Category archive: Markets

News: Sydney’s Housing Market Second Most Unaffordable in the World, New Survey Found

Sydney’s housing market has been rated as the second most expensive in the world, according to the 13th Annual Demographia International Housing Affordability Survey: 2017.

Sydney, which is only topped by Hong Kong, beats other cities including San Jose (fifth most expensive) and Los Angeles (eighth).

The survey rates housing markets based on the World Bank-recommended “median multiple” principle, which divides median house price with median household income. A score of 5.1 and above is categorised as “severely unaffordable”.

10 Least Affordable Housing Markets

1            Hong Kong                       18.1

2            Sydney, NSW, Australia 12.2

3            Vancouver, Canada        11.8

4            Santa Cruz, CA, USA        11.6

5            Santa Barbara, CA, USA  11.3

6            Auckland, NZ                   10

7            Wingcaribbee, NSW, Australia    9.8

8            Tweed Heads, NSW, Australia    9.7

9            San Jose, CA, USA            9.6

10          Melbourne, VIC, Australia           9.5

The report found that 47 of Australia’s 54 markets are categorised as “seriously unaffordable” or “severely unaffordable”. The report’s co-author, Hugh Pavletich said the contrast between Australia’s land size and its housing prices indicates a “decentralisation” issue.

“State and local governments have lost the control of their costs and their capacity to finance infrastructure properly,” said Pavletich.

“Sydney house prices are about 12.2 times annual household incomes which is grossly excessive… What housing should be in normal markets is at or below three times household earnings, so Sydney is four times what it should be.”

The newly-sworn in NSW premier, Gladys Berejiklian said in her first press conference that housing affordability would be one of her policy priorities.

“I want to make sure that every average hard-working person in this state can aspire to own their own home,” said Berejiklian.

News: Petrol Prices Rise in Australia as OPEC-Led Deal Takes Effect

Petrol prices have risen by up to 20 cents a litre in a number of areas in Australia, following the December agreement between the Organisation of the Petroleum Exporting Countries and non-OPEC oil producers to cut production.

According to the Australian Institute of Petroleum, the national average price of unleaded increased by 2.2 cents over the week to Sunday to 128.3 cents per litre.

While Melbourne prices remained steady at $1.22 per litre, Sydney and Adelaide’s prices reached above $1.40. Other capital cities fell in between these extremes, with prices around $1.30 a litre.

There were also some local variations, with some parts of Tasmania – such as Hobart and Launceston – reaching $1.46 a litre.

Experts have recommended motorists to fill up quickly before the prices rise even further.

“The low petrol prices are not sustainable and prices are likely to lift markedly in coming days,” said Savanth Sebastian of stockbroking firm CommSec.

The Australian Competition and Consumer Commission (ACCC) warned that the price hike could be exacerbated by the falling Australian dollar.

“The ACCC is concerned that petrol prices are increasing in Sydney, and those in Melbourne, Brisbane and Adelaide may increase in the coming days,” said ACCC chairman, Rod Sims.

“Motorists should get in early, shop around, and consider filling their tanks before prices jump.”

Sebastian said the petrol price hikes would be applied around the world.

“The focus now shifts to see if oil producers comply with the stated production cuts,” said Sebastian.

“The early indications are that producers are already notifying customers in Asia, Europe and the US of cuts to oil deliveries from January. Importantly for motorists it means higher pump prices in the medium term.”

Stockmarket: ASX Finishes in Red for the First Time in 2017

ASX has finished in the red for the first time in 2017, due to falls in big banks, unstable oil prices and decline in investor confidence.

While brent crude strengthened by the end of the trading session to $US55.05 a barrel, fears that the OPEC-led deal to cut production might not be implemented properly by its participants diminished investor confidence.

The benchmark S&P/ASX 200 Index and the All Ordinaries Index each dropped 0.8 per cent to 5760.7 points and 5813 points respectively. Investors sold out of every sector, with banking receiving the most impact. Commonwealth Bank of Australia fell 0.5 per cent, as Westpac declined by 0.8 per cent. National Australia Bank was down 1.2 per cent and ANZ Banking Group dipped 1.5 per cent.

The US dollar also weakened as the post-election euphoria winded out. “The US dollar appears to have entered a consolidation phase since last week after a period of market optimism associated with prospective Trump policies,” NAB economist Vyanne Lai said. As a result, the Australian dollar rose 0.6 per cent to US73.72¢.

Property Market Predictions for 2017

Property prices in Sydney and Melbourne shows no sign of slowing down while prices in other cities fall, experts predicted.

