31
Jan, 2019
20
Dec, 2018
GE & AMP: Case Studies in Tactical Investing
In April this year, the Banking Royal Commission prompted the first large company scalp with the resignation of AMP’s (ASX: AMP) CEO Craig Meller. Mr Meller’s resignation followed revelations of serious misconduct by the institution for almost a decade and capped off a week in which its failures were brutally and publicly exposed. A few months later in the USA [...]
6
Dec, 2018
Term Deposit Review – November 2018
An eventful month for financial markets saw initial de-risking globally with late dovish sentiment clawing markets back to an even position. Emphasised commentary centred on rates, oil, politics, leverage and earnings. APRA took centre stage with its announcement of TLAC reforms which we discussed in detail in our November 2018 Monthly Market Review. We view the reforms as credit positive [...]
6
Dec, 2018
RCR Tomlinson: A Lesson in Project Risk
The collapse of engineering group RCR Tomlinson (ASX: RCR) into administration on 23 November capped a remarkable fall for one of the oldest engineering contractors in the country. However, whilst the appointment of administrators, that are set to carve up and sell off parts of the ailing business, surprised many in the market, company collapses in the construction industry are [...]
7
Nov, 2018
Term Deposit Review – October 2018
In what was an eventful month for commentary surrounding the state of the Australian economy, the Reserve Bank of Australia (RBA) released its bi-annual Financial Stability Review. In its review, the RBA noted a supportive global economic environment for growth, however, the central bank cited elevated levels of household debt and ongoing trade tensions as key risks to both the [...]
7
Nov, 2018
BICRA and TLAC: Revisiting Bank Hybrids Ahead of Possible Rating and Regulatory Changes
Credit rating agencies such as Moody’s and Standard & Poor’s (S&P) have been in focus throughout 2018 as investors have watched the Australian financial landscape increasingly enter new territory. This has largely been a function of the Royal Commission into Banking and Financial Services, as well as the more unstable political environment seen throughout the year. However, despite the negative [...]
18
Oct, 2018
The Italian Banking Crisis: A Perfect Storm
Earlier last week and before the more systemic selloff in risk assets, Italy’s 10-year government bond yields rose to a quite staggering 3.63% - the highest mark since 2014. Meanwhile, yields on the 10-year German Bund declined to an equally staggering 0.53% as the ‘lo spread’ between the two countries, which has long observed as a proxy for country risk, [...]
4
Oct, 2018
Quantitative Tightening: What’s Happening 12 Months On
Quantitative easing (QE) was first pioneered by the Bank of Japan (BoJ) way back in 2001, when it was employed as a stimulative economic policy, after the BoJ ran short-term rates down to zero. QE’s mechanism for stimulation is the purchase of debt securities by central banks (in the secondary market), causing the central bank’s reserve supply to increase and [...]
5
Aug, 2018
Will Major Bank Divestments Affect Hybrid Instruments?
With the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the “Commission”) being unusually quiet recently following more reactionary and tabloid-friendly beginnings, we thought it might be a good time to consider what impact (currently) planned divestments by the major banks could have on hybrid valuations and risk. Although not directly prompted by the Commission, [...]
5
Aug, 2018
Central Bank Independence: A Cautionary Tale
Major central banks around the globe have, for some time now, been granted total independence in making monetary policy decisions in an effort to ensure the prioritisation of long-term economic health over more short-sighted decisions for political motives. President Trump’s comments last week that he is “not thrilled” by recent increases in the Federal Reserve’s Funds rate has broken the [...]
