DP World sells $1.5bn Australian stake

DP World, the container terminal operator, is to sell a majority stake in its Australian subsidiary to Citi Infrastructure Investors, a private equity company, for A$1.5bn ($1.5bn).

Dubai-listed DP World announced on Wednesday that it was selling the stake to CII and an unnamed partner described as “a major investor”. The company will continue to operate the container terminals at Brisbane, Sydney, Melbourne, Adelaide and Fremantle under a management contract.

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The company said that it expected regulatory approval by the end of the first quarter next year.

DP World said the proceeds of the sale to CII would go towards reducing net debt as part of a strategy “to improve balance sheet flexibility”.

DP World is one of the healthier divisions of Dubai World, the indebted conglomerate, and was excluded from a round of debt restructuring earlier this year. In November last year the Dubai World shocked global markets when it asked for a moratorium on repaying its debts. It has subsequently secured a $25bn restructuring agreement with creditors.

DP World has the widest geographical spread of any of the world’s leading port groups, with operations in Latin America, Africa, the Middle East and Asia. The capacity of the five Australian ports is in excess of 3.5m 20ft-equivalent units a year, a common industry measure, which the company said constituted roughly half the total Australian container market.

The deal values DP World Australia at A$1.817m, the company said. DP World was advised by Deutsche Bank and Citgroup Global Markets while CII was advised by HSBC and UBS.

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Source http://www.ft.com/cms/s/0/97a6b220-0daa-11e0-8b53-00144feabdc0.html#axzz18pfuM6kn

Rosy export outlook but business glum

A rosy export outlook has failed to lift the spirits of businesses, while new government forecasts highlight the impact on farmers from this month's storms in Queensland and NSW.

The heavy rainfalls and flooding have wiped $1 billion off the value of wheat production for 2010/11, the federal government's commodity forecaster said on Tuesday.

Releasing its quarterly commodities report for the December quarter, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) now predicts wheat production of $5.7 billion in 2010/11 rather than the $6.7 billion forecast in September.

"In addition to expected lower production and export volumes from Western Australia, these downward revisions reflect the impact on grain quality of untimely rain on the wheat crop in the eastern states," ABARES acting executive director Paul Morris said releasing the report.

However, the bureau still predicts record commodity exports overall of $211 billion, a 23 per cent increase compared to 2009/10, despite a $3.8 billion downgrade because crop damage and slower growth in gold, iron ore and coal exports.

The bureau still expects iron ore and coal will make a large contribution to exports in 2010/11, while mine production is forecast to increase significantly in response to higher world prices.

This still rosy export outlook came as a new survey showed only a modest improvement in business conditions in November, while confidence fell for a third straight month.

"The impending mining investment and export boom should prove a spectacular ride, but the reality is that the train is still yet to leave the platform," National Australian Bank chief economist Alan Oster said releasing the results of his bank's monthly business survey.

Its business conditions index rose two points in November, while its confidence index was down two points - both being below their long term trend.

Mr Oster said the survey shows no sign of a pick-up in economic growth half way through the December quarter, after the disappointing outcome for the September quarter.

He expects the Reserve Bank will be surprised by this weakness, and as such is not predicting a further rise in the cash rate from 4.75 per cent to 5.0 per cent until May next year.

Other data released on Tuesday showed that new home building slumped in the September quarter, even before the last round of interest rate increases in November.

Builders started work on under 40,000 homes in the quarter, a 13.2 per cent drop compared to the June quarter, and much weaker than the five per cent fall predicted by economists.

The decline was led by a 13.5 per cent drop in the more volatile other residential building component in the private sector - such as flats and townhouses - although even private house building fell by 4.3 per cent.

"The conclusion from the September report is that residential building is returning to the sluggish pre-2009 trend as the lagged effects from earlier record low cash rates and subsidy schemes in housing are unwound," JP Morgan economist Ben Jarman said.

Growth in building approvals have been in decline for much of 2010 after interest rates rose six times between October last year and May, and as the government ended its more generous first home buyers grant on January 1.

Source http://news.smh.com.au/breaking-news-national/rosy-export-outlook-but-business-glum-20101214-18wlh.html

Proposed ASX merger will serve the national interest

The need for additional scale and regional relevance makes ASX's participation in consolidation mandatory.

Change is rarely easy, or initially easily accepted. When we consider the events that led to the creation of the Australian Securities Exchange as we know it today, such as the amalgamation of six state exchanges, or the closure of trading floors, or demutualisation, or the merger with the Sydney Futures Exchange, we may forget how challenging to various stakeholders they seemed at the time.

ASX understands the public interest in the proposed combination with Singapore Exchange (SGX) to create the first major regional exchange group in the Asian time zone.

In the near future, ASX will release information that outlines how the proposal advances Australia's national interest and informs much of the criticism that emerged after the proposal was announced on October 25.

Let me emphatically dispel concerns about a potential reduction -- or even transfer to Singapore -- of governance and regulatory oversight of ASX's operations.

The proposal is for a merger of exchange groups, akin to that which has been sanctioned in numerous other jurisdictions, not a takeover of Australian law.

ASIC, not ASX, is Australia's financial markets regulator and the Reserve Bank oversees Australia's financial stability standards, enshrined in the Corporations Law.

ASX's capacity to set the content of its listing and operating rules is already subject to a regulatory approval process in which the Australian government has the final say.

The Australian operations of the merged group will remain under Australian law and regulated by Australian authorities.

This maintenance of existing local sovereignty occurred with New York Stock Exchange's combination with the Euronext exchange group in 2006 and with Nasdaq's combination with the OMX group of Nordic exchanges in 2008. There can be no change to ASX rules without the agreement of the Australian Securities and Investments Commission and the Australian government.

ASX views the proposed combination as a natural competitive and regulatory evolution of Australia's capital markets.

Despite the fact that ASX is already one of the most cost-efficient exchange groups in the world, the need for additional scale and regional relevance makes ASX's participation in exchange consolidation a mandatory -- not an elective -- matter for all its stakeholders, and not just its shareholders.

Financial capital is highly mobile and increasingly free of geographic boundaries.

Governments appear to welcome new types of trading participants with high-performance technology-based trading strategies, while multinational corporations are drawn to listing venues of regional and global scale and efficiency. These trends are driving market structure, irrespective of whether or when competition between market operators is introduced in Australia.

