Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with Bank of New Zealand, including news that inflation in China surged in November to a 28 month high of 5.1%.
This increased expectations that Chinese authorities would tighten monetary policy to slow down an economy that is threatening to overheat.
Food price inflation hit 11.7% and retail sales grew 18.7% in November from a year ago. Factory output grew 13.3%.
However, contrary to some expectations, Chinese authorities held off on an increase in official interest rates over the weekend. It did increase the reserve assets ratio for banks for a third time, trying to slow down lending.
China's growth rate is crucial for New Zealand and Australia, given it is collectively our largest buyer of exports directly and indirectly.
Meanwhile in Australia, Treasurer Wayne Swan has unveiled reforms to the banking system designed to give more competition for the big four Australian banks.
Swan announced the abolishment of exit penalties for mortgages and plans for single bank account numbers to make it easier for customers to move banks.
It also announced plans to help building societies and credit unions find financing to create a 'fifth pillar' to compete the with the 'four pillar' banks -- NAB (BNZ), ANZ, Westpac, CBA (ASB).
However, in a surprise move, Swan also announced plans for all banks and building societies to be allowed to issue covered bonds, which are currently banned in Australia but not in New Zealand.
This will allow the big four to issue covered bonds offshore to refinance some of their short term borrowing.
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16 Comments
Rents are definately going up a bit- have 3 properties where fixed term due in January.
No movement for one at $330/wk, one at $350 wk increase to $360 wk, the one at $390 wk increase to $405 wk . Might have been a little more except in each case good existing tenants want to stay on.
So covered bonds are going to be allowed in Australia as they are now in New Zealand. As the overseas lenders are not willing to lend to Europe they will to Australia and New Zealand, with gusto, particularly as their covered bonds mean they will come before the depositors in any subsequent crash which will happen. The Banks will cause another property bubble here and extend the one in Australia. So depositors get out of those Aussie Banks unless of course John Boy is going to guarantee your savings!! The world has gone mad.
Flux,
Here's all our articles on covered bonds. Gareth Vaughan has been covering them very closely.
http://www.interest.co.nz/category/tag/covered-bonds
Westpac are planning to issue up to NZ$8.8 billion worth
http://www.interest.co.nz/news/westpac-all-set-5-billion-euros-nz88-billion-covered-bonds-programme
BNZ has already issued NZ$1 billion worth and may sell up to NZ$6 billion worth.
The RBNZ has said our banks can issue up to 10% of assets in covered bonds. That's up to about NZ$32 billion worth.
cheers
Bernard
The idea of covered bonds is to move some of the banks finance "worries" out longer term, and yes an investor gets a pretty secure deal, that helps us stabilise things. The thing I dont like is they get guaranteed before depositors, so depositors lose or the Govn has to step in. I dont think this will cause a [further] bubble, the banks cant lend to ppl who wont borrow which is what is happening right now....and I think the day of reckoning for OZ looks rather close.....
regards
While I can understand that these bonds get rid of the fear of the consequences of the short term loans all coming to a head at the same time I have heard that the Oz Banks think they will make a killing here this year. The main way they can do that is by lending out on mortgages. I have heard that they are back to 90% lending again. I know people who say the market is going to go up again. All the Banks need to do is advertise, tell people that they can have it all and the purchasers will start buying again. If the Government steps in to guarantee the depositors then they will have to get that money from overseas and so the overseas debt will increase even further. Does our Government still guarantee the OZ Banks overseas wholesale funding? If it does then that is even more frightening.
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BUY AUSSIE PROPERTY NOW!!!!!!!!!!1111
http://smh.domain.com.au/real-estate-news/buyers-start-your-engines--th…
This is interesting news, I wonder were Stockco got their finance, wouldn't be a certain south Island finance company would it, no I doubt that.... the firm that owns the lease cows turned up this morning with paper work and they had seen police and demanded i draught the lease cows out and then the truck arrived and loaded and gone, o well 40 less cows to milk.
- xenabuffy (73 ) 10:30 am, Mon 13 Dec #80
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xenabuffy wrote:
the firm that owns the lease cows turned up this morning with paper work and they had seen police and demanded i draught the lease cows out and then the truck arrived and loaded and gone, o well 40 less cows to milk.
http://www.trademe.co.nz/Community/MessageBoard/Messages.aspx?id=525263…
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