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(24-09-2015, 07:38 AM)greengiraffe Wrote: (22-09-2015, 04:26 PM)greengiraffe Wrote: PM change ‘boost to confidence’
- AAP
- SEPTEMBER 22, 2015 3:05PM
[b]A change in the nation’s leader has helped spark a turnaround in consumer confidence.[/b]
The ANZ/Roy Morgan weekly consumer confidence index rose 8.7 per cent the week Malcolm Turnbull became prime minister, bouncing back from three weeks of falls.
ANZ chief economist Warren Hogan said the change in prime minister was the most likely reason for the surge in confidence, but the new administration would need to deliver on the economy to maintain that bounce.
“The sharp jump in consumer confidence last week is a clear vote of confidence in the new prime minister, Malcolm Turnbull,” he said.
“We believe the new prime minister’s first 100 days in office will be essential to formulating a new narrative for the economy that underpins confidence in the economic outlook,” he said.
Mr Hogan said expectations for the new prime minister were clearly high, not unlike when the coalition won government in September 2013, with Tony Abbott as leader.
“The community will be sensitive to disappointment on this front,” he said.
“Consumer caution and gloom in the long-term outlook could easily re-emerge, given weak wages growth and sub-par global economic activity.”
CommSec chief economist Craig James said performance of the new administration would be a key factor on whether the bounce in consumer confidence would be sustained.
“Increased confidence is certainly a positive for the Australian economy hopefully translating into increased spending, investment and employment,” he said.
Mr James said other factors such as a 1.5 per cent lift in the local stockmarkets over the week and some positive comments on the economy from Reserve Bank governor on the economy would also have helped consumer confidence.
“Even before the latest survey, the RBA noted that views on family finances were above average and supporting consumer spending,” he said.
“The latest consumer confidence data just reinforces the Reserve Bank view.”
The ANZ survey was conducted the weekend after Malcolm Turnbull beat Tony Abbott in a liberal leadership spill on September 14. Start of a more stable political environment Down Under?
Group hugs as Malcolm Turnbull’s age of inclusion begins
Niki Savva
[Image: niki_savva.png]
Opinion Columnist
Canberra
[Image: 987984-ba7b5016-61cf-11e5-afef-4942db4d24a5.jpg]
Illustration: Eric Lobbecke Source: TheAustralian
[b]Malcolm Turnbull’s first ministry has sent a powerful message of inclusion as well as regeneration. The photo of the new Prime Minister surrounded by all the women he has appointed to the cabinet and outer ministry, with his deputy Julie Bishop in the vanguard, will act as a clarion call to women that not only are they welcome inside the Liberal Party again, there is room for them at the top.[/b]
The previous administration kept talking about it, complaining incessantly about the shortage of prominent women despite the fact there were talented women there all along, waiting for the call, only to be locked out despite any number of opportunities to promote them. It was left to Turnbull to do it. He did it partly by having the courage to retire men who had a better run than they deserved or by appealing to mates such as Ian Macfarlane to step aside, which he did with great poise. Eric Abetz likewise maintained his dignity.
Will the country be less safe with Marise Payne as Defence Minister? Methinks her first press conference in that job showed it will not, nor would it have been a year ago when there was an opening. Michaelia Cash and Kelly O’Dwyer also have finally been given the opportunity to shine.
Importantly, Turnbull has conveyed a message of tolerance too. Many of those promoted, or who retained their positions, did not vote for him. Check them out: Andrew Robb, Scott Morrison, Mathias Cormann, Greg Hunt, Peter Dutton, Josh Frydenberg, Christian Porter. One of them went so far as to say he had spent more time discussing with the new Prime Minister the shape of things to come than he ever did with his predecessor. Those who suggest Turnbull has engaged in retribution, or that conservatives have been sidelined, are peddling self-serving nonsense.
While we wait for the changes in policy, there has been an immediate and welcome change in rhetoric, in tone and in manner. On Monday night, in a flirty, expansive interview with Leigh Sales, those viewers who had forgotten what Turnbull was like got an insight into an intelligent, complex personality. It also laid down some markers on matters on which he can be judged later, such as tax reform, the importance of polling in the lives of politicians, and the setting of policies within a free-market framework.
Yesterday, in another long interview, this time with Sky News, he was confident, cool, determined not to be led by one of the nation’s sharpest interviewers, David Speers, on to paths too dangerous to tread.
Turnbull has learned the value of consultation, and it shows. His colleagues are flattered he is asking, even more delighted when their suggestions are taken up, as some have been. It has come as a revelation to them, dispelling at least one doubt about his capacity to learn from his first time around. He has learned that colleagues often have good ideas too, so setting aside the time to talk to them pays off in more ways than one. Hallelujah.
The thrashing and gnashing of the capital-C conservatives continues, reminiscent if anything of the last moments of Pris, the replicant terminated by Deckard in the filmBlade Runner. If they want Bill Shorten to become prime minister, with everything that entails, they should keep it up. The lying, delusion, bitterness or vengefulness of the vanquished and their supporters is really smart. Dignified too. Not.
Turnbull cannot pander to those carrying on like they want him to fail, nor can he afford to ignore them. He needs to deliver another message, by way of a thoughtful, broad-ranging speech to promote the healing — or the bonding, if you like — of the party’s conservative and liberal wings.
It should come sooner rather than later because there is no point allowing things to fester.
The idea was prompted from one of many wise heads wanting him to succeed, one key to the success of the Howard era who became so disillusioned with the Abbott regime that he had stopped listening but is now, like many others, hopeful and alert.