At the same time, the global balance of power has been shifting from developed economies to developing ones, especially those in the Asia-Pacific region.

The global crisis accelerated this trend. It is no coincidence that Australian government policy has oriented towards building support for the concept of an Asia-Pacific community, focused on regional economic and security.

The Johnson report concludes: "Greater integration of financial markets is an important aspect of the concept of an Asia-Pacific community, and can contribute to Australia's broader national economic and security objectives in the region."

The Johnson report also notes that the contribution to GDP of Australia's financial sector ranks comparably with its counterparts in other advanced economies, such as the US, Britain Japan and Canada, but it ranks much lower in financial services exports as a share of financial services value added. Additionally, the report quotes Rainmaker statistics showing that half of the 20 largest fund managers are overseas companies, but that only between 3.5 per cent and 11 per cent of the $1.2 trillion funds under management are from offshore.

This compares unfavourably with the situation in Britain (31 per cent of total FUM sourced from abroad), Hong Kong (64 per cent) and Singapore (80 per cent), which broadly defines the challenge facing Australia's financial services industry to evolve beyond its domestic origins.

The merger presents the opportunity for a larger volume of financial transactions involving offshore parties to flow through Australia -- a key characteristic of leading financial centres.

The increased size, liquidity pool and product diversification of a combined exchange group will enable better matching of the risk and reward preferences of investors and companies, reducing the cost of capital for ASX-listed entities. An outcome unequivocally in the national interest.

This is the context in which the ASX-SGX transaction should be judged. As a nation we are indebted to the strength of Asia's industrialising economies and their appetite for our resources (and government debt) -- factors that helped us avoid the worst effects of the global crisis.

Yet, despite talk of becoming more integrated with the pan-Asian economy, a transaction that seeks to achieve this causes parts of the community to raise the spectre of loss of national sovereignty, without understanding the protection afforded by the existing regulatory framework or the competitive forces that threaten to marginalise ASX if parochialism prevails.

Public policy consistency dictates that encouragement of new foreign-owned competitors for domestic exchange-related services, to use their global scale in Australia, also calls for allowing the incumbent exchange group to be similarly allowed to extend its presence through a regional or global combination beyond local shores. Such action, through the proposed ASX-SGX combination, strengthens the national interest and helps to develop Australia's financial services sector.

Source http://www.theaustralian.com.au/business/proposed-asx-merger-will-serve-the-national-interest/story-e6frg8zx-1225965415691

End in sight for unpaid NAB customers

The National Australia Bank says work on restoring customer accounts should be complete by tomorrow.

This afternoon, the bank said work would continue into the night to rectify accounts after a corrupt computer file last Wednesday night left people without wages and payments unprocessed.

NAB says while the glitch that caused payments and transactions to be delayed has now been fixed, additional work on around 19,000 accounts where duplicate or multiple transactions have occurred still needs to be completed and will be done so overnight.

Spokesman George Wright says outstanding transactions are being processed in chronological order.

"A person might have had a payment coming in on Wednesday and there might have been something going out on Thursday," he said.

"So you can't really say it's fixed for this number of customers, it's not that number. But we're up to Friday, so we're working through Friday."

In some cases there have been multiple debits and credits, but the bank says it is aware of the problem and it will be fixed as soon as possible.

Mr Wright says customers who have been charged fees or interest because of the glitch will be reimbursed.

"For NAB customers who may have incurred a fee or interest charge from the bank as a result of these delays, we're putting in a process to identify that and rectify it and refund people," he said.

"And anyone who might have incurred a charge from another institution as a result of these delays, we would ask them to contact us. We don't want people to be out of pocket and we'll work with them to fix that up."

Consumer group Choice says the payments system used by the major banks needs to be scrutinised in the wake of the NAB incident.

Choice spokesman Christopher Zinn says the delays have dragged on for far too long and highlight the vulnerability of the system.

"If this really was just a corrupted file which has caused this much damage, this much distress, we think it's a good time to take a long, hard look at the payments system and see if it really is robust enough and efficient enough for what is something that is essential to our daily lives," he said.

Mr Zinn says the current system is preventing new players from entering the market.

"We've been in talks with those who would seek to enter the banking sector in Australia, with new, competitive and innovative products who feel the structure of the payments system, some of its archaic nature, actually makes it impossible for them.

"We think that is something which the regulators, such as the Reserve Bank and the Federal Government, need to look at."

Source http://www.abc.net.au/news/stories/2010/11/29/3079719.htm?section=justin

ACC drops Paul Hogan tax investigation

THE Australian Crime Commission has revealed it will not lay charges against actor Paul Hogan and his artistic collaborator John "Strop" Cornell.

After a five-year investigation, the ACC today took the extraordinary step of issuing a press release saying it was no longer pursuing the pair over their offshore tax arrangements put in place following the success of the Crocodile Dundee movies.

"This decision has been made following a careful process, including obtaining high-level legal advice on some issues," the crime commission said.

Hogan and Cornell have been targets of the nation's $300 million Wickenby tax probe into offshore structures. They have always maintained their innocence and denied any wrongdoing.

Earlier this year, the Crocodile Dundee star was temporarily banned from leaving Australia at the request of the Australian Taxation Office.

The two-week standoff ended on September 3 and the 70-year-old was allowed to return to Los Angeles where he lives with his wife Linda Kozlowski and their son Chance.

It is understood the ATO will not be dropping its probe into Mr Hogan's affairs. An ATO spokesman declined to comment on the case on Tuesday.

In its statement issued today, the crime commission also noted the number of legal challenges Hogan and Cornell had made in relation to the investigation.

"The delay in resolving this long-running investigation hinges on the international complexity of the structures put in place by those who are the subject of the investigation and a clear strategy by those being investigated to legally challenge the ACC's attempt to establish the facts in the case," it said.

The decision was welcomed by Robinson Legal's Andrew Robinson who released a statement vindicating the innocence of his clients.

"After nearly six years of massively costly investigations during which our clients have been routinely branded in the local and international press as 'tax cheats' and 'tax criminals', the news that the ACC has acknowledged that it does not have the basis to continue with a criminal investigation is of immense relief to them," Mr Robinson said today. "It vindicates the position they have taken since the start of this investigation."

"Unfortunately, we have not been able to contact Paul Hogan to give him the news but John Cornell's reaction was: 'that speck in the sky is my hat and I look forward to sampling some of Strop's patented hangover cure tomorrow morning'."

