Australia 01 (May 08 - Jan 11)

Re: Another Valuable Lesson Investing in Education Business

Postby winston » Wed Sep 03, 2008 5:23 pm

Dear financecaptain,

We are thinking of moving the above post into the "GIC / Temasek" post.

Alternatively, we can also move it into the "Australia" thread or the "Investor's Lounge".

If you happened to have more posts on the "Education sector", we could also rename this thread to "Education Sector".

Please tell us your preference.

Take care,
Winston
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Re: Another Valuable Lesson Investing in Education Business

Postby financecaptain » Wed Sep 03, 2008 5:26 pm

"Australia Tread" is preferred.
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Re: Australia

Postby millionairemind » Thu Sep 11, 2008 12:48 pm

Shipping Costs Signal Aussie Dollar to Drop, TD Securities Says
By Chris Young

Sept. 11 (Bloomberg) -- The Australian dollar will extend its 19 percent drop from a 25-year high, judging by a plunge in the costs to ship coal and iron ore, the nation's biggest export earners, TD Securities Ltd. said.

The currency will slide 2.6 percent to 78 U.S. cents by year-end because a slump in the Baltic Dry Index, a measure of shipping costs for commodities, signals demand for the raw materials Australia exports is waning, said Stephen Koukoulas, London-based head of global foreign exchange and fixed-income strategy for TD, a division of Canada's Toronto-Dominion Bank.

``The BDI and Australian dollar track each other pretty closely so it is certainly causing us to have a big look at our forecasts,'' Koukoulas said yesterday. ``To the extent that the BDI keeps falling, the prices of the bulk commodities Australia exports will be skewed lower.''

The Australian dollar dropped to the lowest since August 2007 today as prices tumbled for raw materials, which account for about 60 percent of the nation's exports. The BDI slumped 11 percent this week as Chinese steelmakers, the largest buyers of iron ore, cut output.

The currency has dropped 1.8 percent this week to 80.05 U.S. cents as of 11:57 a.m. in Sydney and earlier reached a low of 79.44 cents. TD reversed a Sept. 2 forecast for the currency to rise to 89 cents by Dec. 31 after the Baltic Dry Index dropped to its lowest in 18 months.

The Baltic Dry Index tracking transport costs on international trade routes yesterday lost 4.4 percent to 5,026 points, according to the Baltic Exchange in London. That's the lowest since March 9, 2007. It has shed 45 percent this year.

Record Exports


Australia's dollar reached a 25-year high of 98.49 cents on July 17 as prices of iron ore, coal gold and oil rose to records this year, pushing exports to an all-time peak in June of A$23.05 billion ($18.47 billion.)

Australia's dollar will also decline as weakening demand for the country's resources slows the economy and encourages the central bank to keep cutting interest rates, Koukoulas said.

The currency has dropped 4 percent since Sept. 2, when the Reserve Bank of Australia lowered its overnight cash-rate target by a quarter-percentage point to 7 percent, its first reduction in seven years.

There is an 80 percent chance policy makers will reduce the rate to 6.75 percent when they meet next on Oct. 8, according to a Credit Suisse Group index based on swaps trading.

``The influences on the Australian dollar are lining up against the currency,'' Koukoulas said.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Australia

Postby ishak » Fri Sep 12, 2008 12:49 pm

Top Aussie banks may face A$7b in bad debts
Reuters, 12 Sep 2008

Bad debt charges for Australia's top banks are expected to triple to more than A$7 billion (S$8.04 billion) this year, as more borrowers struggle to repay loans and asset values fall as the economy slows.

Top lender National Australia Bank and No 3 Australia and New Zealand Banking Group are considered most vulnerable, banking analysts say; NAB because of its structured debt and UK exposures, and ANZ for its exposure to commercial lending and to New Zealand, whose economy has quickly deteriorated.

'When you get a cyclical decline in the economy, all banks will end up being hit,' ABN Amro banking analyst Jarrod Martin said.

Australia's Big Four banks had been largely unscathed by the first year of the global credit crisis, apart from facing higher funding costs, unlike their peers in the United States and Europe, which have been forced to writedown billions of dollars due to slumping home mortgage markets.