The objective of such a speech should be to show Liberals, not just inside the government but in the party’s heartland (and to steal a favourite expression of John Howard’s) that what unites conservatives and small-l liberals is greater and more enduring than that which divides.
Take budget repair. Fulfilling the dream of returning it to surplus is both a liberal project and a conservative one. It is about prudent management of taxpayers’ dollars to ensure there will be money there for things society needs and cares about: strong defence, a proper safety net, improved health and education services.
Border protection is both a liberal project and a conservative one. Governments should be able to control who comes here, and if they can do that, they provide a vehicle for a more generous immigration and refugee program.
Tackling social problems with a strong focus on personal responsibility (such as domestic violence) is both a liberal project and a conservative one. Nowhere was that demonstrated more emphatically than when Howard reformed gun laws in the wake of the Port Arthur massacre. People are free only when they feel safe.
And so on.
Turnbull was restored to the leadership because he repaired relations with enough of the sensible Right to win. Others, except the completely unhinged, will gradually come across after a suitable period of mourning if he shows what they can achieve if they all work together.
But it will take more than words. Integral to the success of this government is the relationship between the Prime Minister and Scott Morrison.
When prime ministers and treasurers work well together, when both are at their peak in their jobs (which is the polite way of saying when both are up to their jobs) the government overall works well. That was the case with Bob Hawke and Paul Keating, then with Howard and Peter Costello. Keating slotted into the leadership role; however, after John Dawkins resigned as treasurer, the government struggled. A competent prime minister cannot succeed on his own.
Turnbull and Morrison have had a complicated relationship, which is now on a sound footing. Given their combined talents there is no reason, in the early years at least, they should not secure strong foundations for the Coalition, despite the best efforts of some to besmirch the Treasurer’s reputation.
http://www.valuebuddies.com/thread-4912-...#pid120178
Back track the last few threads and one would have discovered that the lucky and beautiful country is well alive and kicking despite the long in the news demise of the resources sector - price low just leave them underground and till another day and another economic cycle to revive the cyclical sector.
Meanwhile, freely fluctuating exchange rates are reviving servicing sectors like education, tourism and even high quality niche agri based mfging sectors. Whilst GSIC is cashing out of it ind prop portfolio that IMHO has more to deal with the emergence of Towkay in the its long strategic partnership in ALZ, AREITs landmark purchase has left a strong indication of the hunger of foreign buyers looking for stable and rare growth under the current global economic cloud.
On a pure textbook Economics analysis, Australia is probably one of the few rare cases where free mkts are functioning - freely fluctuating exchange rates, world class investment bankers stitching deals to help in privatisations that bridges the gap between bankrupt govt finances and that of complex investors appetite for bloated govt linked assets...
Lucky country still?
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- Sep 21 2015 at 2:03 PM
- Updated Sep 22 2015 at 2:45 PM
Investors try to work out how to play the Aussie dollar
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/c/2/d/a/image.related.afrArticleLead.620x350.gjr8fv.png/1442897494235.jpg[/img]The Australian dollar is at the mercy of global forces, primarily the United States and China. James Davies
by Kate Cowling
Investors with currency-exposed stocks have been in an anxious holding pattern for the past few months.
A surprise drop in the Chinese renminbi, uncertainty in global markets and endless commentary about a Federal Reserve rate rise have seen traders hit with news of a faltering Aussie dollar several times since the start of the financial new year – something that could be good or bad news, depending on how you're positioned.
As a heavily commodities-based economy, the Australian dollar is at the mercy of global forces, primarily the United States and China.
And the Aussie certainly recognises that. After dropping to a six-year low of US69¢ in early September, a short China rally brought it back above the US70¢ mark, where it sat, awaiting the Fed's rate call (after a brief bounce following Malcolm Turnbull's election).
[img=620x0]http://www.afr.com/content/dam/images/g/j/s/7/9/q/image.imgtype.afrArticleInline.620x0.png/1442893424457.png[/img]
About half of economists and 28 per cent of the market priced in a rate rise, according to Emma Lawson, a senior currency strategist at NAB. So the lack of movement wasn't a huge surprise.
When Federal Reserve chair Janet Yellen held fire, we saw a predictable jump. Suddenly, the party was back on and investors were feeling confident.
When the dollar hit US72¢, a selling frenzy began as traders rushed to take advantage of the currency's rally, says Ms Lawson.
WAITING ON THE US FED
But few expect the reprieve to last. "Many are just waiting for that band-aid to be pulled off," says Lawson. "We're range-bound again into the October or December meeting."
By range-bound, she says the market doesn't expect the dollar to go higher than the low US70¢s or lower than the high US60¢s.
"The Aussie is likely to be in this range for a while," she says. "It's hard for it to rally too far because the Fed is pretty comfortable about the domestic environment; they're just worried about the international impact."
A Federal Reserve rate rise could cause global volatility, which would push the US dollar higher, lower the oil price and prevent the US from maintaining its inflation target, she says.
Many economists have predicted any rate move by the Fed will be gradual in an attempt to keep volatility at a low, but with a strong US economy it's still a matter of "when" rather than "if".
In the meantime, while investors wait for the US to tighten they are likely to re-establish their short positions, Lawson says.
When that US rate trigger is pulled, some analysts, like head of investment strategy at UBS David Sokulsky, say it could fall as low at US65¢ – or even further, depending on China's withdrawal.
NOT SO FAST
A very different scenario has been keeping Equity Trustees head of asset management Paul Kasian up at night.