Source http://www.theaustralian.com.au/news/acc-drops-paul-hogan-tax-investigation/story-e6frg6n6-1225959464455

New South Wales Receives Bids for Electricity Assets

The government of New South Wales, Australia’s most-populous state, has started evaluating bids for the electricity assets it put up for sale and plans to complete the review by the end of the year.

Submissions closed at 3 p.m. Sydney time, the state government said in an e-mailed statement, declining to identify any potential buyers. AGL Energy Ltd. said today it had made an offer, while Origin Energy Ltd. has previously said it planned to bid.

The sale, which includes the retail businesses of EnergyAustralia, Country Energy and Integral Energy, is the “last available opportunity to obtain a significant retail and generation presence in Australia’s largest electricity market,” state Treasurer Eric Roozendaal said in the statement.

New South Wales may raise A$3.5 billion ($3.4 billion) selling the retail assets, David Leitch, an analyst at UBS AG in Sydney, has estimated. The state is also offering development sites for new power plants and contracting the right to sell electricity produced by state-owned generators.

Australian regulators are scheduled to announce Nov. 25 whether purchases of New South Wales power assets by AGL and Origin would raise competition concerns. The Australian Competition and Consumer Commission had previously expected to report its findings on Oct. 28.

Origin spokesman Tim Scott, TRUenergy Holdings Pty spokesman Carl Kitchen and International Power Plc spokesman Trevor Rowe declined to comment on whether the companies had bid.

Competition, Funds

New South Wales Premier Kristina Keneally said Nov. 3 that the plan to sell the assets by the end of the year remains on schedule. The government has said it wants to spur competition in the electricity market, reduce the need for state investment in power generation and strengthen its finances.

Completion of the sale is expected by early 2011, state Auditor-General Peter Achterstraat said in a report earlier this month. He cited “significant uncertainty” surrounding the value of the assets because of the unknown impact of a potential carbon pollution reduction plan in Australia.

The effort to sell the government assets began about 12 years ago, the auditor-general’s report said.

AGL and Origin may spend more than A$5 billion combined, Leitch of UBS said this month. Origin may buy EnergyAustralia and AGL may get Country Energy, Leitch said. TRUenergy, CLP Holdings Ltd.’s Australian unit, was evaluating a bid, CLP Chief Executive Officer Andrew Brandler said Sept. 28.

The government of New South Wales said last month that it intends to keep ownership of the Cobbora coal mine to supply state-owned power stations with fuel.

Source http://www.businessweek.com/news/2010-11-15/new-south-wales-receives-bids-for-electricity-assets.html

Deaths in Australia at record low

Australia's death rate has hit a record low, as the nation older citizens are growing in number and living longer.

There were 140,800 deaths officially recorded Australia-wide during 2009, according to figures released by the Australian Bureau of Statistics (ABS).

It was a real decline of about 3,200 deaths from 2008, when 143,900 Australians died.

The figure also marked a new low in deaths measured against the population, continuing a declining trend which has unfolded over the past few decades.

In 1989, there were 9.1 deaths per thousand Australians, and in 2009 this figure hit a record low of 5.7.

"It's not just more younger Australians who are surviving through to older ages, those people who get through to age 50 are increasingly likely to live longer," demographer and Professor of Geography Graeme Hugo said in response to the figures released on Wednesday.

"Since 1970 we've added nearly eight years of extra life to an Australian aged 50 ... that's an incredible increase in life expectancy, a remarkable change in a generation when you think about it."

Prof Hugo, from the University of Adelaide, attributes the change to medical breakthroughs that now keep stroke, heart attack and cancer patients alive, along with improving treatments across the board.

Smoking rates were in decline while Australians now enjoyed safer workplaces and roads, and a blurring of once traditional male and female roles was allowing men to catch up to usually longer-lived women.

The ABS figures show over the past two decades, life expectancy increased six years for men (to just over 79 years) and more than four years for women (to almost 84 years).

Prof Hugo said there was room for more improvement as other countries had lower rates of cancer, heart attack and road crash deaths, but there were also emerging challenges.

"Obesity is much higher than it was in previous generations and it could compromise the continued year-by-year improvement in life expectancy," Prof Hugo said.

The ABS figures also show more men than women died in 2009, with 72,300 male deaths compared to 68,400 females.

The nation's infant mortality rate increased slightly, from 4.1 deaths per thousand births in 2008 to 4.3 last year.

Prof Hugo also said "closing the gap" between indigenous and non-indigenous health was also a must, and it would further boost the nation's average life span.

There were 2,400 indigenous deaths recorded last year, accounting for 1.7 per cent of all deaths.

The NT had the nation's highest death rate, at 7.9 deaths per thousand people, while the ACT came in with the lowest at 5.4 deaths.

While total deaths were down last year, the change appears to occur on a scale not immediately felt by the funeral industry.

"I've been around every state in the last few months and none of the funeral directors I've spoken to say `gee, we're down`," Australian Funeral Directors Association president John Scott said.

"(But) there is no doubt people are certainly living longer ... I know in our area (Kyneton, Victoria) we've got some very old people who are well into their hundreds."

Source http://news.smh.com.au/breaking-news-national/deaths-in-australia-at-record-low-20101110-17nhj.html

Australian Services Sector Improved In October

The Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (Australian PSI) rose in October by 5.1 points to a reading of 50.7. This marks only the second monthly expansion in activity for the Australian services sector so far this year.

A reading above 50 indicates an expansion in activity levels, the index last breaching this level back in April. Driving the rise in the index in October were increases in sales and new orders, which reflects improving activity levels in both the retail and wholesale sub-sectors in recent months.

Australian Industry Group chief executive Heather Ridout notes the sales component of the Australian PSI increased by 9.0 points in October to a reading of 55.3. Ridout suggests the improvement in activity levels in the retail and wholesale sub-sectors is a positive sign for consumer spending leading into the December quarter.

The Commonwealth Bank notes most sub-sectors improved in October, the strongest being health and community services, accommodation, cafes and restaurants. Three sub-sectors delivered patchy results, these being the communication, finance and insurance and property and business sub-sectors. The transport and storage sector was the only sub-sector to record weaker conditions in October.

New orders have also returned to a reading above 50, rising 4.6 points in October to a reading of 52.1. Employment continues to contract as evidenced by a reading of 49.4, though Ridout notes the pace of contraction slowed significantly in the month.