Property research group SQM Research predicted that if the cash rate remains unchanged throughout the year, Sydney and Melbourne’s house prices could grow by 15 to 16 per cent.

Low interest rates will keep Sydney and Melbourne markets strong due to high income and population growth in these cities, said Moody’s economist Emily Dabbs.

“Affluent areas tend to be driven by the prosperity of local economy, and right now both Sydney and Melbourne have the fastest-growing economies in the nation,” said SQM managing director, Louis Christopher.

However, apartment prices in Sydney, Melbourne and Brisbane could fall by 15 to 20 per cent in the next two years, AMP capital chief economist Dr Shane Oliver predicted. “There’s a [supply] indigestion problem, but Sydney won’t have a supply problem for another two years,” Dr Oliver said.

On the other hand, Perth, Darwin and Adelaide’s prices are expected to continue falling due to dwindling population and high unemployment rate.

“The unemployment rate in Perth, for example, is quite high compared to the rest of the country,” said Dabbs. “That’s really hampering any income growth and making it difficult for households to pay higher prices for houses.”

Construction industry analyst BIS Shrapnel said house prices would rise in all capital cities except Perth and Darwin, and apartment prices would fall in Brisbane and Melbourne.

Oil rig

News: Investors Expect Oil Selloff Should OPEC Deal Collapse

As tensions arise between OPEC countries in the runup to the November 30 meeting, investors are preparing for the worst and expecting a fall in energy stocks should a deal fail to be clinched.

On Monday crude price fell by 0.3 per cent to $US47.1 per barrel, and energy stocks declined by 1.8 per cent.

Iran and Iraq have reportedly persisted on higher output numbers, according to unnamed sources.

“We hope we (will) have agreement,” said Jabar Ali al-Luaibi, Iraq’s Oil Minister on Monday upon arriving in Vienna for the talk. “We will cooperate with OPEC members to reach agreement acceptable to all.”

Experts expect oil selloff should OPEC fail to reach a deal. “People know if OPEC doesn’t do a deal, all the short-term drivers for the oil price will be off the table,” said Romano Sala Tenna, portfolio manager at Katana Asset Management.

Collapse in talks could send crude prices below $US40, said Fadel Gheit, managing director of oil and gas research at Oppenheimer & Co.

Others are more optimistic. There is a chance that OPEC could agree to cut production by more than 500,000 barrels, said Helima Croft, RBC Capital Markets’ global head of commodity strategy.

“OPEC’s leadership is cognizant of the risks posed by failing to reach a deal,” Croft wrote in a report. Should a deal be reached, Croft said oil prices could climb back to $US55 per barrel.

The Organisation of the Petroleum Exporting Countries will meet on Wednesday, November 30 in Vienna to establish the terms of its first production cut in eight years.

trump

Stockmarket: Trump’s Election Win Boosts Market

Donald Trump’s unexpected election to US presidency has boosted the stock market.

Following Trump’s win, economists expect an economic growth of 2.2 per cent in 2017 and 2.3 per cent in 2018, increasing from 1.5 per cent the past year.

Inflation is also predicted to rise to 2.2 per cent in 2017 and 2.4 per cent in 2018. The Federal Reserve has been struggling to increase inflation above the 2 per cent threshold since the 2008 financial crisis.

Bank of America’s stock has climbed by 17 per cent since Donald Trump won the presidential election.

These changes and estimates are underpinned by the belief that Trump’s administration will push for deregulation and provide market stimulus through infrastructure spending and cuts in tax rates.

The Bank of America has indicated that for every 100 basis points increase, the Bank will earn $5.3 billion in additional net interest income.

Alipay CBA

News: Alipay Enters Australian Market With Commonwealth Bank Partnership

Commonwealth Bank of Australia have signed an agreement with third-party payment platform Alipay to allow Chinese tourists and students to use Alipay in Australia.

The deal will also enable Australians to use Alipay for purchases over AliExpress, a platform for Chinese merchants to reach global consumers.

“We are constantly working on payment solutions that offer flexibility and choice for our customers so the prospect of bringing them closer to a globally leading mobile payments provider, and its 450 million active users, is truly exciting,” said Kelly Bayer Rosmarin, group executive of institutional banking and markets at CBA.

Alipay said the deal is targeted at the 19,000 Chinese tourists who visit Australia every week.

“Australia is a popular destination for Chinese travellers and Chinese students studying overseas,” said Douglas Feagin, senior vice-president at Ant Financial Services and head at Alipay International. “We want Alipay users to enjoy the kind of convenience they are used to at home.”

Alipay’s parent company, Ant Financial was valued at $US75 billion in September.