The China situation is unpredictable, he says, and there's a real risk there could be a rally that would push the Australian dollar right up again – something few analysts are talking about or factoring in.
"During the GFC, China panicked and overstimulated the economy and we had the biggest resources boom for that flash," he says. "If their current stimulus of dropping the renminbi and dropping interest rates doesn't work, there is a risk they'll panic and start spending money.
"If the market gets whiff of that, all the commodities-based currencies, of which we are one, will rally on that because everyone will assume 'away goes China again'."
It's not something Dr Kasian has been investing for. On the contrary, he's positioned for a falling AUD. But he says the other potential "irrational" scenario is worrying him, as humans are unpredictable and have a tendency to panic.
"Most people have got a mid 60s to high 60s view, and that's where I think the market is rationally positioned, but people forget the risk that China is slowing. But China is run by politicians who need to shore up their position.
"We've got more stocks with overseas earnings as opposed to Australian earnings, and we're underweight resource stocks ... but I'm obsessed with the fact if China was to panic and start spending, I would have to unwind my position," he says.
He stresses that if he starts to see spending in China, it would encourage him to rethink his allocation quite quickly.
"As soon as you get wind that China starts spending, you're better off going a bit earlier than a bit later."
INVESTOR VALUE SPOTS
While speculation on where the dollar will go next is rife, the real question that should be concerning investors is who stands to win and lose from a large currency price move?
A weaker Australian dollar makes our exports more appealing and encourages investment in service industries such as education, domestic tourism and financial services, says David Bryant, head of investments at Australian Unity.
"The Fed's indication that it is ready to move in October or December takes pressure off the Reserve Bank of Australia to act on domestic interest rates and it is likely that the end of quantitative easing, and any increase in interest rates in the US, will be a blessing in disguise for Australian investors," he says.
"A higher US dollar also improves returns on our resources and makes other materials exports such as agriculture more competitive."
On China, he says it's "still a work in progress".
A stronger US dollar, against a weaker Aussie, is also welcome news for investors with companies in their portfolios where income is denominated in US currency.
Since the Australian dollar started to weaken, UBS's Sokulsky has been keen on US technology stocks and European financials. He says investors willing to take on a little bit more risk could also look at US energy companies, some of which still have attractive valuations.
"What we've been saying for some time now is to focus on offshore assets and Australian corporates that have US dollar earnings," he says.
There could also be upside in companies leveraged to increasing tourist flows to Australia, he says.
"[When the dollar drops] Australia becomes a much cheaper holiday destination for offshore travellers and, secondly, when you look at Australian travellers they are going to be more inclined to take holidays here rather than go overseas."
Investors worried about the currency fluctuation could hedge a bit of the risk via the options market, FX forwards or dollar-hedged mutual funds.
THE DOWNSIDE
On the other side of the falling Australian dollar/strengthening US dollar coin, retail stocks could suffer further, as cost pressures on retailers see them pass on costs to either consumers or shareholders, says Farina Parsons, an equity analyst at Morningstar.
Parsons named Pacific Brands and personal care brand Asaleo Care as examples of companies that could face tough times, particularly if the dollar stays low for a long time.
"They are all saying they will have price rises," she says. "The majority of them are hedged for the first half for 2015-16, but for the second half, that's where the currency pain will be felt."
PROPERTY IMPACTS
When it comes to property any downward move in the dollar is a positive for a market which has been coping with a series of stimulatory and deflationary pressures in the past few months, including new capital holding requirements by the Australian Prudential and Regulatory Authority and a booming NSW economy, says SQM Research analyst Louis Christopher.
He says property investors should be less worried about the effects of what the US Federal Reserve does and more interested in what the Reserve Bank of Australia does.
The market has partially priced in an RBA rate cut to 1.75 per cent by February – or May at the latest – something that would have almost certainly have a stimulatory impact on the housing market.
In a speech to Parliament's standing committee on economics last week, RBA governor Glenn Stevens said he's comfortable where the economy is going and said there was some evidence that regulatory measures to curb debt build up were working.
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(17-09-2015, 01:34 PM)greengiraffe Wrote: (13-09-2015, 11:12 PM)greengiraffe Wrote: Lucky country still have lots to sell to China after commodities...
Selling to China: secrets to cashing in on demand
[Image: 388614-1db68012-5873-11e5-a7dc-18321c6979b2.jpg]
Sydney-based online retailer Patrick Liu is capitalising on Australia’s reputation for high quality and safe products. Picture: Aaron Francis Source: News Corp Australia
[b]Australian businesses looking to capitalise on China’s growing demand for locally made products should be targeting health-conscious, middle-class women living in second- and third-tier cities, who care more about quality than price when sourcing overseas goods.[/b]
New research into the online shopping habits of Chinese consumers, provided exclusively to The Australian, has revealed milk powder, food, health supplements and skincare products to be the most preferred Australian products.
Digital marketing group Think China surveyed 3000 Chinese shoppers about their attitudes towards Australian products and analysed internet search data in a bid to inform local businesses considering exporting to China in anticipation of the impending China-Australia free trade agreement unlocking opportunities.
They found women to be the most active online shoppers, making up 66 per cent of internet users who had searched for Australian products via the e-commerce platforms Tmall and Taobao. More than 80 per cent of those surveyed cited “quality” as an “extremely important” consideration when buying overseas products online, with price having the least effect on a purchasing decision.
Australia was the second most searched-for country, behind the US, between 2011 and 2015, with the accompanying term “supplements” comprising 31 per cent of searches, followed by “skincare” (17 per cent), “dairy” (13 per cent) and “pharmaceuticals” (11 per cent).
