 2010, according to a Sydney academic who has also forecast official interest rates falling to zero over the same time frame.

But on a worst case basis, University of Western Sydney associate professor of economics and finance Steve Keen says one in five people could be out of work by 2010, as sky-high household debt levels weigh on demand.

That would be the highest level since the Great Depression almost 80 years ago, when the jobless rate peaked at 29 per cent.

"That would be a worse-case scenario ... I hope it doesn't hit that level," Dr Keen said.

1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: Australia

Postby LenaHuat » Fri Oct 24, 2008 12:28 pm

But on a worst case basis, University of Western Sydney associate professor of economics and finance Steve Keen says one in five people could be out of work by 2010, as sky-high household debt levels weigh on demand.

That would be the highest level since the Great Depression almost 80 years ago, when the jobless rate peaked at 29 per cent.


Australia, like Canada, once had lost 2 decades. Young Australians are leaving Australia in droves............except those who sun themselves to death on welfare payouts at the Sun Belt.
Please be forewarned that you are reading a post by an otiose housewife. ImageImage**Image**Image@@ImageImageImage
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Re: Australia

Postby iam802 » Fri Oct 24, 2008 4:54 pm

Waterloo for non-banks

http://business.smh.com.au/business/wat ... 57n7.html#

The Big Four bank chiefs - Mike Smith, Ralph Norris, Gail Kelly and John Stewart - made the pilgrimage to Canberra last night for crisis talks with Kevin Rudd and Government officials desperate for advice on which finger to stick in the dyke next.

This is a financial emergency like none have seen in their lifetimes. Rudd faces some huge dilemmas.

First things first: the bank guarantees. The deluge of money out of institutions into the banks is a disaster.

Funds - both mortgage and high-yield funds - are freezing redemptions and locking down investor savings by the day.

It's a fluid situation but the figures now surpass 30 funds with $20 billion in investor savings affecting some 100,000 people. And counting.

Perpetual, AXA and Australian Unity all locked down a suite of funds yesterday. More will follow.

It is fair to say the Government had little choice but to stand behind the banks; some stand had to be taken to preserve the safety of peoples' savings, selective and discriminating as it is.

Yet the fall-out is an horrendous blow to the non-bank sector - and the foreign banks which have also experienced an exodus of money - and the details of the guarantees have to be sorted out quickly.

This may entail a backflip on the unlimited guarantee, or a grandfathering of existing deposits, and perhaps even emergency legislation to protect non-bank guaranteed players.

Money muddle

The allocated pension providers have roughly three months' of money left in their members' cash accounts. Diversity is the key to protecting retiree savings and some portion of these investments are in high-yield funds and mortgage funds.

The slather of redemption freezes means there may not be access to distributions from frozen assets, which would have an unwelcome effect on pensions compounded by the hit to share prices and dividends.

In the Government's defence, the guarantees may look like a balls-up but it appears to have hardly had the luxury of a three-month scoping study to come up with a finely manicured rescue package while confidence in the banking system was splintering worldwide.

It could have been done better but it's done now.

Another mistake can ill be afforded, though, as the Government looks silly for protesting the banks were in fine shape one week, then whacking the taxpayer balance sheet behind them the next.

Having said the banks were fine, it's clear someone tapped Kevin and Wayne on the shoulder and said, er...not all fine, actually.

The line had to be drawn. Another mistake would damage confidence in the Government's economic management, which is a critical component of calming peoples' nerves in the present climate.

Gathering momentum

The backlash against the Government's guarantee over bank deposits had gathered frightening momentum yesterday with a wave of redemptions across the nation from funds not covered by the emergency banking measures.

The latest victims were blue chip funds managers Perpetual and AXA. Perpetual froze redemptions today in seven of its funds containing around $2 billion in investors savings.

The Perpetual move came hard on the heels of Challenger Howard, the biggest mortgage fund in the country ($2.9 billion) freezing redemptions earlier this week.

Perpetual pointed the finger squarely at the Government guarantee.

Now that the banks are permitted the luxury of a AAA- Government guarantee on their wholesale funding alongside a guarantee on their depositor bases there must be some quid pro quo or the outrage will endure for years.

If the Government is to favour one sector over others there must be an equitable arrangement made on fees and caps on executive salaries.

The likes of Perpetual and other funds managers whose profitability is suffering and whose very viability is at stake may demand compensation and will demand restraint from the banks.

This is a gimme for the banks, some of whom have been reckless in their lending practices and derivatives exposures.

1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: Australia

Postby kennynah » Fri Oct 24, 2008 5:03 pm

back to catching crocs.....and boozing fosters...
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Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
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Re: Australia

Postby helios » Tue Oct 28, 2008 8:40 am

Oct. 28 - BG Group Plc, the third-biggest U.K. oil and gas producer, agreed to pay A$5.2 billion ($3.1 billion) to buy the rest of Queensland Gas Co., gaining full control over their planned liquefied natural gas venture in Australia.

BG, which already holds 9.9 percent of the Brisbane-based company, will pay A$5.75 a share in cash, 80 percent more than the last closing price of A$3.20, BG and Queensland Gas, or QGC, said today in a joint statement to the Australian stock exchange. Queensland Gas shares surged to match the offer price in Sydney.

Source: Bloomberg
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