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  • Rate Cut Chances Rise As Retail Sales Remain Poor - 4 August 2013 (AFR)
    Rate cut chances rise as retail sales remain poor

    4 August 2013

    Retail sales continued their lacklustre run into a fourth month, boosting the Reserve Bank of Australia's scope to deliver an official interest rate cut on Tuesday.

    My View: (4 August 2013)

    The latest Australian retail sales growth remained flat continuing its dismal run since March. Latest inflation data showed a 2.7% increase on annualised basis over last year (July). Although, most economists/analysts have already priced-in a 25bps fall in the RBA Cash rate, I am of the opinion that the RBA may just decide to hold off any decrease till the next meeting. One of the primary drivers is house prices that has seen a steady rise over this year with recent auction clearance rates back at new highs. This factor coupled with decline in US$ longs could push the A$ up in the near term.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 16 10:33 AM | Link | Comment!
  • Australia's Problems ‘luxury’ Ones: Citi - 4 August 2013 (AFR)
    Australia's problems 'luxury' ones: Citi

    4 August 2013

    Citiglobal chief economist Willem Buiter believes the global economy is at a crucial turning point as emerging markets like China slow and says Australia's problems are "luxury problems compared to the rest of the world".

    My View: (4 August 2013)

    Although I agree with the fact that the Australian banking system is heavily reliant on mortgage lending, I seriously dispute the statement made in the this article about the weighting of 80% to this segment. Recent APRA statistics suggest about 63-65% focus on mortgage lending and 30-32% towards business/commercial lending and remaining with personal and other lending. The major banks constitute over 85% of the home lending market in Australia and Westpac has the highest exposure (approximately 72%) in mortgages.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 16 10:33 AM | Link | Comment!
  • Inside The Insider Trading Debate - 27 July 2013
    Is it time to say bye bye to the buy side corporate lunch?

    Angela Pica, CFA Head of Advocacy, Australia and New Zealand at CFA Institute

    Peter Morgan, ex Perpetual and ex 452 Capital comes forward slamming the selective access large insto investors get with company management. He thinks that exclusive meetings should be banned or monitored by ASIC to avoid selective disclosure by company management.

    This has sparked a lot of debate with many not seeing it as an actual problem. Citing that the information shared is in the public domain and the main purpose is to gain insight into industry trends, company strategy and most of the time the quality and trustworthiness of company management.

    ASIC will be paying close attention to the communication between company management and both the sell and buy side during the upcoming reporting season. It wants to "hear how companies brief analysts and understand these companies' procedures and protocols".

    What is your opinion - should these types of meetings be banned?

    Inside the insider trading debate afr.com27 July 2013

    Equality of access to company information that could affect investment decisions is under scrutiny from the Australian Securities and Investments Commission - and, while it's a controversial issue, two ex-fund managers are happy to blow the whistle on...

    My View: (27 July 2013)

    Sridhar Balakrishna, CFA CA

    Sridhar Balakrishna, CFA CA

    Research analyst, Buy-side, Strategy, Valuation, Financial Advisory, Consulting, Asia Markets, CFA

    The US Securities Exchange Commission (SEC) introduced Regulation Fair Disclosure (Reg FD) during mid-2000 to circumvent special access/disclosure to Institutional Investors by company management before the information was disseminated to other investors. The key word in this process is the evidence of material, non-public information. Reg FD fundamentally changed the way information was disseminated to investors and allowing for more transparency. This, however, stemmed the benefits that large fund managers had over other smaller investors.

    An exception to this is defined by the Mosaic Theory, which clearly allows analysts and institutional investors to question company management about non-material, public/non-public information. However, analysts using this information in their investment decision-making must disclose the details of the information and the methodology used to arrive at their recommendation.

    Sep 16 10:33 AM | Link | Comment!
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