Firms in the services sector continue to run down inventories, as the stocks component of the Australian PSI registered a reading of 46.9 in October. This is the fifth successive month of a below 50 reading for this measure.

Supplier deliveries also continue to contract and the below 50 reading in October was the ninth such reading in the past 10 months. Input price growth remains modest when compared to levels prior to the Global Financial Crisis, this measure falling 4.8 points for the month to a 60.1 reading.

On the plus side average selling prices are picking up, Ridout noting this measure registered a reading of 50.6 for October. This compares to a reading of 47.5 in September. Capacity utilisation also improved and came in at 76.1% for October, up from 74.1% in the previous month.

According to Commonwealth Bank the lift in the Australian PSI is encouraging as it implies Australian consumers may be starting to turn more positive. This should see less emphasis on household balance sheet repair going forward.

The bank also suggests the strong Australian jobs market, solid wages and salaries growth and general improvement in household wealth levels from rising share and housing prices are likely to contribute to an improvement in Australian consumer spending in the months ahead.

Source http://money.ninemsn.com.au/article.aspx?id=8117810

Westfield Group eyes $3.5bn raising, asset split

WESTFIELD will tomorrow unveil a split of its Australian retail assets into a separate company to be called Westfield Retail.

The spin-off will raise up to $3.5 billion through the issue of new shares and is expected to have $9 billion of assets.

The deal is aimed at unleashing value for the company to give more flexibility for further expansion.

The equity raising will be led by Morgan Stanley, Citigroup and Credit Suisse.

The company rang other brokers this morning to offer a role in the deal, which explains why word leaked out into the market.

Morgan Stanley is advising the company on the deal, which will be by way of distribution to shareholders of 50 per cent of the Australian assets with the parent company to own the other 50 per cent.

The market had been abuzz with speculation that Westfield was about to make a “major” announcement tomorrow.

This afternoon, Westfield responded to "media speculations" and requested a trading halt, until the market opened tomorrow.

In its ASX statement, Westfield said it requested a trading halt in respect of its shares pursuant to Listing Rule 17.1, pending a further announcement about a possible transaction.

Sources said that Westfield would be doing the raising for acquisitions and to fund its development program.

They suggested that Westfield was considering buying some of the assets expected to come to the market from the $4.5bn Centro portfolio, as it ramps up its Australian operation.

Throughout the global financial crisis, Westfield’s Australian operation held up and helped offset the sluggishness of US retail sales.

Westfield, the world's largest shopping centre owner, has 119 centres, of which 44 centres are located in Australia, valued at $22bn. The rest is located mostly in the US, Britain and New Zealand.

Last week, Westfield opened the first stage of its $1.2bn Sydney Westfield project.

Speculation continues in the market that half of the centre could be for sale.

These sources said that part of the raising could be to fund its huge pipeline of development.

The group currently has projects underway, costing $4.4bn.

Westfield has a deep development pipeline, particularly in Australia, where it is currently developing two projects.

The group last came to the market in February last year when it raised $2.9bn at $10.50 per unit. In that offer, the units were offered at a 13 per cent discount.

At June 30, the group had assets under management of $61.7bn, and gearing ratio of 37.4 per cent. It had available liquidity of $7.3bn.

Source http://www.theaustralian.com.au/business/property/westfield-group-eyes-35bn-raising-split-of-australian-assets/story-e6frg9gx-1225946809564

Sydney's CBD puts on the glitz

It cost $1.2 billion to build, caused traffic chaos and only half of the shops are trading, but Westfield opened its glitzy new superstore in Sydney's CBD today.

The Pitt Street complex is still being finished, but more than 100 shoppers were lining up this morning to get a first look.

Before long, thousands more walked through the doors.

The seven-storey complex includes a number of high-end fashion and dining options.

Most businesses this morning were putting the final touches to their stores.

But the European fashion shop that appeared to be causing the most shopper interest, Zara, remained closed.

Westfield chief executive Steven Lowy said the complex was opening six months ahead of schedule, with the company keen to catch the Christmas market.

He believed Westfield would complement rival stores David Jones and Myer.

Shopper reaction was mostly positive following the opening.

Jane, from Newcastle, said the layout and design were impressive.

"I like it, it looks very beautiful and has lots of new [shop] ideas," she said.

"I like the number of different shops too, and [swimwear shop] Tigerlily was great."

Waterloo resident Helen agreed the centre was exciting, but was eagerly awaiting the opening of Zara.

"I like the lounge area, and I'm really looking forward to Zara too," she said.

Nick, a Surry Hills resident and city worker, said the new complex "was almost too glitzy".

"We were just saying it appeared to be a bit bright, a bit too glitzy, but there is an impressive range of shops of good calibre," he said.

"But, yeah, it was probably needed, everything was looking a bit tired."

Sydney lord mayor Clover Moore welcomed the investment in the city, calling the complex "beautiful".

Source http://www.smh.com.au/lifestyle/shopping/sydneys-cbd-puts-on-the-glitz-20101028-174ig.html?autostart=1

Doubts cast over ASX merger approval

Foreign investment specialists doubt the $8.4 billion merger of the Australian and Singapore stock exchanges will receive regulatory approval in its current form.

The 23 per cent stake the Singapore government owns in the exchange means the Australian Foreign Investment Review Board (FIRB) will apply more stringent tests to the proposal.

The 15 per cent cap on foreign investment needs to be waived by Treasurer Wayne Swan, while the deal also needs approval from the corporate regulator, the Australian Securities Investments Commission.

ASX shareholders have benefited so far, with ASX shares jumping as much as 25 per cent today to reach a high of $43.89. They are being offered $48 a share.

The combined group will be worth more than $12 billion, making it the second biggest stock exchange in the region.

But Emin Altiparmak, a senior associate in mergers at Allens Arthur Robinson, says the FIRB is likely to closely examine whether the merger could lead to resources and jobs moving offshore.

"I think it is fair to say they will take a much closer look at the transaction," he said.

"And given the nature of FIRB being a political process and the fact that there is another government involved, I think they will take a much closer interest."

The Australian Shareholders Association (ASA) believes the proposed merger will present significant concerns.

The ASA says while there are many potential advantages for investors like greater access to international markets, there are also many grey areas in the deal.

ASA chair Helen Dent says the issue of independence on the board of the Singapore Exchange is of particular concern.