Sydney-based online retailer Patrick Liu is capitalising on Australia’s reputation for high quality and safe products.
“Selling online actually cuts out the middle man and keeps costs competitive,” he said.
Think China’s Ben Sun, who wrote the report, said the number of Chinese online consumers was booming, reaching 361 million in December last year, up 19.4 per cent on the year before. About 75 per cent of online consumers lived in second- and third-tier cities outside Beijing, Shanghai and Guangzhou, he said.
“The growth in the number of online Chinese shoppers, and the formidable purchasing power of Chinese consumers, makes the online Chinese marketplace and important channel for Australian enterprises,” Mr Sun said. “Despite the popularity of Australian products in China, as of July, there were only 47 individual Australian brands with an online presence on Alibaba’s shopping platforms Tmall and Tmall Global. “As an Asian-literate trading nation, Australia certainly has a lot more to offer.”
The report comes as Austrade has been touring regional parts of the country in a bid to encourage rural and regional businesses to consider emerging opportunities to export to China.
Mr Liu agreed that many Australian companies were intimidated by the idea of selling to China, seeing it as complicated, highly regulated and costly. But he said selling online was “very transparent”. “ You can see how much of the product is sold, who is buying it, their age group and even where they are from.”
Launched in 2013, Mr Liu’s company CarePlus Australia, has a shopfront on China’s Tmall Global, an online platform that permits foreign companies to sell products into free-trade zones, avoiding significant taxes.
His suppliers include local icons Greens Foods, Blackmores, Swisse and Jurlique. Annual sales for the business were about $5 million last year and are forecast to double this year to $10-$12m.
Mr Liu said while the benefits of the ChAFTA might take time to manifest, the deal was good for Australia’s ties with China.
“When the Chinese previously think about Australia, they think of Australia as a tourist destination. Now they see it … as a partner, a place to buy things from, a place they know about, as a friend,” he said.
Brent Moore, Austrade’s trade commissioner based in Shanghai, spent last week travelling around Victoria, visiting regional areas to promote export opportunities in China.
“For a small business, the conventional way of selling to China was probably too difficult in the past,” Mr Moore said.
“With online selling those costs are coming down and we see good opportunities to sell to Chinese consumers looking for local brands, particular organic food, skincare, cosmetics and baby and maternity products.”
Mr Moore said e-commerce platforms were more interactive, featuring videos and other media.
Lai liao... that's the beauty of a freely floating exchange rates. In addition, as long as you have quality eports, you will stay relevant and survive.
Services sector such as tourism and education have yet to be factored into the following survey...
Like that always say... its a no worries and beautiful country...
No Vested Interests
Manufacturing boosted by lower Australian dollar
- AAP
- SEPTEMBER 17, 2015 10:56AM
[b]Manufacturing is becoming a key beneficiary of low interest rates and a weaker Australian dollar, a new survey suggests.[/b]
The latest Westpac-Australian Chamber of Commerce and Industry survey of industrial trends shows that, while moderating in the September quarter, results remain well above those of 2014.
“The sharp drop in the Australian dollar is reshaping the economy ... boosting the export competitiveness of manufacturers and increasing export returns,” Westpac senior economist Andrew Hanlan says.
Lower Australian dollar boosts manufacturing, survey shows
Michael Roddan
[Image: michael_roddan.png]
Reporter
[b]Australia’s manufacturing sector has expanded for a third straight month to its strongest point since May, according to an industry survey.[/b]
The Australian Industry Group’s performance of manufacturing index rose 0.4 points to 52.1 in September. It’s the strongest reading for the sector in five months.
A reading above 50 indicates expansion, while a reading below points to contraction.
The manufacturing sector has now expanded for a third straight month for the first time since July 2010, thanks to the lower Australian dollar stimulating local orders and exports.
“Increased residential construction is also strengthening demand for building materials and related housing products,” Ai Group said.
The Australian dollar has fallen US14c since the beginning of the year, and is 9 per cent weaker against a basket of currencies representing its major trading partners.
Meanwhile, the food, beverages and tobacco sub-sector expanded for a sixteenth consecutive month in September. This manufacturing sub-sector is Australia’s largest, accounting for more than a quarter of all manufacturing output and employment.
Ai Group chief executive Innes Willox said it was good news for an economy that’s looking for sources of growth outside of the mining sector.
“The lower Australian dollar is a clear driver with local producers winning against imports in the domestic market and making further progress in export markets,” he said.
With AAP
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Job vacancies at highest level in almost three years
Michael Roddan
[Image: michael_roddan.png]
Reporter
[Image: 243070-4c165196-67e4-11e5-80b2-c23ead0b75ad.jpg]
There were 160,900 vacancies in August, up 2.7 per cent from May. Source: Supplied
[b]The number of job vacancies is picking up pace, rising 2.2 per cent in the August quarter to the highest number in nearly three years, according to the Australian Bureau of Statistics.[/b]
The total number of vacancies in the three months through August was 160,200 in seasonally-adjusted terms, increasing from the upwardly revised May quarter reading of 156,800.
There are now 8.5 per cent more job vacancies, on a seasonally adjusted basis, than a year ago, and vacancies are at their highest point since November 2012.
“The job market continues to improve with job vacancies at the highest levels in almost three-year highs,” CommSec economist Savanth Sebastian said.
“With population growth slower than in past years, unemployment has more chance of falling over the coming year,” Mr Sebastian said.
The unemployment rate has been stymied above 6 per cent since June 2014.
There were 147,100 private sector job vacancies in the August quarter, up 2.4 per cent on the previous quarter in seasonally adjusted terms.
