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That’s it from us today. Thanks for joining us.
We’ll be back next week – take care of yourselves out there.
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Among the 10 best performing individual stocks today were Downer EDI (+16.95%), Bega Cheese (+9.44%), and Qantas (+5.34%).
Among the 10 worst performing stocks were Ramsay Healthcare (-6.75%), Tabcorp Holdings (-4.4%), Wesfarmers (-1.97%) and Fortescue (-1.56%).
All of the four big bank bosses have spoken extensively about scams.
Their frustration with the meagre efforts of global social media platforms has been bubbling beneath the surface.
Some of the things that jump out from the past two days:
According to ANZ’s Maile Carnegie it’s particularly difficult even when payments are intercepted. Calls take around 40 minutes and are draining for staff because they’re often “breaking people’s hearts” (about people they’re in love with but are actually professional scammers).
But Shayne Elliott has a broader warning about cyber-security, given that banks have spent hundreds of millions of dollars to try to stop scams – and other institutions haven’t.
“There’s a significant gap between where they are and where they need to be. Government agencies have a role in – like scams – continuing to educate the population, and push for industry-wide approaches… it’s a cliché but you’re only as strong as your weakest link and that’s why there has to be collaboration.”
Australian luxury fashion label Dion Lee Enterprise has gone into liquidation, months after falling into voluntary administration.
The 15-year-old retailer made headlines earlier this year after one of its corset tops was worn by Taylor Swift at the Super Bowl. It has also proven popular with other celebrities.
But the interest wasn’t enough to save the company’s finances.
Creditors of Dion Lee Australian Enterprise resolved that the company be wound up after the retailer failed to find a buyer.
Antony Resnick and Henry Kwok of dVT Group will be appointed as liquidators.
In a statement, dVT said the second creditors meeting heard that while there had been interest from potential buyers of the brand, “no acceptable offer was as yet forthcoming”.
While the label is being wound up, Dion Lee retail stores in Australia are expected to continue operating until late September or early October.
And the brand’s online site is expected to continue to trade through to early-November or later.
Trading closed at 4pm, and the ASX200 index gained 46.8 points today (+0.58%), to settle on 8,091 points.
CBA senior economist Belinda Allen has circulated a note that summarises the week’s economic data this way:
“There was a steady flow of economic data in Australia this week.
“A number of partial data was released ahead of the June quarter National Accounts, as well as July retail trade data.
“All eyes were on the July CPI [inflation] indicator. It printed at 3.5%, just above our and the consensus forecast of 3.4%/yr. There was however a very wide range of economist forecasts, ranging from 2.7%/yr to 3.9%/yr given the uncertainty as to how state and federal electricity rebates would flow through in July.
“Ultimately the number showed disinflation continued in July and broadened with electricity rebates not the sole driver … Electricity prices in the CPI fell by 6.4%/mth, close to our forecast for a 5.0%/mth decline. Abstracting from the impacts of energy bill relief, the disinflationary impulse continued to broaden. The number of items in the CPI basket with annual inflation below 2% continued to rise and now outnumbers the number of items with prices growing above the RBA’s inflation target band. Electricity prices are expected to fall by ~20% in August as the Federal government rebates commence. We expect the August CPI Indicator to print with a 2-handle.
“The two partial GDP indicators, construction work done and private capex [capital expenditure] both came in weaker than expected. Construction work done rose by 0.1%/qtr, while capex fell by 2.2% (both June quarter volume data) …
“Retail trade data was flat in July, in line with our bottom‑of‑consensus forecast. This was the first official read on spend since the stage 3 tax cuts kicked in. It is early days of course post the income tax cuts, but there is no evidence of any tax cut impact on consumer spend so far. That aligns with the signal from the CommBank HSI out earlier this month.”
Next week…
Wednesday: The ABS will be publishing the June Quarter GDP figures at 11:30am.
Thursday: Reserve Bank governor Michele Bullock will be making two public statements.
The first will be at midday, when she speaks to the Anika Foundation in Sydney. That typically has a Q&A session. The second will be at 7pm, and it will be a pre-recorded “fireside chat” for the Women in Banking & Finance Awards.
The corporate watchdog has alleged investor funds may have been used to buy a luxury apartment for the wife of a property developer.
Last month, the ABC revealed people had invested in Shield Master Fund after allegedly being cold-called for a superannuation review.
The Australian Securities and Investments Commission (ASIC) is investigating and receivers have been appointed to a key company overseeing the fund.
You can read more about the story here.
How good is Alan Kohler??!! Who knew there was a boom in toothpaste? I had to laugh when I listened to his financial summary from yesterday’s market…
– Merrowyn
He’s also a fan of the Big Lebowski.
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So, the big issue has been about the allegations around ANZ’s potential manipulation of the bond sales.
(Bonds are a government asset, essentially buying a loan and getting payments over time).
There have been allegations that ANZ traders may have manipulated the sale of some government bonds. The way the government decides which bank leads the next sale is based on who sells the next three months’ worth. So, if there was manipulation, they could have gained an advantage and potentially cost taxpayers because they weren’t the most efficient sales agents.
Summation: trouble, regulators, newspaper front pages.
