Archive for the ‘Australia’ Category

It was another good day for the major banks, following yesterday’s announcement by APRA on minimum capital requirements. Australian shares closed higher for the second day in a row.

Today’s scoreboard:

ASX 200: 5,761.50 +29.37 (+0.51%) All Ordinaries: 5,805.70 +26.33 (+0.46%) AUD/USD: 0.7920 -0.0036 (-0.45%) The Australian dollar reached a high this morning above US79.8 cents before finding resistance following the release of the June employment report this morning. Although the jobs report met expectations, mild selling of the AUD has continued this afternoon as UK markets open and the AUD is currently tracking back towards US79 cents. The benchmark S & P/ASX200 index was up 0.5 per cent at noon (AEST), with the energy sector up 1.4 per cent and financials 1.2 per cent stronger. The broader All Ordinaries index was up 27.5 points, or 0.5 per cent, at 5,806.9 points. Higher commodity prices and weakness in the US dollar were keeping the Australian dollar at its two year highs, trading at US79.60 cents at noon (AEST). The energy producers were boosted by a rise in oil prices, and Santos was the best performer after also improving its full year sales and production forecasts, up 7.5 per cent to $32.50. The big four banks continue to rise after the release yesterday of softer- than-expected new capital rules by the prudential regulator. ANZ was the best of the four, up 2.5 per cent, and Commonwealth Bank had posted the most modest gain, of 0.6 per cent. Myer was one of the weakest stocks on the market, plunging 8.3 per cent to 74.75 cents after announcing a $45.6 million hit from writing off its stake in Topshop’s Australian franchisee and impairing the value of its struggling sass & bide brand. Infant formula maker Bellamy’s Australia was down 8.9 per cent to $6.10 after its shares emerged from a two-week hiatus related to its offer of refunds for a $60.4 million capital raising to fund the purchase of a canning facility.

 

The openly gay Chief Executive Officer of Australian airline Qantas, Alan Joyce was a fierce advocate of same-sex marriage has been hit with a pie in his face. This event happened when he was to talking to 500 audience at business breakfast in Perth. An unknown man went up the stage when Joyce was speking for 2 minutes already. Luckily that he was not harmed and returned to the stage after cleaning his face.

Alan Joyce was regularly highlighted on lists of the world’s most powerful and influential LGBTI business people and also often speaks out about the benefits of diversity and inclusion for business. He also been known for writing an opinion piece for supporting gay marriage in Qantas. He also discussed whether companies and CEOs should express opinions on social issues, stressing that they should.

‘I don’t know what that was about. Now, if there are any more pies can we get it over with now!’- Alan Joyce said.

Alan was discussing to the audience about Qantas’ new nonstop flights from Perth to London. And he has been taking a pro side for same-sex marriage and it was not sure if the incident was connected to that.

According to BBC, the mysterious man who hit Alan with a pie was detained in the security before turning him over to the police.

Western Australia Police spokesman said: ‘We’re currently investigating the incident and interviewing the individual concerned.’ One audience also described the incidence as “bizarre situation”.

 

Cyclone Debbie expected to be devastating in the east coast of Queens Land Australia. That’s why British backpacker are forcing to evacuate the area where the cyclone hit. Townsville, Whitsunday and Ayr is said to be the main track of the cyclone. Weather forecast said it has extremely strong wind, floorings and massive rain. All residents within the said areas are being warned to evacuate particularly for those near to the east coast. They have been told to find a safe place away from the east coast or stay with friends and relatives. But for those whose no safe place to stay, emergency shelters are always available.  Regional Council Mayor Andrew Wilcox, said “we have cyclone shelters. It has a capacity of 800 persons available for those people who is affected by cyclone”. Many flights that is covered by the Cyclone Debbie have been cancelled already.

Refugee entrepreneurs in Australia has been valued boosting the nation’s economy. Three years’ pilot program of Settlement Services international (SSI). They help the majorities of refugee entrepreneurs move off Centrelink payments. Total of about 68% refugees participated who established their business successfully. Jock Collins, professor of social economics at the University of Technology Sydney Business School, has a report on the economic impact of the program.

He stated “refugee entrepreneurs a net gain to the economy. Professor Collins also said: we asked our refugees entrepreneurs: have  you moved off Centrelink? And the majority  of them had moved off Centrelink”. “and we calculated we saved about four, four and a half million dollars. The program itself cost half a million dollars over three years, so you can see that it is the program that actually generates saving”. “the business provides a way for people to help themselves, provide for themselves economically but also socially and to make a difference to themselves and often to the local communities”.