Meanwhile, the number of public sector vacancies increased a seasonally adjusted 0.6 per cent to 12,500.
However, the transition away from the mining boom continues to be evident across the country, as the much-maligned two-speed economy now sees the mining-exposed states fall behind.
Over the year vacancies lifted 18.6 per cent in Victoria in original terms over the year but fell by 34.2 per cent in the Northern Territory and by 11.3 per cent Western Australia.
Job vacancies have declined the most in the manufacturing industry, the mining sector, transport and storage, and communication services sectors over the past year. Administrative support and accommodation, cafes and restaurants, on the other hand, have posted more vacancies.
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While the Australian stockmarket has had a tough year, Blackmore’s shares have soared from less than $40 at the start of the year to a record $146 this week on the back of the company’s stellar performance.
Blackmores gets a dose of good medicine as Chinese sales soar
Glenda Korporaal
[Image: glenda_korporaal.png]
Senior Journalist
Sydney
[Image: 818049-8ffa1636-68e8-11e5-95d3-14a82c556d0b.jpg]
Blackmore's CEO Christine Holgate says Australia has much to offer Asia. Source: Supplied
[b]Blackmore’s British-born chief executive Christine Holgate says there has “never been a better time to be an Australian”.[/b]
While the Australian stockmarket has had a tough year, Blackmore’s shares have soared from less than $40 at the start of the year to a record $146 this week on the back of the company’s stellar performance.
Blackmores was cited by the Chinese Ambassador to Australia this week as a shining example of what Australian companies can do in China after its sales in the country jumped from $2 million to more than $70m over the past year.
With an 83 per cent increase in net profit, boosted by strong demand for its natural vitamins and healthcare products in Asia, Blackmores has been shortlisted in the healthcare section of the Australian Growth Company Awards.
The awards recognise mid-market Australian companies with a turnover from $25m to $500m, which show a high rate of growth, innovation and integrity.
They are backed by Sparke Helmore lawyers, Deloitte, Macquarie Capital, MYOB, Intralinks and the 2020 Exchange.
Other companies shortlisted for the health category include, Pulse Health and SummitCare.
Holgate herself has also been shortlisted for the award’s women in leadership category.
“Living in Australia has so many benefits, including healthcare, food and education,” she says.
“They are areas where Australia offers something which is unique and high quality.”
Other contenders for the AGCA Women in Leadership award include BevChain chief executive Kylie Fraser; Deals.com products chief executive Alexandra Mills and Online Courses Australia chief executive Cheryl Brookes.
Holgate, a former senior executive with Telstra who has run Blackmores from its headquarters on Sydney’s northern beaches for almost seven years, has little time for those who bemoan the slowdown in the Australian economy.
“It’s easy to sit here and say the domestic market has dampened but Australians have a set of skills, a set of products and knowledge which is really valuable to our Asian neighbours,” she says.
Blackmores sales to Asia, including China, Thailand, Malaysia and Singapore, have grown sixfold since Holgate took over.
The company’s China business took off over the last year after it set up a wholly owned foreign enterprise that allowed it to take advantage of a free-trade zone in Shanghai to sell its creams and vitamins into the local online market.
Having former Chinese tennis star Li Na as a brand ambassador and Chinese film star Fan Bingbing use its Vitamin E cream have also helped popularise the company’s name in China.
A combination of success in Asia and an expansion into new product areas such as “BioCeuticals” and vitamins for pets saw group sales rise by 36 per cent to $471m in the financial year ended June 30, with net profits up by 83 per cent to a record $46.6m.
The company’s strong performance has seen it employ another 100 people at its Warriewood head office this year, taking its total staff to just under 1000. Holgate says Blackmores’ success in Asia has come as its growing middle class is becoming more attuned to the natural health care products the company produces.
“Natural health is an important part of the DNA for most Asians,” Holgate says.
“They see taking responsibility for their own health as being a really important part of their everyday life. We often have to explain the benefits of taking natural health products to people in Australia but we don’t generally have to do it in Asia. Asians are discerning consumers who do a lot of research and are prepared to pay a premium for a brand they know and trust.”
Blackmores has been very strong in Thailand where it has 40 per cent market share and is set to boost its local staff from 150 to 200.
Holgate has just been appointed chair of the federal government’s Australian-ASEAN Council in recognition of her business success in the region.
Unlike other foreign companies which just try to sell their existing products in Asia, Holgate says the success in the region has come after detailed research and working closely with regulatory authorities in each market.
Holgate says the company also makes sure it hires talented local staff in each market.
She says Chinese tourists visiting Australia have provided another big market for the company recently, as they buy Blackmores’ vitamin and healthcare products during their visit and take them home for friends or to onsell — a trend she calls “passive” China sales.
“When I took over our sales to Asia were about $26m a year,” she says.
“Taking into account passive China sales, Asia has probably contributed some $150m in revenues to our business in the last year.”
Holgate says increasing consciousness in Asia about the source of food and healthcare products had also helped their business, given Australia’s reputation for high standards of health care and industry regulation.
Holgate says that once it is passed by the Senate, Australia’s new free trade agreement with China will further boost Blackmores’ business, but she says the company’s growth is now constrained by limitations on the supply of its ingredients.
The company is working with its suppliers to help them plan for the increased demand.
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Services sector activity rises in September
Mitchell Neems
[Image: mitchell_neems.png]
Business Spectator Reporter
Melbourne
[b]Activity in Australia’s services sector continued to expand in September, but at a slower rate than in August, according to Australian Industry Group data.[/b]
The Ai Group performance of manufacturing index fell to 52.3 points in September from a reading of 55.6 in August.
