28 Mar 2013
• Markets remained volatile this week as agreement was finally reached on the Cyprian bail-out, which was received positively but with plenty of caution.
• Some brief details of the bail-out include: limits on withdrawals and transfers, deposits below 100,000 to be protected, the nation’s 2nd largest bank to close with 4.2bn in deposits of more than 100,000 to be wiped out (along with bond holders), deposits of more than 100,000 in Bank of Cyprus to be frozen and partially used to recapitalise the bank.
• The key positive news was that small depositors (less than 100,000) will be protected, as they should’ve been. The key negative news was the contagion and precedent this has set for future bank bail-outs.
• In stock news, we were surprised by the shock resignation of Leighton chairman and 2 directors following a breakdown in relations with major shareholder Hochtief. The stock was subsequently punished by the market down nearly 7% for the day.
• Westfield Group has sold its half stake in 6 malls in Florida for US$700m (at book value), but will continue to manage, develop and lease the properties. This is in line with their strategy of freeing up capital on the balance sheet.
• The ACCC has granted authorisation to Qantas to integrate their operations with four Asia-based joint venture partners. Qantas was also granted conditional authorisation on their alliance with Emirates.
• It was a fairly light week for economic news and any news played second fiddle to the developments in Cyprus.
• One of the well-known US housing price indices increased by the most since 2006 continuing the impressive US housing recovery.
• Though the data was overshadowed by a worse than forecast decline in the US consumer confidence.
• Locally, the Reserve Bank of Australia released one of its key reviews – in it, they highlighted the significant improvements in global financial conditions over the last 6 months, but importantly, that it was too early to determine whether this marked the beginning of a sustained recovery.
• The Italian President has given Mr Bersani (who won the most votes in the lower house) a mandate to try form a government….reports just out that his attempts have been unsurprisingly futile.
• Further on the Cyprus – the Eurozone smartened up and decided that the Cyprian bail-out would be a “bank restructuring” not a levy on deposits, thus circumventing the need for Cyprian parliament approval.
• The Chairman of the Euro-group then faltered by suggesting somewhat comically that the Cypriot deal (ie. debacle) should be used as a template for future Eurozone bank bail-outs….markets plummeted…he subsequently withdraw his comments and has been unheard of since.
• The Gillard government’s plan to raid superannuation at the May budget has reared its ugly head again after recent moves to convince us otherwise…..it will now conveniently be the Treasury’s suggestion to cut tax concessions for the “well-off”.
• PM Gillard re-filled her front bench after a number of senior ministers resigned or were sacked following the so-called leadership spill that never eventuated….globally, we are being laughed at, whilst domestically the concern is now that these replacements are relatively junior in comparison to the departed.
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