Australians hate a tall poppy, which means the country's richly-valued banks are liable to get cut down at the first hint of bad news... The most China-dependent economy isn’t so keen on Chinese money...
The commodities slump won't undermine Australia's banks: Gadfly
(Bloomberg) -- Australians hate a tall poppy, which means the country's richly-valued banks are liable to get cut down at the first hint of bad news.
So when Australia & New Zealand Banking Group admitted last week that it would have to take higher bad-debt charges due to the slump in commodity prices the shares fell as much as 6 percent, the biggest drop in more than seven months. Overvalued banks, rising defaults, troubled mining companies: what's not to dislike about that picture?
Sadly for the dwindling band still shorting the country's big four banks, there's little evidence such problems will pose more than a temporary speed-bump to their earnings. For ANZ, the deteriorating environment will probably add about A$100 million ($75 million) to a total first-half credit charge forecast at A$800 million, it said Thursday. Next to net income that analysts expect to be about A$3.7 billion, that's nothing to lose sleep about.
While Australia's economy may be unusually dependent on mining, its banks (like those elsewhere in the world) have far greater exposure to more conventional stuff like mortgages and government bonds.
The most China-dependent economy isn’t so keen on Chinese money
(Bloomberg) -- Australia, the developed world’s most China- reliant economy, offers a natural destination for billions of dollars of investment from its largest trading partner. There’s just one hurdle -- the Australians themselves.
When Australia’s largest dairy farm was sold to Chinese buyers last month, its biggest tabloid paper howled that the government was ‘Milking Us Dry!’ by approving the deal. That chimes with a survey showing most Australians think too much Chinese property buying is allowed Down Under. The reality is China accounted for just over 4 percent of foreign investment at the end of 2014 -- slightly less than the Netherlands.
With federal elections looming as soon as July, neither the ruling coalition nor the opposition has yet sought to engage on the issue of Chinese money. Failure to adapt risks forgoing much of a slice of the more than $1 trillion in outbound investment funding that China has targeted for the decade to 2024, at a time when Australia is searching for growth drivers to replace mining.
“Australia needs to start having the grown up conversation that it has so far evaded,” said Hugh White, a professor of strategic studies at the Australian National University in Canberra. “China, even at lower growth rates, is going to remain the most important source of economic opportunities for Australia.”
(Bloomberg) -- Australians hate a tall poppy, which means the country's richly-valued banks are liable to get cut down at the first hint of bad news.
So when Australia & New Zealand Banking Group admitted last week that it would have to take higher bad-debt charges due to the slump in commodity prices the shares fell as much as 6 percent, the biggest drop in more than seven months. Overvalued banks, rising defaults, troubled mining companies: what's not to dislike about that picture?
Sadly for the dwindling band still shorting the country's big four banks, there's little evidence such problems will pose more than a temporary speed-bump to their earnings. For ANZ, the deteriorating environment will probably add about A$100 million ($75 million) to a total first-half credit charge forecast at A$800 million, it said Thursday. Next to net income that analysts expect to be about A$3.7 billion, that's nothing to lose sleep about.
While Australia's economy may be unusually dependent on mining, its banks (like those elsewhere in the world) have far greater exposure to more conventional stuff like mortgages and government bonds.
The most China-dependent economy isn’t so keen on Chinese money
(Bloomberg) -- Australia, the developed world’s most China- reliant economy, offers a natural destination for billions of dollars of investment from its largest trading partner. There’s just one hurdle -- the Australians themselves.
When Australia’s largest dairy farm was sold to Chinese buyers last month, its biggest tabloid paper howled that the government was ‘Milking Us Dry!’ by approving the deal. That chimes with a survey showing most Australians think too much Chinese property buying is allowed Down Under. The reality is China accounted for just over 4 percent of foreign investment at the end of 2014 -- slightly less than the Netherlands.
With federal elections looming as soon as July, neither the ruling coalition nor the opposition has yet sought to engage on the issue of Chinese money. Failure to adapt risks forgoing much of a slice of the more than $1 trillion in outbound investment funding that China has targeted for the decade to 2024, at a time when Australia is searching for growth drivers to replace mining.
“Australia needs to start having the grown up conversation that it has so far evaded,” said Hugh White, a professor of strategic studies at the Australian National University in Canberra. “China, even at lower growth rates, is going to remain the most important source of economic opportunities for Australia.”