A reading above 50 indicates expansion, while a reading below points to contraction.
September is the fourth consecutive month the sector has remained in expansionary territory.
Ai Group chief executive Innes Willox said the services sector was enjoying its longest period of expansion since the global financial crisis.
“Still-buoyant housing market activity is clearly a factor in the growth of some sub-sectors and there is some early evidence that changes in the political environment may have supported consumer confidence and sales,” he said.
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Inflation stays below 2pc, says gauge
- AAP
- OCTOBER 05, 2015 11:00AM
[b]The annual rate of inflation is staying below the Reserve Bank’s two to three per cent target, weighed down by falls in fuel prices.[/b]
Consumer prices were up 0.3 per cent in September, following a 0.1 rise in August, according to the TD Securities/Melbourne Institute monthly inflation gauge.
That’s keeping the annual rate of inflation at 1.9 per cent to September, the highest since November 2014, but still below two per cent all year.
Price rises for tobacco, and holiday travel and accommodation, were offset by falls in the price of fuel, newspapers, books and stationery, and clothing.
TD head of Asia Pacific research Annette Beacher said she expects inflation to pick up in the September quarter, but stay within the RBA’s target range.
“The weaker Australian dollar may be boosting imported prices, but benign domestic inflation provides an offset,” she said.
TD Securities is not expecting the RBA to cut the cash rate in the foreseeable future after the central bank made two reductions earlier this year.
“We expect tomorrow’s RBA board meeting to be a placeholder, noting the lower exchange rate, China slowdown and that the US Federal Reserve is set to lift the cash rate in due course,” Ms Beacher said.
AAP
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(05-10-2015, 08:17 AM)greengiraffe Wrote: Services sector activity rises in September
Mitchell Neems
[Image: mitchell_neems.png]
Business Spectator Reporter
Melbourne
[b]Activity in Australia’s services sector continued to expand in September, but at a slower rate than in August, according to Australian Industry Group data.[/b]
The Ai Group performance of manufacturing index fell to 52.3 points in September from a reading of 55.6 in August.
A reading above 50 indicates expansion, while a reading below points to contraction.
September is the fourth consecutive month the sector has remained in expansionary territory.
Ai Group chief executive Innes Willox said the services sector was enjoying its longest period of expansion since the global financial crisis.
“Still-buoyant housing market activity is clearly a factor in the growth of some sub-sectors and there is some early evidence that changes in the political environment may have supported consumer confidence and sales,” he said.
Business Spectator
Job ads up 3.9pc in September as services firms gear up
NaN of
[img=620x0]http://www.afr.com/content/dam/images/1/0/n/r/1/b/image.related.afrArticleLead.620x350.gk19y5.png/1444005260993.jpg[/img]"Hiring in the services sector also looks to have displayed some 'catch up' over the past year or so following unusually weak outcomes."
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by Jacob Greber
Job ads jumped last month amid a rise in services hiring, suggesting the lower Australian dollar and low interest rates are spurring activity.
Notices online and in print for jobs rose 3.9 per cent in September, adding to a 1.3 per cent gain in August, ANZ Bank said on Monday.
Internet jobs grew 4 per cent in the month, to be 13.7 per cent higher than a year earlier. Newspaper notices, which account for 2 per cent of total job ads, were down 2.7 per cent.
"The positive trend in job advertising is a sign that the economy is so far adjusting relatively well to significant headwinds from falling commodity prices and mining investment," ANZ economist Warren Hogan said.
While companies are still relatively reluctant to boost investment spending, demand for labour across a range of services industries has strengthened, he said.
"Activity in these industries has been supported by the sharp depreciation of the Australian dollar, which has redirected spending back towards the domestic economy, and by low interest rates, particularly through robust housing market activity and its flow on effects," Mr Hogan said.
"Hiring in the services sector also looks to have displayed some 'catch up' over the past year or so following unusually weak outcomes."
Despite the solid momentum, ANZ Bank predicts the positive factors current driving employment growth will wane into next year.
"This is likely to prompt the Reserve Bank to provide a little more monetary policy support to prevent the unemployment rate from rising further."
Employment growth remains the Reserve Bank's most closely watched economic variable, with policy makers anticipating only a slow decline in the jobless rate.
Economists widely expect the Reserve Bank to keep the official interest rate steady at 2 per cent on Tuesday.
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Interest rates: RBA refuses to blink, keeping cash rate at 2pc despite IMF downgrade
Adam Creighton
[Image: adam_creighton.png]
Economics Correspondent
Sydney
[Image: 611285-5fa6470e-6c10-11e5-8559-5a0017f2887b.jpg]
IMF economic growth projections Source: TheAustralian
[b]The Reserve Bank has defied mounting global economic gloom, keeping interest rates on hold for the fifth month in a row and expressing confidence in APRA’s efforts to keep a lid on investment lending in the frothy Sydney and Melbourne housing markets.[/b]
As the International Monetary Fund downgraded its economic growth forecasts yet again, including those for Australia, Reserve Bank governor Glenn Stevens issued almost a carbon copy of his previous month’s monetary statement, whose tweaks if anything suggested even less desire to reduce the 2 per cent cash rate.
The Australian dollar jumped about 0.5 per cent to about US71.2c yesterday on the decision as investors pared back the likelihood of an interest-rate cut. Meanwhile the S&P/ASX 200 index made further modest gains, closing up 0.33 per cent at 5167.