China is the world’s largest market for mobile payment, with a transaction volume of $US235 billion in 2015.

Market: Latest Stock Market News – US Election

It has been reported on Monday that international stock markets has risen. With the Dow Jones industrial average increased by 371.32 points, this has suggested positive news for Clinton following the FBI email investigation.

According to an article on CBC, “Investors have been anxious in recent weeks over signs that the presidential race was tightening. Stock markets hate instability, and a Clinton presidency is being interpreted as a continuation of the status quo.”

CBC also reported that “A broader market index, the S&P 500, ended Friday on its longest losing streak since 1980 — nine days in a row — on fears that Republican candidate Donald Trump may ascend to the White House.” There was confidence on Monday as the market with the S&P reaching 46.34 points, to 2,131.52

Phil Blancato, CEO of Ladenburg Thalmann Asset Management has stated that “This is not a rational market. This is a reaction to less uncertainty,” “In those kinds of markets, people are jumping into stocks that they think are cheap. And what are the cheapest right now? Financials and health care.”

For Toronto’s stock market, the S&P/TSX composite index is rising by 143.20 points to just over 14,652.45.

Gold has lost $25.10 US an ounce to hit $1,279.40 US an ounce.

The December contract for light sweet crude dipped by 82 cents, closing at $44.89 US a barrel.

The Canadian dollar rose by 0.17 of a cent to finish at 74.78 cents US.

building

News: Chinese Investment in Australia’s Property Market Declines

Chinese property investment in Australia has declined by 37 per cent year-on-year, according to a report by London-based property consultancy Knight Frank.

The Changing Currents, Rising Tides report found that Chinese developers and investors spent US$1.7billion in the first half of 2016, with the volume of office and hotel transactions dropping 65 per cent and 42 per cent respectively year-on-year.

“The volume of Chinese investment in Australia is down considerably year-on-year because of a lack of mega-deals in the first half, as large deals such as the Investa portfolio dragged the 2015 number higher,” said Matt Whitby, head of research and consulting at Knight Frank.

However, Whitby said en-block commercial properties in Sydney and Melbourne remained popular to Chinese investors, who were “attracted by rental growth supported by strong tenant demand and a supply shortage.”

The report also noted that Chinese investors’ interest in foreign real estate market remained strong, “driven by Chinese economic and policy factors and are attracted by favourable local market conditions in gateway cities” in Australia, Canada, the United Kingdom, and the United States.

Dominic Ong, head of Asian markets at Knight Frank indicated that more major deals could be made in the second half of the year, as fewer transaction opportunities and a promising rental market have pulled in investors.

“Activity has picked up in the past few months,” said Ong.

“Some of the most recent transactions in Australia from Chinese buyers include 15 Help Street, Chatswood which sold for $43.8 million to One Pro Investment Group; 20 Bridge Street, Pymble which sold for $78 million to YuHu; 210 George Street, Sydney sold for $160 million to Poly Group; and 61 Lavender Street, Milsons Point sold to Aqualand for $110 million.”

 

Construction equipment sales in China have improved based on reports from Equipment hunt

Oil rig

Market: Oil Prices Fall Following Iraq’s Backtracking on OPEC Output Curb

Oil prices have fallen following Iraq’s statement that it sought to be exempt from the OPEC’s planned output cuts, as the group seeks to stabilise crude market.

Iraqi officials were reported on Sunday saying they would not reduce output, which is currently at 4.77 million barrels per day, because the country needed more fund to fight Islamic State militants.

Oil prices fluctuate around US$50 per barrel, mostly down 30 cents or 0.6%. West Texas Intermediate for December delivery dropped 33 cents to close at $US50.52 per barrel on the New York Mercantile Exchange. Brent fell 32 cents to $US51.46 per barrel.

Iraq is the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), behind Saudi Arabia.

“Iraq’s request to be exempted from a deal to cut output has further clouded the prospect of OPEC strategy to stabilise the oil market succeeding,” said Danske Bank analyst, Jens Naervig Pedersen.

“There is a risk that Iraq’s refusal could trigger a domino effect that other producers would ask to be exempt from the cuts too,”  SCI International energy analyst, Gao Jian said.

OPEC members Iran, Libya and Nigeria expected to be spared from the deal. “If they do nothing, OPEC production next year is likely to average at least 34 mbpd (million barrels a day) with a real threat of it reaching close to 35 mbpd if the chaos in Libya and Nigeria were to be resolved,” broker PVM said.

OPEC produced a record of 33.75 million barrels per day in September, with Saudi Arabia producing 10.58 million of them.