"It would appear the independent directors, or many of them, have had close relations with the Singapore government or Singapore government-owned enterprises, so the issue of independence is one that could well be of concern," she said.

However, outgoing ASX chairman Robert Elstone remains optimistic.

The man who engineered the $8.4 billion deal with Singapore Exchange chief executive Magnus Bocker says the new company will be a force in the Asia-Pacific region.

"Together we think ASX and SGX will create interesting opportunities for our various stakeholders and we believe the new group we endeavour to create will be a very competitive global exchange force to be reckoned with," Mr Elstone said.

"I think the choice for the Government will be a stark one: is the national interest best served by boxing the domestic exchange into its existing strong but confined-to-Australian franchise, or should it allow its domestic exchange to truly internationalise?

"Have we chosen the right partner? Is this the end-game? All of those issues will get aired over coming weeks and months with the Government.

"Clearly we wouldn't have announced the transaction this morning if the board of both exchanges didn't believe it was in the national interest of both countries to form this combination."

Influence

The Singapore Exchange and the ASX will continue to operate as separate entities, while there will be a merged company that sits above them.

The merged company will be listed on both the Singapore Exchange and the ASX.

Mr Bocker, who will become the chief executive of the merged company, denies Singapore will have more influence in a combined group.

"There's a lot of accident knowledge in each country that we could combine, so I don't see it as a game between two countries," he said.

"It's a question of... how could we create more liquidity into our stocks, how could we get more products?"

Mr Bocker says the timing of the merger is right.

"We aim to create a new company that will play a significant role in the Asia-Pacific capital markets in the years to come, and this is an opportunity that we think is great in timing of all the things that's going on right now," he said.

Source http://www.abc.net.au/news/stories/2010/10/25/3047844.htm

Australian Dollar Up Late, Awaiting G-20 Outcome

                          Rates At 0517 GMT
                          Latest       Change
AUD/USD                   0.9833        +0.2%
AUD/JPY                   79.79         +0.2%
6.5% May, 2013            4.8975%       +0.03
4.5% Apr, 2020            5.1534%       +0.03
10-Yr Spread To U.S.      +262 bps      -2 bps
SFE Dec 3-Year Futures    95.04         -0.04
SFE Dec 10-Year Futures   94.82         -0.035  

Thin trade ahead of this weekend's meeting of finance ministers and central bankers from the Group of 20 industrial and developing nations in Korea capped gains in the Australian dollar in Asia on Friday as dealers wait for detail on the G-20's discussion on exchange rate valuations.

What resolution, if any, is reached at the meeting on a framework for currencies to deal with global imbalances will be of most interest to dealers, RBC Senior Strategist Sue Trinh said.

"Absent an enforcement mechanism or deadline on the process, however, credibility is somewhat limited," Trinh said.

A letter by U.S. Treasury Secretary Timothy Geithner--cited by Reuters--in which he made a renewed call for greater exchange rate flexibility hurt the U.S. dollar late in the session, boosting the Australian unit.

Outside of the G-20, the local currency is also waiting next week's crucial third quarter inflation numbers, which some analysts think could prompt renewed tightening by the Reserve Bank of Australia if core inflation breaches the central bank's 2%-3% target band on an annual basis, or a reading of 0.8% on quarter.

Economists peg a tipping point for the RBA at 0.7%.

"The (RBA) Board is clearly anxious to hike again, so if the 'tone' of global data is better through the next couple of weeks, this will be enough in itself to trigger a hike in November," TD Securities Strategist Roland Randall said.

"The Australian dollar is likely to remain north of US$0.9800 for the foreseeable future. Prospects for higher yields are but one tailwind pushing the Australian dollar stronger," he said.

At 0517 GMT, the Australian dollar traded at US$0.9833, up from US$0.9817 late Thursday, and traded at Y79.79 up from Y79.67.

For interest rate futures, the December three-year spot contract dipped four ticks while 10-years fell three and a half ticks in quite subdued trade. The inflation outlook will be key for bond price action, although dealers broadly expect prices to absorb a strong reading and subsequent build up in rate hike bets.

"A November tightening is a 50-50 call and we will assess the tone of global news flow and domestic data over the next two weeks, which is likely to determine whether the RBA moves or not," TD Securities said.

Still, the risk is a for big sell-off in bonds, a Sydney-based interest rates strategist said.

"(The) market is pricing a 40% chance (the RBA hikes rates at November meeting) but I'm suggesting it should be 70%-30% or even 80%-20% they hike. So, even if CPI matches expectations, there could be a decent sell off," the strategist said.

Source http://online.wsj.com/article/BT-CO-20101022-701245.html

Australia lagging on carbon pricing says new report

TONY EASTLEY: As political and business leaders confront the obstacles to putting a price on carbon, an independent report says Australia is already lagging behind its trading partners.

The report, to be released today, says there's no risk of Australia actually being left isolated if it so chooses to put a price on carbon.

Research commissioned by the Climate Institute says countries including Britain, China and the United States already have higher direct, and indirect, carbon pricing.

Dr Cameron Hepburn from Vivid Economics conducted the research for the Climate Institute. He spoke from London to our business editor, Peter Ryan.

CAMERON HEPBURN: Well I don't think there's any great danger, here. There's certainly no risk that Australia will be leading the world on climate change policy or on setting a carbon price, and what our report does is look at the implicit prices across six economies, and we find that Australia is a long way behind almost all the other economies there - including China - in the prices in its power generation sector.

PETER RYAN: So, to put it bluntly, does this report conclude that the fear about Australia being left alone in setting a carbon price is based on a myth?

CAMERON HEPBURN: Yep, that's pretty much right. The European Union has had carbon prices for at least five years in many of the nations in Europe.

In the US, there's implicit carbon prices of over $US5 and up to 10, $9 or $10 in the north-east US states, and even in China, now, there's a range of policies already in place that we looked at in the report that ends up with an implicit carbon price of over $US10 a tonne of CO2 in China.

PETER RYAN: So, according to this research, there is no risk that Australia could lead the world by setting a carbon price, even if it wanted to?

CAMERON HEPBURN: No, that's right. I mean, that's not to suggest that, because we're not going to lead that we shouldn't do it. We are the dirtiest economy per capita amongst major countries in the world, and so it's an issue we can't really afford to ignore.