“The available information suggests that moderate expansion in the economy continues,” Mr Stevens said, dumping last month’s qualifier of ‘most of’ and once again pointing to the strength of the jobs market. In the only other major change from last month, Mr Stevens suggested APRA’s efforts to dampen the growth of investor housing lending were “helping to contain risks that may arise from the housing market”.
“The signal seems quite clear that it is unlikely that the bank will see the need to substantially revise its growth forecasts and therefore need to further ease rates,” said Westpac’s chief economist Bill Evans.
“Arguably the governor’s statement represents the fewest number of changes to the previous month’s statement that we have ever seen,” he added.
Annotated RBA statement
The statement evinced cool indifference to the financial gyrations that rocked global markets in September, which dragged the local benchmark index to its lowest close in more than two years, and renewed uncertainty about the timing of the US “lift off” in the wake of weak US jobs growth.
“Equity market volatility has continued, but the functioning of financial markets generally has not, to date, been impaired,” the governor said. “The Federal Reserve is expected to start increasing its policy rate over the period ahead”.
Meanwhile the IMF issued a new set of global economic forecasts in Lima, Peru, marking down its expectation for global growth mainly as a result of weakness in developing countries, to 3.1 per cent and 3.6 per cent this and next year respectively.
“In an environment of declining commodity prices, reduced capital flows to emerging markets and pressure on their currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging market economies,” the IMF said.
While the Washington DC-based institution did not downgrade its forecast growth for China — expected to grow at 6.8 and 6.5 per cent this and next year, respectively — it shaved overall growth for emerging markets, which contribute the lion’s share of global growth by 0.2 percentage points to 4 per cent.
“Major commodity producers, notably Canada but also Australia and Norway, are experiencing slowdown,” the IMF said, shaving its expected forecast for Australia’s growth this year to 2.4 per cent. The IMF expects Australia’s growth will rebound to 2.9 per cent next year, when advanced countries overall will grow by 2.2 per cent. The US and Britain are at the forefront of the pick-up in growth in advanced countries, the IMF said.
Its incoming chief economist, Maurice Obstfeld, said the world economy was “at the intersection of at least three powerful forces”, signalling out China’s transition to a consumption led economy, the beginning of a rate-rising cycle in the United States, and perpetually weak commodity prices.
“The holy grail of robust and synchronised global expansion remains elusive,” he said, urging countries to lift infrastructure spending at and time of low global interest rates and enact “targeted structural reforms” to boost economic growth.
A recent improvement in business confidence and rise in the number of job advertisements appear to have confirmed the Reserve Bank’s relatively optimistic view. Last month the governor expressed frustration with the level of pessimism in economic reporting.
Prices in financial markets still anticipate at least one further official cut in interest rates by the Reserve Bank before the middle of next year.
APRA late last year said it would act to try to keep growth in investment housing lending below 10 per cent.
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(03-10-2015, 09:56 AM)greengiraffe Wrote: While the Australian stockmarket has had a tough year, Blackmore’s shares have soared from less than $40 at the start of the year to a record $146 this week on the back of the company’s stellar performance.
Blackmores gets a dose of good medicine as Chinese sales soar
Glenda Korporaal
[Image: glenda_korporaal.png]
Senior Journalist
Sydney
[Image: 818049-8ffa1636-68e8-11e5-95d3-14a82c556d0b.jpg]
Blackmore's CEO Christine Holgate says Australia has much to offer Asia. Source: Supplied
[b]Blackmore’s British-born chief executive Christine Holgate says there has “never been a better time to be an Australian”.[/b]
While the Australian stockmarket has had a tough year, Blackmore’s shares have soared from less than $40 at the start of the year to a record $146 this week on the back of the company’s stellar performance.
Blackmores was cited by the Chinese Ambassador to Australia this week as a shining example of what Australian companies can do in China after its sales in the country jumped from $2 million to more than $70m over the past year.
With an 83 per cent increase in net profit, boosted by strong demand for its natural vitamins and healthcare products in Asia, Blackmores has been shortlisted in the healthcare section of the Australian Growth Company Awards.
The awards recognise mid-market Australian companies with a turnover from $25m to $500m, which show a high rate of growth, innovation and integrity.
They are backed by Sparke Helmore lawyers, Deloitte, Macquarie Capital, MYOB, Intralinks and the 2020 Exchange.
Other companies shortlisted for the health category include, Pulse Health and SummitCare.
Holgate herself has also been shortlisted for the award’s women in leadership category.
“Living in Australia has so many benefits, including healthcare, food and education,” she says.
“They are areas where Australia offers something which is unique and high quality.”
Other contenders for the AGCA Women in Leadership award include BevChain chief executive Kylie Fraser; Deals.com products chief executive Alexandra Mills and Online Courses Australia chief executive Cheryl Brookes.
Holgate, a former senior executive with Telstra who has run Blackmores from its headquarters on Sydney’s northern beaches for almost seven years, has little time for those who bemoan the slowdown in the Australian economy.
“It’s easy to sit here and say the domestic market has dampened but Australians have a set of skills, a set of products and knowledge which is really valuable to our Asian neighbours,” she says.
Blackmores sales to Asia, including China, Thailand, Malaysia and Singapore, have grown sixfold since Holgate took over.
The company’s China business took off over the last year after it set up a wholly owned foreign enterprise that allowed it to take advantage of a free-trade zone in Shanghai to sell its creams and vitamins into the local online market.
Having former Chinese tennis star Li Na as a brand ambassador and Chinese film star Fan Bingbing use its Vitamin E cream have also helped popularise the company’s name in China.