The managing director of Singapore’s corporate regulator, the Monetary Authority of Singapore Ravi Menom told the Australian Securities and Investments Commission’s (ASIC) annual conference in Sydney that financial regulators around the globe needed to keep up emerging technologies and and share information to cope with new risks.

Ravi Menom stated “cyber attacks are a growing treat to the financial ecosystem as more financial services are delivered over the internet”.

He also added that “there will be growing security and privacy concerns from cyber threat and may be even systemic concerns”.

Mr. Medcraft also stated companies should be legally required to report the cyber attacks, saying the number of unreported attacks was staggering. “no one told. It is really frightening.

Nick Abboud, CEO of Dick Smith

So Dick Smith (DSH) has just gone into liquidation after listing in 2013. What happened?

Private equity group Anchorage Capital bought Dick Smith from Woolworths in 2012 for an initial payment of just $20m.

Anchorage then “dressed the company up to look good for just one thing – to persuade people to buy shares,” according to analysts from Forager Funds Management.

Anchorage “wrote down the value of the inventory, took provisions for future onerous lease payments, wrote down the value of the plant and equipment and liquidated a lot of the inventory as quickly as they possibly could to throw off cash,” according to Forager’s Steve Johnson.

The cash was then used by Anchorage to effectively make Dick Smith ‘buy itself’.

The writedowns inflated profits, a key factor in enticing investors into the company.

For example: a stock item that may have been bought for $100 may have been in the books at $60 after the writedowns, which meant an extra $40 profit on every sale.

The writedown of plant and equipment lowered depreciation charges, also boosting the bottom line.

“But when they liquidated all that inventory to pay for the purchase price, they didn’t replace it,” according to Forager’s Steve Johnson.

“And the new owners of the business, since it’s been listed on the stock market, have had to put in a lot more money to fund the increase in inventory.”

Coupled with an aggressive expansion plan which added 75 stores (25% more stores), Nick Abboud helped bring Dick Smith into the ground.

Read more and more.

Malcolm Turnbull’s full press conference on challenging Tony Abbott for leadership of the Liberal Party of Australia.

Australian companies will soon be publishing financial results, as well as information about sustainability efforts.

Corporate social responsibility of the big four banks – Australia and New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac is a continuing topic of debate following recent scandals and reports of unsustainable activities.

Yet according to ANZ chairman, David Gonski, Australians ought to “stop bashing the banks” for being large and profitable.

This comment should put civil society on guard.

A recent study by the Centre for Corporate Governance at the University of Technology Sydney, part of the UNEP Inquiry into the Design of a Sustainable Financial System, examined self-regulatory and voluntary sustainability efforts of the world’s largest banks, in partnership with Catalyst Australia which scrutinised the efforts of the big four Australian banks.

Sustainable finance

The “four pillars” of the Australian banking system are a dominant part of the Australian economy: the four banks are featured in the top five of the ASX 200 and hold A$522 billion of Australian household deposits, equal to one-third of Australia’s gross domestic product.

In the words of David Murray, former CBA boss and chair of the Financial System Inquiry: “banks fund most of the assets in the economy – whether it’s businesses, governments themselves, homes or projects, whatever else.”

This market dominance results in great power and great responsibility. As banks provide the majority of external finance to companies and governments, they can influence practices: bank lending potentially has more impact on sustainable enterprise than investment and divestment on the stock market.

Banks can thus wield their enormous market power to support sustainable activities, while their actions can likewise contribute to detrimental behaviour.

Conflicting images

The examination of the sustainability efforts of Australian and international banks reveals a schism between symbolic and substantive sustainability efforts.

At the 2014 World Economic Forum, Westpac was named the most sustainable company in the world. ANZ has been named as a leader in the global banking sector by the Dow Jones Sustainability Index, a major reference point for sustainable investors, six times in the last seven years, while NAB and the CBA have likewise been recognised for their sustainability performance.

Yet despite being lauded for their sustainability efforts, the public image of big Australian banks have suffered in the wake of dodgy financial advice scandals, disputed fees, and allegations of rate-fixing and insider trading.

Banks have drawn the ire of environmental activists by extensively funding the fossil fuel industry, coal mining along the great barrier reef, and nuclear arms manufacturing. Oxfam Australia claims the Big Four are also backing agricultural and timber companies accused of land grabbing in developing countries.