PETER RYAN: So, the question appears to be changing, from whether there needs to be a price on carbon, to how extensive that carbon price should be?

CAMERON HEPBURN: Yeah, that's right. And one of the things that we also found in the report is that there are more expensive, and cheaper, ways of doing this.

And it's a very strong conclusion that the cheapest way, and the most efficient and competitive way of making this transition, is to go about it with a very broad carbon price - whether it's through trading or taxation - doesn't really matter from the transition's point of view.

You need a broad price across as much of the economy as possible and that makes it a cheaper transition.

Where things end up being more expensive is if government picks specific narrow sectors, or winners, and starts to throw taxpayers' money at those particular sectors.

TONY EASTLEY: Dr Cameron Hepburn from Vivid Economics speaking from London to our business editor, Peter Ryan.

And there'll be an extended version of that interview on the AM website later this morning.

Source http://www.abc.net.au/am/content/2010/s3041910.htm

Dollar edges closer to parity

As international markets began trading the Australian dollar reached a 28-year high of 99.93 US cents, but has since slipped back to 99.64 cents.

Traders are buying into the dollar because Australian interest rates are relatively higher than those in other advanced economies.

The latest rise in the local dollar has been a result of growing expectations the Federal Reserve will flood the economy with US dollars, which will weaken that currency.

The dollar is at the highest level against the US currency since 1983, when the Australian dollar floated.

Senior Westpac economist Huw McKay says when the dollar does hit parity, it will last for a while.

"Now, my personal opinion is that the next decade will see a structurally stronger Australian dollar than in the decades just past. So this is a sign of things to come," he said.

Mr McKay says the weak greenback and higher interest rates here are the key drivers.

"That has been the dominant force in recent weeks, the fact that the US has been pursuing an implicitly weak US dollar policy via dramatic monetary expansion," he said.

"They haven't actually delivered this yet but they're talking very openly about it and that is pushing other currencies higher.

"The Aussie dollar is doing better than most though, because our relative fundamentals are still strikingly attractive.

"Our interest rate setting is significantly higher than in other advanced markets and we are linked into the emerging growth story in Asia.

"Our terms of trade is high so there are good reasons to be buying the Aussie dollar, but I would emphasise the last week or so has been very much about the US."

Downside

But Chris Cronin is feeling the pain - he has been forced to close his tourism business in Perth

"With the Australian dollar being as strong as it is, it's very difficult for any traveller to afford the sort of lengths that they have to travel up and down Western Australia," Mr Cronin said.

"Easyrider have been a West Australian icon for such a long time now - 15 years - so for us to have to close the door, it's very sad.

"We've just [shut] down our last tour; it's very significant especially when it comes to the English and Irish; when they used to be in the bars every night, they're just not here at the moment."

Aside from the tourism industry, farmers say their earnings will be affected by the higher dollar as do companies which make money overseas, such as blood products maker CSL.

Last week Ric Battellino, the deputy governor of the Reserve Bank, ruled out intervening to weaken the currency even though some industries are being hurt.

"It would be a big mistake for Australia to try and get involved in that process as well; I think we'd get ourself into trouble very quickly," he said.

Mr McKay says while some industries will face challenges, there is no case for intervention because overall export income will rise.

"The strong Australian dollar doesn't affect the demand for those goods, what it does affect is the amount of profit which is repatriated to Australia once you come back to the Australian dollar," he said.

"And that goes for the farm sector, as well as the mining sector.

"I think it [intervention] would be inconsistent with the Reserve Bank's view of the world. Intervention in the currency directly has been shown over many, many years to be very ineffective for a floating exchange rate."

Source http://www.abc.net.au/news/stories/2010/10/14/3038730.htm?section=justin

Mortgage stress worst in south-west Sydney

A new report has found that the residents of south-west Sydney suffer the worst mortgage stress in the nation.

The report by the global ratings agency Moody's says the further borrowers live from city centres the more like they are to have mortgage stress.

It found the worst performing areas included Campbelltown, Minto, Liverpool and Fairfield which are all in Sydney's south-west.

In these places nearly 3 per cent of mortgage holders have failed to make at least one repayment.

Michael Edwards has this report.

MICHAEL EDWARDS: As a financial counsellor for Mission Australia based in Campbelltown in south-west Sydney John Sexton says it's not a good sign for the rest of the community if his business is booming.

JOHN SEXTON: I'm seeing personally probably 10 to 12 clients a week at the Campbelltown office. With that we've probably seen an increase from one in eight of our clients having mortgages to probably one in three having mortgages now and being under mortgage stress.

MICHAEL EDWARDS: That sounds like a fairly alarming rise.

JOHN SEXTON: It is. And it relates to a big part of it is the financial literacy problem within the south-west of Sydney.

MICHAEL EDWARDS: When you talk about financial literacy what do you exactly mean?

JOHN SEXTON: A lot of people don't understand when they get, particularly when they get a home loan that most financial institutions will automatically give them credit cards or will give them interest free loan deals to get furniture or things like that.

And so they go out and get those credit cards or the interest free deals. But they haven't actually sat down and done a budget or a personal money plan to see that they can afford to make the repayments of everything.

MICHAEL EDWARDS: John Sexton's observations of mortgage stress in south-west Sydney come straight from the coalface of the problem. And they're also backed up by economic research.

The ratings agency Moody's has just released a report indicating south-west Sydney has the worst rate of mortgage stress in the country.

Here between 2.5 to almost 3 per cent of borrowers have defaulted on at least one repayment.

In the Fairfield-Liverpool district mortgage delinquency numbers are double the national average.

John Sexton says more effort should be put in to better educating people about what they're getting into when they take out mortgage products.

JOHN SEXTON: That is a big part of the problem. But also part of the problem for south-west Sydney is that most of our mortgages are set up on a couple, two people's incomes where when one of those, either through having children or they lose their job, they're down to one or one and a half incomes.

So therefore they can't afford the original mortgage, let alone the credit card debts or the interest free loans.

MICHAEL EDWARDS: Do you think that financial institutions are giving too many loans on this basis?

JOHN SEXTON: I think personally before the new credit code came in in July that it was that they were giving too many of those loans without checking whether the people could properly finance it.

MICHAEL EDWARDS: Economist Saul Eslake from the Grattan Institute says south-west Sydney has always been a region susceptible to mortgage stress.

