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