A combination of success in Asia and an expansion into new product areas such as “BioCeuticals” and vitamins for pets saw group sales rise by 36 per cent to $471m in the financial year ended June 30, with net profits up by 83 per cent to a record $46.6m.
The company’s strong performance has seen it employ another 100 people at its Warriewood head office this year, taking its total staff to just under 1000. Holgate says Blackmores’ success in Asia has come as its growing middle class is becoming more attuned to the natural health care products the company produces.
“Natural health is an important part of the DNA for most Asians,” Holgate says.
“They see taking responsibility for their own health as being a really important part of their everyday life. We often have to explain the benefits of taking natural health products to people in Australia but we don’t generally have to do it in Asia. Asians are discerning consumers who do a lot of research and are prepared to pay a premium for a brand they know and trust.”
Blackmores has been very strong in Thailand where it has 40 per cent market share and is set to boost its local staff from 150 to 200.
Holgate has just been appointed chair of the federal government’s Australian-ASEAN Council in recognition of her business success in the region.
Unlike other foreign companies which just try to sell their existing products in Asia, Holgate says the success in the region has come after detailed research and working closely with regulatory authorities in each market.
Holgate says the company also makes sure it hires talented local staff in each market.
She says Chinese tourists visiting Australia have provided another big market for the company recently, as they buy Blackmores’ vitamin and healthcare products during their visit and take them home for friends or to onsell — a trend she calls “passive” China sales.
“When I took over our sales to Asia were about $26m a year,” she says.
“Taking into account passive China sales, Asia has probably contributed some $150m in revenues to our business in the last year.”
Holgate says increasing consciousness in Asia about the source of food and healthcare products had also helped their business, given Australia’s reputation for high standards of health care and industry regulation.
Holgate says that once it is passed by the Senate, Australia’s new free trade agreement with China will further boost Blackmores’ business, but she says the company’s growth is now constrained by limitations on the supply of its ingredients.
The company is working with its suppliers to help them plan for the increased demand.
Lessons of booms and busts. 30 years to hit $100 then six weeks for another $50
DateOctober 9, 2015 - 11:57AM
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Simon Evans
Senior Reporter
[Image: 1444353935222.jpg]
While both Blackmores and Bellamy's are well-run and highly-respected companies, they are both trading on price-earnings multiples of around 40 times expected 2015-16 earnings. Photo: John Woudstra
It took 30 years for vitamins maker Blackmore's shares to reach $100, and just six weeks for it to add another $50. Organic baby formula maker Bellamy's Australia has gone from an issue price of $1 in July, 2014 to be seven times higher now at above $7.
Australian investors have watched plenty of bubbles over the past 15 years. There is an increasing sense that health foods and vitamins may be the modern-day version of the mining boom and slow bust, and the much-faster dot com boom and bust of 1999 and 2000.
While both Blackmores and Bellamy's are well-run and highly-respected companies, they are both trading on price-earnings multiples of around 40 times expected 2015-16 earnings. Contrast that with the long-run average of a forward-looking p-e for the Australian sharemarket of between 15 to 16 times.
There's no doubt the broad market dynamics are running absolutely the right way for both companies and investors see vast potential for both as they capitalise on strong demand from China and other Asian countries for trusted brands made in a "clean and green" environment, with rigid quality control.
Investors fortunate enough to take a slice of the Tasmanian-based Bellamy's at $1 a share have absolutely cleaned up. A seven-bagger is a stellar outcome at a time when sharemarkets have the wobbles and there are question marks across the globe about a low-growth economic environment.
Bellamy's shot the lights out in surpassing prospectus forecasts, but there is also a scarcity factor at play, with the company having a total of 95 million shares on issue after having raised $25 million at $1 per share in its float, as some new investors came in.
But when it comes to Blackmores shares, they have more in common with the rare Mountain Pygmy Possum when it comes to scarcity. There's only 17.2 million shares on issue and chairman and founder Marcus Blackmore alone holds almost 20 per cent of the company.
Blackmores has done an extraordinary job of building its brand and capitalising on demand from China from both expatriates and entrepreneurs sending vitamins back to relatives and friends, tourists visiting Australia, and on Chinese language online sites like Tmall.
Citigroup analyst Craig Woolford pointed out in an extensive report on ASX vitamins newcomer Vitaco on October 6 that Blackmores has traded for a long time on the ASX after having listed in 1985 and provides a useful proxy for longer-term horizons.
Woolford says the one-year forward p-e ratio for Blackmores on a 10-year average is 17.8 times. He also points that the sale multiples for Hong Kong-listed Biostiome's $1.67 billion acquisition of Swisse Wellness were at similar levels to where Blackmores is trading.
Blackmores hit a high of $156.50 during intra-day trading on October 8 before falling to $141.87 at the close. It went through $100 per share for the first time in late August 2015.
But on the plus side for the Australian vitamins and health foods groups according to Citigroup is the rising number of "China connections" to Australia through international students studying here, tourists coming to visit, and through migration. The connections have been growing at a double-digit rate for each of the past five years and now sits at 1.4 million people in total. That's substantial in a total population of 24 million, and very good for building brand awareness.
But even for companies in the sweet spot for China demand, sometimes share prices run up too hard. Rio Tinto reached $145 in late November, 2007 while BHP Billiton got to $49.55 in May, 2008 as the flagbearers for what was supposed to be a once in 100 year resources boom that experts predicted would just keep on going. BHP, even with its mini-surge of 16 per cent over the past three days, is now at half those levels of seven years ago.
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