SAUL ESLAKE: Well I think this was a phenomenon that was observed in the years leading up to the financial crisis. Western Sydney was one of the regions experiencing the greatest degree of mortgage stress as interest rates on mortgages rose to over 9.5 per cent back then.

And among the reasons for that were the stagnation of incomes in Western Sydney where unemployment was relatively high as that region didn't benefit greatly from some of the employment growth that was happening at the time.

MICHAEL EDWARDS: Saul Eslake says the results also reflect the fact that many people in south-western Sydney take out mortgages with higher interest rates.

SAUL ESKALE: That meant in turn that people in this situation were especially vulnerable to any increase in interest rates, to any reductions in their income, perhaps for example as a result of having their working hours reduced during the financial crisis, and to any decline in property prices.

And of course Western Sydney was one of those areas where property prices did fall during the middle years of the past decade.

MARK COLVIN: Economist Saul Eslake ending Michael Edwards' report.

Source http://www.abc.net.au/pm/content/2010/s3036543.htm

Tasered man apologised for behaviour

An Aboriginal man who was tasered 13 times by police officers at East Perth Watch House forwarded a written apology nearly a month later to the West Australian police commissioner.

WA Police Union boss Russell Armstrong said 41-year-old Kevin Spratt wrote to the police commissioner a month after he was brought into the East Perth Watch House just after 11 (WST) one August night in 2008.

The WA corruption watchdog on Monday revealed Mr Spratt was first tasered 11 times after refusing to comply to a strip search.

An officer then yelled "do you want to go again" and Mr Spratt was tasered another two times.

Mr Armstrong said Mr Spratt wrote a letter to the police commissioner on September 26 stating he didn't want the officers disciplined and he apologised for his actions.

A spokesman for the WA police commissioner confirmed a letter had been received.

"Mr Spratt is now coming out saying he had memory loss and back pain and he's suffered for two years," Mr Armstrong told Fairfax Radio.

"I can tell you, a month later he certainly apologised to the commissioner and the officers for his behaviour and his behaviour is normal for a person who has a violent history."

But, on Wednesday, Mr Spratt said he was disgusted by the WA officers' actions during the August 2008 incident.

The two officers responsible have so far escaped criminal prosecution but have been fined a combined total of $1950 following a police disciplinary hearing into the incident.

Mr Spratt said he was disgusted the two officers had not been stood down.

"They don't deserve to hold a weapon like that if they're just going to use it like it's a water pistol," he told the West Australian.

"It's humiliating for me and disgusting."

In its report, the WA Corruption and Crime Commission found the father of seven did not remember the incident and, therefore, would not be able to give evidence in court.

It has also been revealed that a week after Mr Spratt was tasered by police officers, he was subjected to similar treatment by corrective service officers.

Department of Corrective Services have confirmed Mr Spratt was tasered 11 times on September 6 when they tried to "extract" him from his cell at the East Perth Lockup.

"The prisoner was said to be acting in an irrational and violent way. He was in an observation cell and unrestrained," a spokesman said.

According to the department, Mr Spratt refused to co-operate with the officer despite "verbal negotiations and clear instructions to allow officers to restrain him".

"He did not obey these instructions and continued trying to bite and otherwise injure the officers and resisted all attempts to restrain him even when the team entered the cell."

The department reviewed the incident and deemed the actions taken by the staff were "appropriate and in accordance with current policies and procedures in regards to this incident," the spokesman said.

Source http://news.smh.com.au/breaking-news-national/tasered-man-apologised-for-behaviour-20101006-167oa.html

Australian sharemarket rises, dollar strengthens against greenback

STOCKS closed about 1 per cent higher today and the dollar firmed against the greenback ahead of the RBA's rates decision tomorrow.

High commodity prices and positive economic reports for the US and China propelled the bourse from the start of trade today.

The benchmark S&P/ASX 200 index climbed 46.1 points, or 1.01 per cent, to 4625.3, while the broader All Ordinaries index rose 43.7 points, or 0.94 per cent, to 4678.4.

At 0500 GMT, the Australian dollar was at US96.96 cents, from US96.60c on Friday. It traded at a fresh 26-month high of US97.70c in New York. Against the Japanese yen, the Australian dollar was at Y81.08, from Y80.59.

In equities, many NSW investors took advantage of a long weekend, but the market made the most of thin trading volumes.

Gains were broad-based, with all sectors pushing higher day and 69 per cent of companies finishing in positive territory.

“The local market posted solid gains today, helped by positive leads from the US over the weekend,” Australian Stock Report head of research Geoff Saffer said.

“Banking was the strongest sector, while miners were also strong, with base metal prices closing strongly on Friday.

“The rest of the market saw a general bullish mood following positive US consumer data on Friday.”

Of the major miners, BHP Billiton gained 54c (1.37 per cent) to $40 and Rio Tinto added 78c to $78.08.

All four major banks closed higher, led by Commonwealth Bank, which added 64c to $51.54. National Australia Bank gained 45c to $25.45, Westpac rose 39c to $23.32 and ANZ added 17c at $23.68.

The Australian dollar strengthened in thin Asia trade as traders awaited tomorrow’s central bank meeting, when the Reserve Bank of Australia is expected to tighten policy for the first time since May.

Economists have overwhelmingly forecast the RBA will hike its overnight target by 25 basis points to 4.75 per cent, citing a desire to keep a lid on inflation and strike first before a mining boom-driven economy beings to overheat.

If the RBA does lift its rates, the move is expected to be positive for the Australian dollar and possibly push the unit through the all important resistance level of US98.50c, the post-float high traded in July 2008.

“Barring a scenario in which the RBA does not raise the rate and sounds dovish, a combination we do not expect, a rate hike would be a substantial boost for the Australian dollar,” Barclays Capital strategists said.

“The RBA would not begin raising rates again after being on hold for four months to fine-tune policy. So, the bills market would likely quickly move to price in a second rate hike this year, which is currently priced at only about a 20 per cent chance,” they wrote.

If the RBA doesn't tighten, the local unit could suffer, RBC senior strategist Sue Trinh said.

“With around 35 basis points of hikes priced by year end, the risk is for a steady rate decision and/or a balanced statement accompanying a hike, which may serve to cool the Australian dollar's heel ahead of the post-float highs of US98.50c,” she said.

In a Dow Jones Newswires poll of 25 economists, 19 expect a rate hike while interbank futures are 60 per cent priced for a lift to the interest rate tomorrow.