“These are very serious concerns that have been raised. At this point ASIC has not put an allegation to us,” says Shayne Elliott.
“They obviously have suspicions… Clearly they have a concern. We’ve employed internal and external advisors… based on what I’ve seen, we’ve seen nothing that was improper by ANZ.
“They (asked for and received) hundreds of thousands – may have even reached the millions – of documents… they have interviewed staff… in terms of our investigations we’ve formed a board sub committee – there are some sensitive legal issues here – we felt it more legally robust to have that committee. There’s been an initial report from our investigations… once that’s reported to the board, we’ll decide what actions we should take.”
Mr Elliott says based on what he knows there has been no loss to taxpayers.
There are three issues, one about a data breach, one about conduct of some senior members of the trading team, and then the “bond issue”.
“As of now we have no evidence of misconduct (on the bonds)… the conflation of these three issues in media reporting has…
“Whether that’s fair, right, wrong how we can avoid these things… There will be consequence for that – we’re not at a definitive point for that.”
Am I the only one confused between Woolworths and Coles reporting? I thought Woolworths was the ‘bigger’ of the two, how come their profit was so much lower than Coles? Was it the NZ issue?
– Confused
You’re right, Woolworths Group is much bigger than Coles Group, by market capitalisation (Woolies: $43.65 billion, and Coles: $25.27 bn).
And yes, Woolworths is dealing with a unique situation.
It reported a total impairment loss on its NZ food business worth $1.5 billion, and it discontinued its “equity method” of accounting and recognised its investment in Endeavour Group as a financial asset at fair value through equity, at a loss of $209 million.
That contributed to total group significant items after tax worth $1.6 billion.
Last year, its full year net profit after tax was $1.6 billion. This year, it was $108 million – thanks to those significant items.
Shayne Elliott, chief executive of Australia and New Zealand Banking Group Limited (ANZ), is in front of the Economics Committee.
Next to him is Maile Carnegie, group executive for the Australian retail business.
He cracks straight into the big issue.
ASIC is investigating whether ANZ broke the law when it sold 10-year government bonds in 2023. In essence, the bank that sells the most bonds in a three-month period usually gets the contract to lead the selling for the next quarter’s worth of bonds. The allegations are that the value of the bonds sold was manipulated.
It’s complicated, but the allegation is people at the bank lied something happening, to win a government contract.
With it under investigation, there’s not much he can say.
“For some time now we’ve had a program of work to improve non financial risk… we clearly have more work to do.
“We’re taking this very seriously. There has been speculation that may have cost taxpayers. From what I have seen there is no evidence of this.”
(He notes that they don’t yet have all the information and reserves the right to alter that view if new evidence emerges).
“There will be appropriate consequences for proven conduct… I assure the Committee we are taking it very seriously.”
Earlier we reported that the future of Sydney’s Star Entertainment Casino remains uncertain after a second damning report found it failed to reform its culture.
As chief business correspondent Ian Verrender writes, it’s quite the turnaround for Australia’s gaming giant, which is now hanging by a thread.
“Once perceived as the glittering symbol of city sophistication, Australia’s biggest listed casino group has found itself reduced to the status of last chance saloon.
“In an extraordinary turn of events, Star Entertainment Group’s corporate reputation once again has been shredded by a formal inquiry.
“This time, it was a blistering assessment of management’s failed efforts to restore its tarnished reputation and fix a culture found to be rotten to the core.
You can read his analysis on the situation here.
The ABS says the lack of growth in retail spending in July followed a couple of months of mid-year sales by retailers, at the end of the 2023/24 financial year.
But some economists say the softness in retail sales still suggests there may be some “downside risks” to the outlook for household consumption this year.
“Retail sales remained unchanged in July, in contrast to the modest pickup that most had anticipated,” said Abhijit Surya from Capital Economics.
“Moreover, a look under the hood paints an even weaker picture of consumer spending. Indeed, food retailing was the only industry which saw a rise in turnover. In fact, spending fell outright across three of the six industries, while it was flat in the remaining two.
“Overall, it’s clear there was little momentum behind consumer spending at the start of the quarter.
“And while it is early days, the data broadly reinforce our view that Australian households are not rushing to spend their newfound tax cuts.
Granted, the retail sales figures are only a decent guide to goods consumption. Whereas the RBA is clearly more concerned about the strength of services spending.
Even so, the data should give the Bank greater confidence that demand and supply are moving closer into balance,” he said.
Callam Pickering, APAC economist at global job site Indeed, says it’s clear that retail conditions overall remain “mediocre” with cost-of-living pressures weighing heavily on Australian households.
“The average household is buying considerably fewer retail goods than they were a year ago,” he said.
“Growth in May and June was boosted by mid-year sales activity, which occurred a little earlier and was a little larger than we typically see. Savvy shoppers took advantage, boosting their spending throughout May and June. That ultimately contributed to a softer spending throughout July.
Mr Pickering says there’s also little in the data that will convince the Reserve Bank to stray from its course.
“Household spending remains terribly weak at the household level but is holding up okay nationally due to very strong population growth. While a lot of households are doing it tough, aggregate demand has arguably been too strong to facilitate a quick return to the RBA’s 2-3% inflation target.