As a result, public confidence in banks is low: according to a national survey, part of the research by Catalyst Australia, 76% of respondents believe that banks put profits before their social and environmental responsibilities.

 

Regulation and Supervision

In 2005, the Government launched an Inquiry into Corporate Responsibility and Triple Bottom Line reporting. It examined the extent to which the Australian legal framework encourages or discourages company directors from considering interests of stakeholders other than shareholders, the suitability of voluntary sustainability measures, and the appropriateness of reporting requirements.

The Committee found that legal amendments were undesirable, as it deemed it “not appropriate to mandate the consideration of stakeholder interests into directors’ duties”.

Furthermore, the Committee recommended that sustainability reporting should remain voluntary, fearing that “mandatory reporting would lead to a ‘tick-the-box’ culture of compliance”.

In the aftermath of the global financial crisis, financial sector regulators were pushed to exercise more supervision and be less trusting of self-regulatory efforts. Consequently, in 2013 the Government launched the Financial System Inquiry. Regrettably, the terms of reference did not address social and environmental sustainability and risks in the financial sector.

The readiness to increase supervision to avoid financial risks is not matched by a similar willingness to supervise and regulate the social and environmental risks caused by the financial sector. This emphasis on voluntary efforts is problematic, as the study by Catalyst Australia shows that only 26% of the Australian public believe banks will behave ethically and responsibly if they self-regulate.

 

Bridging the governance gap

While many Australian and overseas banks have successfully shaped sustainable corporate imagery, the research by the Centre for Corporate Governance and Catalyst Australia finds that self-regulation permits facts to be obscured and leaves social and environmental matters peripheral to business strategies.

The assurance that banking activities are based on sustainable principles requires public monitoring of compliance and performance – as US litigater Louis D. Brandeis famously said:

“Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

In order to accomplish this, directors’ duties ought to be reformulated to include social and environmental responsibilities, sustainability reporting requirements should be redefined and further embedded in corporate governance systems, and social and environmental risk assessments should apply the precautionary principle, shifting the burden of proof to actors that potentially cause harm.

Robust governance, regulation and supervision should not be seen as measures that restrain innovation or entrepreneurship, but rather as instruments that can help to restore trust, and ensure that banking activities are conducted openly, fairly and sustainably

THE Australian dollar is higher amid upbeat sentiment on global markets after the European Central Bank boosted its cash lifeline to Greece.

At 0630 AEST on Friday, the local currency was trading at 74.03 US cents, up from 73.81 cents on Thursday.

 

The ECB will tip an additional 900 million euros into the financial assistance that has kept Greek banks afloat, a move that comes after Athens passed a tough reform package demanded by creditors.

CURRENCY SNAPSHOT AT 0630 AEST ON FRIDAY

One Australian dollar buys:

* 74.03 US cents, from 73.81 cents on Thursday

* 91.88 Japanese yen, from 91.39 yen

* 68.05 euro cents, from 67.52 euro cents

(*Currency closes taken at 1700 AEST previous local session)

Source: IRESS

A piece of land the size of New Jersey is up for sale in Australia. At a sprawling 23,000 square kilometers (14,000 square miles), the Anna Creek Station in South Australia is the world’s biggest cattle ranch.

It’s being offered as part of a portfolio of Australian properties which includes 11 cattle stations and a bull breeding stud farm. But it doesn’t score many points for location. The collection of farming assets stretch across more than 100,000 square kilometers of Australia’s vast interior. To inspect the full sweep of properties on the block by air would take about a week.

Buyers around the world have expressed interest in the sale which should fetch around $300 million Australian dollars ($232 million U.S. dollars). It’s expected to wrap up by the end of the year. Ernst & Young’s Adelaide managing partner Don Manifold is handling the deal, and has more than 30 serious buyers on his books, including parties from North America, Europe and Asia.

Foreign ownership, particularly Chinese, of agricultural land is a contentious topic in Australia. To combat rising unease with the level of foreign investment in farm land, the country raised the threshold on purchases subject to government review earlier this year. Australia is world’s third largest beef exporter behind India and Brazil, and ahead of the U.S. Its export strength is helped by a number of free trade agreements with beef-eating countries and the reputation of its meat as safe. Manifold said the Anna Creek ranch offers a chance to become “one of the world’s foremost beef producers” as Asia’s growing middle class spurs demand for red meat.