Australian banks still rank among the strongest in the world in terms of asset quality, all carrying AA-ratings from major rating agencies.


But as the credit crunch drags into its second year, both NAB and ANZ have warned that profits could slide amid mounting credit-related losses, and analysts say that further writedowns could be announced between now and the next results announcements in October. Australian banks end their financial year on Sept 30.

At the same time, Australians' appetite for new loans is waning with growth in mortgages falling to its slowest pace in 20 years in July and sales of new homes sliding.

Investors are most worried about NAB and ANZ, pointing to NAB's exposure to collateralised debt obligations (CDOs), a structured debt product backed by a pool of assets.

Citigroup has estimated that NAB and ANZ could face a further A$500 million to A$1 billion each in structured credit related writedowns.

ABN Amro has estimated bad debt charges for the country's five largest banks will triple to A$7 billion this year, from about A$2.4 billion in 2007, and rise to A$8.5 billion in 2009.

While other top lenders, Commonwealth Bank and Westpac Banking Corp have so far avoided any major writedowns, analysts believe that there is no such thing as a safe haven bank at the moment.

Commonwealth has recently been quizzed by investors over its exposure to ailing childcare services provider ABC Learning Centres, which analysts estimate at around A$500 million, and all the major banks are exposed to struggling investment group Babcock & Brown and many of its funds.

Market watchers believe that the potential writedowns have already been largely factored into the banks' depressed shares, with ANZ down around 38 per cent so far this year and NAB down 36 per cent, more than double the fall in Westpac, which is considered the country's least risky bank.

But the shock of any new writedowns, or fears that even bigger losses may be looming, could push bank stocks lower still.

'We think further writedowns are already priced into the stock. Despite this, investors should still expect an initial reaction to any material announcement,' Citi said in a research note on NAB yesterday.

While writedowns have so far been related to exposure to US mortgages or a relatively few domestic corporate borrowers, analysts now forecast a second wave of problems will test Australian banks.

Analysts point to credit card related defaults, slowing consumer spending, and problems rapidly building up for Australian property developers in Queensland and New South Wales.

'The first step has been related to the credit crunch. We don't know whether we are fully through with that, but the next phase will be the real world effect of the slowing economy,' Rohan Walsh, investment manager at Karara Capital said.

At the end of July, ANZ warned that profits would fall sharply and forecast more than A$1 billion in bad debt charges, just three days after NAB announced A$830 million in credit-related losses, citing rapid deterioration in the United States housing market.

NAB and ANZ spokesmen said that at this stage, there were no further writedowns to add.
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Re: Australia

Postby millionairemind » Fri Sep 19, 2008 8:43 am

Published September 19, 2008
Macquarie Group takes heat from market driven by fear
Investors seek relative safety of gold and commodities even as world central banks oil credit markets


(SYDNEY/LONDON) In a sign that the domino effect of the US financial crisis is far from over, another investment bank may now be the victim of poor sentiment - this time in Australia.

Shares in Australia's biggest investment bank Macquarie Group plunged 23 per cent yesterday on fears that the global credit crunch could hurt its ability to refinance debt, dealers said.

Macquarie shares closed down A$7.88 at A$26.05, having lost some 38 per cent of their value this week. They are down 70 per cent from a 12-month high of A$88.73.

'While we believe the hedge fund 'short Macquarie' arguments do not bear closer scrutiny, the direction of Macquarie's price is telling us Macquarie is broken,' JPMorgan analyst Brian Johnson wrote in a note to clients.

'In this environment, with the hedge funds driving the agenda, it is hard to identify a catalyst to turn Macquarie's price direction around.'

The group, which manages assets such as airports and toll roads globally, has suffered from investor concerns over companies carrying large debts in the wake of the collapse of US investment giant Lehman Brothers.

Moody's Investors Service has affirmed the investment bank's A2 long-term issuer rating but cut the outlook to stable from positive.

And despite positive earnings results on Tuesday, US investment bank Morgan Stanley topped the list of major financial firms scrambling to find a buyer.