“Monetary policy remains data dependent. It’s also clear that the RBA maintains a tightening bias and the recent data flow probably hasn’t done anything to change that.”
“The RBA won’t be seeing anything in the recent economic data flow that suggests that the economy is getting weaker or that a recession has become more likely. If anything, the ongoing strength in the jobs market and wage growth, along with persistently high inflation, suggests that a rate hike remains the more probable next move for the RBA,” he said.
According to the Australian Bureau of Statistics (ABS), retail spending remained unchanged 0.0% between June and July.
It means the annual rate of growth in retail spending has fallen from 2.9% to 2.3%, in seasonally adjusted terms.
In July:
Scams are the “plague of our times” – indeed they are! And yet we are still careering full steam down the road so fast we can’t read the writing on the wall. We are sacrificing security for the sake of convenience and opening the door for criminals to take advantage of us all. It’s time to slow down and reevaluate was is more important.
– P Joel
Mr Irvine says NAB still sees the crypto-currency space as “very high risk” for its customers.
“We were seeing so many scams and customer complaints around payments to crypto exchanges and cryptocurencies that we actually put in significant impediments and banned payments to those currencies in order to protect our customers, and we would like to see much more maturity and regulation in those cryptocurrencies before we would be comfortable enabling our customers to transact with them.
“Now, many Australians are bypassing us and choosing to buy cryptocurrency directly. There’s nothing we can do about that. But we do encourage everybody to just make sure they’re knowledgeable about the risks.”
He said he was concerned about the trend of younger Australians taking financial advice on the internet from people they’ve never met.
“It feels like the gold rush of our time.
“People want to make a quick buck, and some of these instruments have grown so fast and become so profitable for people, and therefore they’re shared widely on social media.
“They’re taking financial advice from people they’ve never met on the web, and who knows what the veracity or capability of these people [online] are.
“There is something to be said about the fact that, you know, financial advice in this country is now much, much more limited, and so I do worry that many Australians, and frankly, younger people, today are getting their advice from nefarious sources.
Mr Irvine has just provided a long list of ways to improve housing affordability in Australia.
“I do want to emphasise with the committee that this is far and away a supply problem versus a demand problem, in terms of housing.
“When I speak to federal politicians, the primary lever that the federal government and politicians have is demand side levers.
“I do worry that if all we pull, as a country, are demand side levers and continue to make weak progress on supply side levers, all we will do is make housing more expensive, and so the more the banks put in, the more enablement we give to first time home buyers to potentially pull money from superannuation, whatever it is, if that’s all we do we just increase the price of housing stock.
“The conversation needs to focus 80% of the time on supply, and only 20% of the conversation should be on demand.”
Mr Irvine said when he talks to developers they don’t say financing is the problem for the supply of affordable housing.
He said rather, they point to different problems in different jurisdictions.
“In NSW, and particularly in Sydney, the planning and zoning issues in the state and in the city are very, very challenging, and they’re the worst in the country. There are planning challenges across the country, but Sydney and NSW are the laggards here.
“And so planning and how difficult that is, how long it takes, that adds to the cost for developers, and it constricts supply.
“In Victoria, the big issue is taxation, and the amount of taxation in the cost of constructing a new dwelling is somewhere between 40 and 45% of the dwelling costs. And so it’s such an impediment to actually starting construction.
“I was at a luncheon with about 10 or 12 of our property clients a couple of weeks ago in Melbourne, and amongst those clients, I would say there was a few thousand dwellings that have been approved and they’re ready to go, and not one of them is being started because the maths don’t work.”
He said we also don’t have enough specialised tradesmen in Australia.
“In the last year, Australia brought in hundreds of thousands of newcomers, and of those, only 8,000 were people with trade skills, and I think that is problematic.
“We need more people coming into the country that are electricians, plumbers, who have concreting or roofing skills that will, I think, add to capacity for us to bring dwellings to market and speed up the process.”
He said there also needed to be more format innovation in the construction industry.
“If we want more social and affordable housing, I think we need more modularisation, changes to how dwellings are built together, we need more focus on medium density building. Too much is still light density housing and detached or semi-detached dwellings.
“There’s an awful lot of work to be done to bring more of the right type of housing to market, and to do that at scale.
And then there’s the question of land itself.
His colleague jumped in to say that there are large tracts of land that were sitting unused and underutilised, that were often owned by not-for-profit and faith-based organisations.
He said creating incentives to enable some of that land to be released for housing would help too.
Mr Irvine says Australia needs to keep working really hard to try to make Australia a hard target for scammers.
“The goal for all of us here needs to be to make Australia the hardest place in the world for criminals to come.”
He says we could probably look at our AML CTF laws to see if there’s room for more information sharing, to strengthen our collective intelligence about scammers.
He’s referring to the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act), which is the main piece of Australian government legislation that regulates AUSTRAC’s functions.
Mr Irvine says social media is a weak link at the moment, with new types of scams regularly popping up through that portal.
He said he’s really encouraged by the fact that the banking industry will be deploying a total industry matching scheme for account verification, which could be rolled out early- to -mid next year.
