It’s been a pretty slow news week. It seems as if only one man and one topic was worth the media’s time in the lead up to the Easter break.
Funnily enough this week, the Sunrise television show was the source the media turned to. The Governor of the Reserve Bank of Australia (RBA), Glenn Stevens gave an exclusive interview with David ‘Kochie’ Koch from Sunrise.
Now, the interview was a very warm and fuzzy special. I’m sure the goal was to make Mr. Stevens look like he was in touch in with the ‘mum & dad’ folk at home.
You can watch the interview here, if you can stomach the intro ‘…the man who really did save the country from the worst of the global financial crisis’ from Kochie. [Ed note: bucket please!]
But what he had to say has created frenzy in the papers. Especially when he’s actually trying warned people against speculating on increasing house prices. So far, this is the closet we’ve come to anyone in government or the RBA acknowledging that Australia has a property problem.
We won’t expect them to say bubble, but this is a good start.
‘It’s a mistake to assume a riskless, easy and guaranteed way to prosperity is just to leverage to property’, Mr. Glenn Stevens said.
Er, I don’t think the property spruikers are going to like that statement. Every day readers forward emails to the moneymorning inbox from property bulls. Telling you, that property is the only way to ‘real wealth’.
These sorts of statements from Stevens, have further increased media speculation of the chance of a rate rise on the April 6 meeting. Mr Stevens reiterated that rates need to return to ‘normal levels’ as soon as possible. In fact, Stevens has suggested that cash rates could rise about 0.5% to 1% over this year.
Adding to the surprise comments from the Governor, he finally spoke on the topic of relaxed foreign investment legislation in Australia. Many bloggers on mainstream news websites are expressing their views on how much of a problem this has caused for Australian home owners. Until now, most forms of media have dodged this topic.
Apparently Mr. Steven said that ‘…question of the role of foreign purchases is an important one and it’s one we’re giving some attention to’. But he admitted that ‘hard facts’ are hard to find. And hard facts are hard to find because foreign investors no longer need approval to purchase in Australia, so the data of foreign ownership is no longer measured.
And, while the RBA use rates to slow the property market, this won’t matter to foreign investors. Generally they purchases houses for cash. So higher interest rates will only impact Australian purchasing power of properties, not foreigners.
A popular quote going around at the moment is from Steven Keen the doom and gloom – or realistic – economist, ‘If you let incomes in other countries determine your [housing] prices, all you’re doing is importing a bubble’
And finally, to end our short working week, there’ll be a rival to the Australian Stock Exchange (ASX).
The Japanese-owned London-based company, Chi-X Global, has finally their application approval to operate in Australia. The chief executive of the company Ronald Gould plans to drastically reduce trading costs to its users.
‘By significant I don’t mean 10 or 20 percent – I mean more than that’ he said.
The target market for Chi-X will most likely be institutional traders and it’s suspected that Chi-X will be restricted to the top 200 stocks in Australia.
Coincidently shares in ASX dropped to a nine week low on the news that the ASX’s monopoly as an exchange service would be ending.
In 2007 Chi-X Global launched in London and since then it has grown to 28% of the market share. The primary exchange in England, the London Stock Exchange has reduced its market dominance to 43%.
The plans for the new exchange won’t be finalised until the Australian Securities Investments Commission (ASIC) takes over into its new role as a market supervisor. This is unlikely to happen for a few months yet.
Now let’s have a look what happened on the market’s yesterday…
The S&P/ASX 200 ended the day down by 41 points to 4,875.50. The market started the morning up but the weak building data dragged the index down over 50 points from its high of 4,928.
The Dow Jones Industrial Average was down overnight by 50 points, ending the session at 10,856.63. The ADP Employer Services data showed that the private sector cut jobs for March.
America is desperate to see some growth in the job market. On Saturday morning our time, more employment data will be released regarding public sector employment. Investors are anticipating an increase of about 200,000 jobs. However this expected increase in jobs is largely due to the once every ten-year census. Most of the jobs that have been created are temporary.
Over in the UK, the FTSE finished the session up by 7 points to 5,679.64
The Nikkei added dropped 7 points closing to 11,089.94.
The price of spot gold in Australian dollars is trading at $1,214.64 while in US Dollars it is trading at $1,113.32. The price of silver in Aussie dollars is $19.07 and in US Dollars it is $17.48.
The Aussie dollar versus the US dollar was USD$0.9168, and gained against the Japanese Yen JPY85.66
Crude Oil closed at USD$83.76
For the biggest movers on the market yesterday click here…
That’s end of a short week. Have great a Easter.
Shae.
{ 3 comments… read them below or add one }
The Rudd government and the Reserve Bank of Australia has stealthly lifted the restrictions of foreigners purchasing properties in australia,this move is quite in contrast to some of the Asian countries to the north of us,just take as an example Bali, or more priscisely [Indonesia]. whether your purchasing their properties for Investment,holiday homes or permanent residence the rules and regulations are quite rigid and most importantly,i personally have never been aware that the [FREEHOLD] AS WE KNOW IT IN AUSTRALIA] is included in the Sales Transactions………i have noticed on Advertising Real ESTATE Billboards situated between Kuta and Denpasar “FREEHOLD ” properties for sale, but on further enquirees it mostly relates to different terms on the length of Leases [in Years] on these respective properties…..”i am sure that some other australians reading this column and has been involved in purchasing properties in places such as Bali could enlighten us with comparisons.i wonder if these foreign investers purchasing properties in OZ encounter similar restictions,If they dont then their Country of Origins Rules should be implimented on their property bought in OZ. THUS perhaps AUSTRALIANS then have the opportunity to compete on [A level Playing FIELD when thinking of investing Abroad ] huju@iprimus.com.au
perhaps the sentence[stealthly lifted the restrictions] should be replaced by the word [recently] yours sincerely huju@iprimus.com.au
Indonesia can’t let foreigners have freehold (so-called “hak milik”) because it is entirely blocked by the Constitution. So won’t happen. Not in a million years. And just by the way, don’t put any of your hard-earned into Indonesia unless you are prepared to lose it. I am married to an Indo and live here and have some experience. There is zero law here and courte are entirely rigged, my friend. It is a fascist or semi-feudal system where local areas are run by appointed Gauleiters. You can trust no one and if someone is smiling at you, you are talking to a crocodile ready to eat you. Just how it is. But the food and weather are great.