CNBC reported yesterday that Morgan Stanley was in advanced talks with US regional banking powerhouse Wachovia. Earlier, CNBC reported that HSBC Holdings and China's CITIC Group were also eyeing Wall Street's second-largest investment bank, although CITIC has denied these claims.

'The fear is who is next,' said John O'Brien, senior vice-president at MKM Partners in Cleveland. 'It almost feels like people scour the books and say who is the next likely target that we can put a short on. And that spreads continuous fear.'

The US Securities and Exchange Commission (SEC) has stepped in to curb short-selling, but share slumps stoked talk that Wall Street's two surviving investment banks may have to join up with a commercial bank to survive.

British bank Lloyds TSB took advantage of the market turmoil to achieve a long-held ambition by scooping up the country's biggest mortgage lender HBOS in a US$22 billion all-share deal to end a slump in HBOS shares prompted by fears about its funding.

Another financial giant, Washington Mutual (WaMu), beleaguered by mortgage losses, has put itself up for sale, sources familiar with the situation said. Potential suitors include Citigroup, JPMorgan, Wells Fargo and HSBC.

Meanwhile, the world's top central banks joined forces yesterday to throw a multi-billion-dollar lifeline to global markets in a dramatic effort to free up bank-to-bank lending, frozen by the upheavals on Wall Street.

In an unprecedented move, the US Federal Reserve made an extra US$180 billion available to major central banks to lend on to their local commercial banks in a bid to get dollars circulating in overnight and term money markets.

Central banks including the Fed, the Bank of England and the European Central Bank also lent out extra funds in their own currencies as markets reeled.

Analysts said the extra funds calmed markets, but this would likely prove only temporary and noted mixed demand from banks for the extra funds on offer in the auctions yesterday.

'There's a complete lack of faith in the markets,' said Jim O'Neill, chief economist at Goldman Sachs Group Inc in London. 'There's a lot of cash hoarding and people losing trust in banks, so the central banks are acting to relieve that. This might not be the last time they have to act.'

Even as equities continue to be battered, commodities are being propelled upwards as investors turn towards them as 'safer' bets. Oil prices surged above US$100 a barrel again yesterday, supported also by the unrest in oil-rich Nigeria.

'Oil is not viewed as safe a haven as gold, but investors consider it safer than equities,' said Victor Shum, an energy analyst with consultancy Gertz & Purvin in Singapore. -- AFP, Reuters, AP, Bloomberg
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Australia

Postby millionairemind » Fri Sep 19, 2008 7:04 pm

Looks like every1 is jumping on the bandwagon to ban shortselling..

September 19, 2008, 4.41 pm (Singapore time)
Australia to slap interim ban on naked short-sells

CANBERRA - Australia will slap an interim ban on what is known as 'naked' short-selling from Sept 22 in response to stock market turmoil, the government said on Friday.

'Australia has a world-class regulatory system and this action today will help ensure ongoing confidence in the operation of Australia's financial markets,' Treasurer Wayne Swan said in a statement.

Naked short-selling is a practice favoured by traders who want to profit from falling share prices. They sell a share they do not own and buy it back at a lower price, all before the first leg of the transaction has been settled.

It was already a controversial practice before the most recent crises on Wall Street because it differs from regular short-selling, where a trader, usually a hedge fund, has to borrow shares before short-selling them. -- REUTERS
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Australia

Postby winston » Fri Sep 19, 2008 7:42 pm

Monkey see, monkey do...

All these regulators are afraid to do anything but once they see the SEC doing it, they then have the confidence to do it as a precedence has now been set..
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 winston » Mon Sep 22, 2008 10:07 am

Now the ban is on all short-selling in Australia...
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 millionairemind » Mon Sep 22, 2008 10:14 am

This banning of short selling is the most ludicrous scheme of all things..

How can you ban something that adds liquidity to your system?? If the company is good, I am sure it can stand the pressure of short selling... :lol:

Mkt can only go up??? How about fair play???
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Australia

Postby winston » Mon Sep 22, 2008 10:28 am

I have no problem that they temporary ban short selling.

The shorts have been ganging up and beating the financial companies down too much.

it is also not a one way play. When market goes up too fast, the regulators put in caps on the prices, take away contra plays, take away margin accounts, increase transaction fees etc..
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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