Source http://www.theaustralian.com.au/business/markets/australian-sharemarket-rises-dollar-strengthens-against-greenback/story-e6frg916-1225933955760

World's richest man Carlos Slim slams broadband plan

Mexican telco tycoon Carlos Slim has hit out at the National Broadband Network during a press conference in Sydney

THE world's richest man Carlos Slim has slammed the Government's national broadband network, branding it "too expensive".

Mr Slim, speaking at the Forbes conference in Sydney, told a press conference that the $42 billion plan to install the NBN is simply going to cost too much.

"It's too much money," he said.

"It is not necessary to invest so much money, because technology is changing all the time."

Mr Slim said that $7000 a home to connect around six million homes was too high a cost.

He also criticised the reliance of the project on fibre.

"You need to have a multi platform of everything; mobile, landline, fibre, cable and copper," he said.

"You need to have all these. You need to have a very good fibre network and rings and you need to have a loop of fibre to sustain when you have a problem in one place that the communications don’t get interrupted.

"But with copper and cable you can give 20 or 30 MhZ. I think fibre is not enough. You need to have a good network of wireless. "

But Mr Slim, who made much of his $US60 billion fortune from telecommunications in is native Mexico, came to the defence of beleagured telco Telstra, describing it as a "good company'.

Source http://www.heraldsun.com.au/news/worlds-richest-man-carlos-slim-slams-broadband-plan/story-e6frf7jo-1225931844361

Australian Wheat Forecast Increased on Rain, CBA Says

Sept. 24 (Bloomberg) -- Commonwealth Bank of Australia increased its wheat output forecast for the country by 4 percent as a record harvest in eastern areas may make up for crop losses in the west because of dry weather.

Production may gain to 23.1 million metric tons from 21.4 million tons last year and up from a July estimate of 22.2 million tons, the bank said in an e-mailed report. Exports in 2010-2011 may rise to 17 million tons from at least 15 million tons this season, it estimated.

La Nina weather conditions have brought increased rain to Australia’s eastern states, raising crop production forecasts and driving cattle prices to the highest level in four years. The wheat crop may be the third-largest on record, according to the federal government’s commodities forecaster.

“Our improved production numbers reflect record-breaking yield prospects across most regions in eastern Australia,” Luke Mathews, commodities strategist at Commonwealth Bank, wrote in the report. Key risks to the eastern harvest included locusts, crop-disease damage, frosts or a heat wave, he said.

December-delivery wheat advanced 1.3 percent to $7.0525 a bushel on the Chicago Board of Trade at 6:47 p.m. Melbourne time, taking the weekly loss to 4.7 percent, the most for the most- active contract since the week ended June 4.

Australian wheat production may increase to 25.1 million tons this harvest and exports may rise to 18.4 million tons, the Australian Bureau of Agricultural & Resource Economics-Bureau of Rural Sciences forecast Sept. 14.

Export Outlook

Exports could be curbed if there were any significant logistics problems in the east or if the Western Australia crop continued to deteriorate, potentially challenging the state’s record low of 4 million tons, the bank said.

Damage from past locust plagues was generally less than 1 percent of the total output and the worst damage was in 1934-35 when losses were forecast at 2 percent to percent, the bank said.

“This would hardly put a dent in our record crop forecast, and technology to control locusts in the 1930s is hardly comparable to what is available today,” Mathews said.

“Although we do expect reports of damage due to locusts over the next month, which may include the complete wipe-out of some individual paddocks, we don’t expect an Armageddon-like impact on the entire east coast crop.”

Wet weather in Australia’s east this year reflects warm conditions in the Indian Ocean and cool temperatures in the equatorial Pacific Ocean, both associated with a La Nina event, the Bureau of Meteorology said yesterday.

--Editors: Ravil Shirodkar, Matthew Oakley

To contact the reporter on this story: Wendy Pugh in Melbourne at wpugh@bloomberg.net

To contact the editor responsible for this story: Wendy Pugh at wpugh@bloomberg.net

Source http://www.businessweek.com/news/2010-09-24/australian-wheat-forecast-increased-on-rain-cba-says.html

Cairn India head says hopes to close Vedanta deal by end 2010

The chairman of Cairn India, a unit of the UK's Cairn Energy, said on Thursday he hopes the deal for London-based Vedanta Resources to buy a controlling stake in the Indian firm would close by end-2010.

Vedanta, in its first move into the energy sector, is buying a controlling stake in India's No. 4 oil and gas company from Cairn Energy to capitalise on rising energy demand, economic growth and an expanding population.

Vedanta Resources has offered Rs 405 rupees a share for between 40 and 51 per cent of Cairn India. The final stake bought would depend on the response to an open offer for a 20 per cent stake made to minority shareholders at 355 rupees a share. That offer opens on October 11.

Source http://economictimes.indiatimes.com/news/news-by-industry/energy/oil--gas/Cairn-India-head-says-hopes-to-close-Vedanta-deal-by-end-2010/articleshow/6565683.cms

Gold futures firm, physical demand wanes

Gold futures traded firm on Tuesday as the U.S dollar slipped against other currencies, denting demand from physical buyers. "Demand is slightly on the lower side because although the dollar-rupee is favourable rate for gold buyers, the gold-dollar rate has moved up to $1,255," said a dealer with a foreign bank.

"At these levels the kind of demand we have seen for the past 5-7 days is difficult to come by," he added. Gold and dollar move in opposite directions as a weak dollar enhances the yellow metal's appeal as an alternative investment. Gold on Multi Commodity Exchange of India (MCX) was trading at 18,966 rupees, up 0.57 percent.

"We have done deals of around 100 kgs, but in this sort of a market where demand started coming up, these deals are not much," said another bank dealer. Traditionally, demand for gold in India, the world's largest consumer of bullion, is high during the Sept-November festival season. Dhanteras, considered auspicious day for buying gold, is in November.

The Indian rupee strengthened on Tuesday as shares rallied more than 1 percent, boosting hopes for more portfolio inflows.

A strong rupee makes the dollar-denominated commodity cheaper as it plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars. A Reuters poll has estimated India's gold imports in 2010 at 504.5 tonnes, up by 24.5 tonnes from last year.

Source http://economictimes.indiatimes.com/markets/commodities/Gold-futures-firm-physical-demand-wanes/articleshow/6552745.cms