Australia 01 (May 08 - Jan 11)

[helios]

Hybrids market feels strain

29-Oct: THE crisis gripping the nation's mortgage fund industry has spread to Australia's $26 billion hybrid securities market, with investors selling out of the listed securities as they switch into high-yielding bank deposits.

The selldown in the hybrid market is also threatening to force a number of companies to rethink planned capital raisings, particularly banks considering issuing the securities as a means to bolster their balance sheets.

Hybrids have the characteristics of both debt and equity. The securities, which pay interest, are generally regarded as defensive assets, which means investors usually flock to them during sharemarket downturns.

But, as with mortgage funds, the guarantee on bank deposits has seen investors exit hybrids, pushing down prices.

"It is an easy transition for someone to redeem their money out of a managed fund or sell their hybrid securities and put it in the bank," said Robert Camilleri, a senior manager of credit funds at Aviva Investors.

Even hybrid shares offered by some of the biggest banks have taken a hammering, trading at a deep discount to their $100 issue price.

National Australia Bank's hybrids yesterday closed at $76.50, while hybrid shares issued by Macquarie Group were trading at $61 despite paying an interest rate of 7.8 per cent.

Babcock & Brown hybrids were trading at just $21, and IAG's reset exchange shares were $60 each.

"The hybrid market has not escaped the irrational selling and, being ASX listed, there is generally some degree of liquidity," Citigroup said.

Bendigo Bank this week said it was considering tapping its existing hybrid program to boost capital. NAB has also considered issuing new hybrids as part of capital raising efforts. Companies such as Macquarie and ANZ have already raised hundreds of millions of dollars through the issue of hybrid shares this year.

"Right now I doubt any issuer will be able to issue a security of that nature, given investors would prefer to put their money in a bank deposit with no risk attached," said Mr Camilleri.

Citigroup noted that the bulk of hybrids carried the equivalent of an "A" credit rating, and they were expected to rebound as the market turmoil abates.

ANZ's chief executive, Mike Smith, said yesterday the Federal Government's decision to guarantee bank deposits was the right one.

"There was a need to stabilise the system," he said, after a speech at an Australian Institute of Company Directors lunch.

Meanwhile, some superannuation funds are selling shares to meet a sharp rise in members switching into cash options, adding to the pressure on Australian equities.

Pauline Vamos, chief executive of the Association of Superannuation Funds Australia, confirmed that "a number of funds" were having to sell shares after a rise in members switching from balanced funds - which include shares - into cash.

Source: TheAge.com

[HengHeng]

hmmm now can buy abit of aussie . i say abit hor.. never tell u to buy all ur fortune into it ..

Now can invest abit in aussie , since MAS guarantee local bank FD acct including foreign currencies.

I can still remember last time i argue with an arrogant fellow on FD and he say not guaranteed .. i wonder now is he biting his own tongue ? LOL

[kennynah]

i dont think so..... i think kangeroos will suffer along with us Asians...they are nothing if not for their natural resources...a bunch of lazy fosters drinking asses...

i will never park my money with the kangeroos...

[winston]

It's all about interest rates and commodities.

At this point in time, they still have both...

[kennynah]

Australian Oct Inflation Gauge -0.2% on Month
11/2/2008 9:43 PM ET

(RTTNews) - A measure of inflation in Australia was down 0.2 percent in October compared to the previous month, the TD Securities-Melbourne Institute monthly inflation gauge said on Monday, marking the first decline in nearly three years following a 0.4 percent increase in September.

On an annual basis, inflation was still up 3.9 percent, the data showed, easing from the 4.5 percent increase in the previous month. The October figure marked the first annual reading below 4 percent since January, the report said.

According to official government data, inflation hit 5.0 percent in the third quarter of 2008, while core inflation came in higher at 4.7 percent.

[kennynah]

Australian Oct Performance of Manufacturing Index -6.8 Pts
11/2/2008 10:04 PM ET

(RTTNews) - An index measuring manufacturing activity in Australia fell 6.8 points in October, the Australian Industry Group and PricewaterhouseCoopers said on Monday, posting a score of 40.4.

That comes after the index saw a score of 47.2 in September, and it also represents the lowest reading since the survey began in 1992.

A reading below 50 indicates that manufacturing is shrinking. Slower economic growth has eroded the confidence of business and consumers, the report said, while a weak housing sector, a slowdown in developed economies and falling local consumption all contributed to a nationwide decline.

[kennynah]

Australia Total Job Ads -5.9% on Month in Oct
11/2/2008 9:12 PM ET

(RTTNews) - Total job advertisements in Australia fell 5.9 percent on month in October, ANZ Bank reported on Monday, accelerating the 1.4 percent monthly decline posted in September.

There was an average of 231,135 job ads per week in October, making it an annual 9.8 percent lower for the largest loss since February 2001. In trend terms, total job ads dropped 2.6 percent in October, while Internet job ads fell 5.5 percent in October, the data showed, while newspaper ads plummeted 12.2 percent on month.

Among individual states, ads in Western Australia were down 14.8 percent, while Queensland was down 14.1 percent, New South Wales lost 11.9 percent and Victoria shed 11 percent.

[millionairemind]

Australia Cuts Key Interest Rate by 75 Basis Points (Update3)

By Jacob Greber

Nov. 4 (Bloomberg) -- Australia's central bank cut its benchmark interest rate by a larger-than-expected three quarters of a percentage point, the third reduction in as many months, amid evidence global financial turmoil is buffeting the economy.

[iam802]

ABC Learning teeters on the edge

http://business.smh.com.au/business/abc ... -5i2b.html

Childcare giant ABC Learning says it is continuing to discuss its future with stakeholders, despite reports it would be placed into receivership today.

In a statement issued today, the company said it was continuing discussions with stakeholders including banks and the federal government to secure the future of its operations.

It was reported this morning that the company, which looks after more than 100,000 Australian toddlers and infants, would be placed into receivership.

.......

[LenaHuat]

I would "buy" Australia cuz China and the US are going to be govt-infrastructure driven economies in the next 5 years. They all need tonnes of aluminium, iron ore etc....