The Border Watch : February 3rd 2015
Business Volatile time for investment – Argo MELBOURNE: A growing divergence between the United States and other developed countries has created a volatile investment environment, says investment fund Argo Investments. Argo yesterday reported a record profit for the six months to December 31, 2014 of $104.8 million – up 2.9 per cent on the profit a year earlier. Argo said it had benefited from increased dividends and distributions from its portfolio of over 100 stocks. Argo managing director Jason Beddow said global economic uncertainty had unwound a positive start to the 2014-15 financial year. The Australian share market fell more than 5 per cent during the December quarter, and expectations of company earnings were being downgraded as commodity prices fell. Mr Beddow said the US economy was strengthening, leading to a stronger US dollar and potentially higher interest rates. This contrasted with the continued aggressive easing of monetary policy in the European Union and Japan. “These events have created a volatile and more-difficult-to-navigate investment environment,” Mr Beddow said yesterday. “Whilst the defensive, higher yielding sectors such as banks and utilities, and offshore earners, are trading at or near all-time highs, other sectors have lagged significantly.” Mr Beddow said business activity and investment in Australia would continue to rotate towards the nonmining sectors as miningrelated capital expenditure continued to fall. He said Australia’s rising unemployment rate posed a risk to consumer spending, but the housing market was robust and the fall in the Australian dollar was potentially positive for the economy in 2015. rate cut risks housing bubble SYDNEY: Another rate cut could increase the risks of a housing bubble, a leading economist says, as new figures show house prices got off to a flying start in 2015. Rate cut expectations have been growing since last week, after the Reserve Bank of New Zealand abandoned its bias for raising interest rates, triggering speculation that Australia’s central bank would also adopt a more cautious approach. There’s now a two- in-three chance the Reserve Bank of Australia will slash the cash rate to a new record low of 2.25 per cent today, according to market expectations. Westpac economists are also forecasting a cut. But CommSec chief economist Craig James says a batch of data released yesterday, including house price and inflation figures, had shifted the interest rate debate in favour of the RBA figures from CoreLogic RP Data. Prices in Sydney were up 1.4 per cent in the month, while prices in Melbourne jumped 2.7 per cent. Meanwhile, underlying inflation lifted sharply in January. “The latest economic data have shifted the balance of risks in favour of rates being left on hold.” remaining on hold at 2.5 per cent. Property prices experienced their biggest rise in six months in January, with capital city dwelling values up 1.3 per cent in the month, according to Underlying inflation rose 0.7 per cent last month, according to the TD Securities/Melbourne Institute monthly inflation gauge. “The latest economic data have shifted the balance of risks in favour of rates being left on hold,” Mr James said. “While global deflationary forces support the case for an easing of domestic monetary conditions, the risk is that another rate cut will lead to unsustainable strength in home prices and contribute to inflationary risks. “The strength of the housing market will clearly feature at the Reserve Bank board meeting.” St George senior economist Hans Kunnen said strong house price growth, along with firm retail sales and jobs growth, suggested the RBA would remain on hold throughout 2015. New Westpac boss stamps authority MELBOURNE: New Westpac boss Brian Hartzer has stamped his authority in his first day as CEO, in a shakeup that puts the potential achilles heel of technology front and centre. However, no significant changes were announced from predecessor Gail Kelly’s strategy that delivered six years of strong returns. Mr Hartzer, 47, increased the number of people that report directly to him, including head of technology, chief information officer Peter Curran. That means the heads of AAP “customer facing business”: Westpac Retail & Business Banking, St George Banking Group and BT Financial Group will now report directly to Mr Hartzer as CEO. “Given the changing ways customers are choosing to manage their finances, particularly through online, digital and mobile solutions, the technology function will be critical to us achieving our strategy,” Mr Hartzer said. AAP in Brief Dollar weaker due to rates decision SYDNEY: The Australian dollar is marginally weaker as a growing minority of traders doubt whether the Reserve Bank will cut interest rates today. At the close yesterday, the local currency was trading at US77.81c, down from US77.91c on Friday. The Australian dollar had dipped to US77.26c during early morning trade, sinking closer to levels last reached in July 2009. School kids lift JB Hi-Fi sales BRISBANE: School children’s demand for laptops have kept the tills ringing at JB Hi-Fi. The electronic goods retailer’s sales climbed by 8.9 per cent last month, with like-for-like sales up 7 per cent. Both results were better-than-expected and surpassed sales made a year ago, chief executive Richard Murray said. He said the back to school trade drove up laptop sales and offset a marketwide slump in demand for tablets. Manufacturing set to struggle in 2015 SYDNEY: Australia’s manufacturing industry remains in decline, with 2015 shaping up to be another difficult year. Manufacturing increased by 2.1 points to 49 in January, below the 50 level separating expansion from contraction, according to the Australian Industry Group performance of manufacturing index yesterday. Work to start on NorthConnex AAP Shake-up: New Westpac boss Brian Hartzer is making his mark. Kathmandu shares dive on profit warning SYDNEY: Shares in outdoor clothing retailer Kathmandu have dived more than 20 per cent after it said weakerthan-expected sales would see it post a first-half loss. Kathmandu yesterday warned it would report a net loss of between $940,000-$1.87 million for the six months to January 25, down from $10.6 million profit the same time last year. In response, the company’s shares lost 39c, or more than 20 per cent, to $1.49 at the start of trading yesterday. Kathmandu lifted sales by 6.9 per cent to $167 million during the half, which was weaker than expected. Same stores sales fell in Australia during December and January and were down in New Zealand in the weeks following Boxing Day. The company attributed the result to disappointing sales of summer clothes. 10 - The Border Watch, Tuesday, February 3, 2015 AAP Real estate ready for 3D revolution SYDNEY: Unrealistic pictures of homes up for sale could soon be a thing of the past thanks to an innovative 3D real estate technology developed in Australia. Software developed by Melbourne-based company Scann3d allows buyers to take a virtual walk through a home so it feels like they are standing inside. Scann3d sets up a 3D camera on a tripod inside the home and rotates it around the room, including the ceiling and floors, to film every detail and measure its exact dimensions. Images collected by the camera are then pulled together so viewers can “walk” from room to room, look up, down and behind them as if they were standing there. As a result, buyers gain a more accurate impression of the size of rooms, colours and layout than traditional photos and videos of properties. “You have the control to walk around and look behind the bed and get a sense of space and the layout,” said Scann3d’s Trent Clews-De Castella, who helped develop the software. Picture: AAP MELBOURNE: Tollway operator Transurban expects construction of a new $2.9 billion road tunnel in Sydney’s north to start early this year. The deal to build the NorthConnex Motorway was finalised yesterday. The 9km tolled twin tunnels linking the southern end of the M1 Pacific Motorway at Wahroonga to the Hills M2 Motorway at its existing Pennant Hills Road interchange will be owned by Transurban and its partners in the Westlink M7. Housing prices up in January AAP SYDNEY: Housing prices rose strongly in January, but the rise was uneven in a “two-tiered market. The average rise across the nation’s’s capital cities was 1.3 per cent, according a CoreLogic RP Data. The result, flagged by the property market analysis firm last week, was released yesterday.
January 30th 2015
February 4th 2015