Month: August 2022

CoreLogic’s daily dwelling values ​​index, which measures price changes across Australia’s five major capital cities, fell another 0.22% in the week ended 5 August – the 13th consecutive weekly decline:

Thirteenth straight loss.

Once again, the fall in dwelling values ​​was driven by Sydney (-0.29%), Melbourne (-0.34%) and Brisbane (-0.14%), whereas Adelaide (+0.12%) and Perth (+0.07%) recorded rises:

The ‘big 3’ continue to drive price falls.

It has been roughly one quarter since the Reserve Bank of Australia (RBA) first hiked the official cash rate (OCR) by 0.25% on 3 May. Since then, dwelling values ​​at the 5-city aggregate level have plunged by 2.8%, driven entirely by heavy falls across Sydney (-4.8%) and Melbourne (-3.4%):

The next chart plots the time series of price movements across Sydney, Melbourne, Brisbane and the 5-city aggregate since the beginning of the year, alongside their declines from peak as at 4 August:

Sydney and Melbourne lead declines from peak.

Sydney’s dwelling values ​​have fallen 5.4% from their mid-February peak, Melbourne’s are down 3.6%, and 5-city aggregate values ​​have fallen 2.9%. Losses across each market accelerated after the RBA’s first rate hike.

Brisbane was late to the party and only began falling in late June. However, dwelling values ​​are down 1.1% from peak.

With the RBA hiking interest rates four times over the past quarter, by a cumulative 1.75%, it is inevitable that dwelling values ​​will continue to fall, led by Sydney and Melbourne.

Already borrowing capacity has been reduced by 23% because of these hikes, and soon price falls will spread across the other capital cities and the regions.

Ultimately, the magnitude of Australia’s house price bust will depend on how aggressively the RBA hike rates. Will it follow ANZ’s, Westpac’s and the financial market’s forecasts and hike the OCR above 3%? Or will it take a more measured approach?

Only time will tell. Pass the popcorn.

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Distance? The universe must have collapsed in on itself because there’s barely a cigarette paper between the two. This may be odd, given that ASIC’s investigation, we are told, remains ongoing.

Take, for instance, Creso Pharma’s $7 million placement outlined to the market on Thursday. Not only did Blumenthal (and his nominee) chip in $1.74 million to raise, EverBlu Capital Corporate Pty Ltd acted as lead manager on the equity issue.

Based on the 6 per cent cash fee, EverBlu took in a tidy $420,000 for the deal, which will see EverBlu trousing 175 million options in Croesus, barring shareholder disapproval (luckily, Blumenthal held 10.31 per cent of the shares as at July 2021).

The fees and options are apparently negotiated at “arm’s length”. Creso must deserve entry into the Guiness World Records book for shortest limbs, given it is “mandated by Everblu Capital as its corporate adviser and lead manager for capital raisings”.

Or consider Croesus’s $5 million raising in March this year, to fund an expansion into the US. There, Blumenthal committed to chip in $318,250, just slightly more than the $300,000 EverBlu earned facilitating the raising.

Creso’s 2021 annual report lists $5.4 million in related party transactions with EverBlu, and $5.7 million the year before that.

Croesus’s raising this week comes as it looks to swallow up fellow ASX-listed weed barn Health House International. Deidre Chambers, what a coincidence, EverBlu is acting as Creso’s corporate adviser for the proposed merger and will receive a 7.5 per cent transaction fee.

Health House, which counts former South Australian premier mike rann among its directors, was recently jilted by another ASX-listed dope show, Zelira Therapeutics Ltd. Any awkwardness at that situation for Tim Slatewho sits on the board of both Health House and Zelira, could have been smoothed over with a few passes of the dutchie.

But surely other employees of Health House could use something a bit stronger. Creso plans to “immediately” cut costs of the merger partner, including “the removal of all corporate overheads, reduction in headcount, sales, manufacturing, distribution costs”.

Hey, someone’s gotta foot the bill for those corporate advisory fees!

Although it doesn’t make the front page of newspapers any more, the COVID-19 pandemic unfortunately refuses to go away.

In fact, hospitalizations and deaths were disturbingly up the past few weeks as Australians battled through winter.

So despite more than two years having passed since the S&P/ASX 200 Index (ASX: XJO) hit its coronavirus panic through, many post-COVID recovery stocks have yet to reach their full potential.

This is great news for investors, as it’s not too late to buy into some of these ASX shares.

In fact, some of them have discounted nicely in 2022 as the general market malaise dragged them down.

Here are three to buy, as nominated by Wilson Asset Management analysts:

Travel’s back. And busier than before the pandemic

The sector most obviously hit by the pandemic has been the travel industry.

While online travel agent WebJet Limited (ASX: WEB) has seen its share price double since the dark days of 2020, senior analyst Shaun Weick feels like there’s plenty more upside.

“Webjet’s a buy for us,” he said in a Wilson video.

“If you look at consensus analyst estimates on this name, you’re essentially implying a recovery to pre-COVID in the second half of 2023. We think that’s too conservative.”

Webjet has its financial year end each March, so had already reported on its results back in May, when it revealed it had returned to profitability.

“We think the market’s underappreciating the technology investments that they’ve made and the upside that provides.”

3 reasons why CSL will go gangbusters

While CSL Limited (ASX: CSL) had made a lot of money for investors for decades, the pandemic period has been lean.

Its blood plasma collection business in North America took a massive hit due to lockdowns and people generally wary of physically visiting donor centers.

Its share price, therefore, has still yet to approach its pre-COVID high.

But Wilson analyst Anna Milne reckons that’s all about to turn around.

“Firstly, there’s the Behring business, which is plasma-derived products — that’s been under-earning for a number of years now, and we think it’s really just starting to hit its straps,” she said.

“Sequiris is the vaccine business… it’s been a pretty horrendous flu season Down Under and we think that’ll probably translate to the same in the northern hemisphere.”

Then there’s the new $16.4 billion Vifor Pharma business, which CSL put in a takeover offer for late last year.

“The Vifor transaction, which has been delayed, but management is still very confident that it’s going to close and we’re really excited about the pipeline of drugs there,” said Milne.

“So CSL’s a buy.”

CSL will reveal its preliminary results on 17 August.

Strong assets and a lucrative market reopening?

Winemakers are not obvious COVID victims, but Treasury Wine Estates Ltd (ASX: TWE) would argue very much that it was.

Back in 2020, the Australian government demanded an international inquiry into the origins of COVID-19. Beijing took exception to this and placed punitive tariffs on certain Australian imports.

And China was one of the largest markets for Treasury Wine at the time.

The stock price plunged, and the company attempted to diversify its markets to restore its revenues.

Milne feels like the company can put its woes behind it now.

“Firstly, it’s got a really strong asset backing. It’s got the wine itself, then it’s got the vineyards — so that provides a bit of a backstop to the share price in these kinds of volatile environments,” she said.

“Additionally, I don’t want to speak too soon, but with a new Australian government, it does like China-Australia relations might be having a bit of a cautious reset.”

Treasury Wine will report its annual results on 18 August.

The precise days of this June trip, for “digital asset meetings”, are unknown. Bragg updated the Senate register of interests on July 13.

Last year, Britain’s Financial Conduct Authority announced that Binance is prohibited from conducting any regulated activity in Britain and warned consumers about firms advertising and selling investments in crypto-assets.

Around the same time, Japan’s Financial Services Agency warned that Binance was operating in the country illegally, Germany’s BaFin threatened to fine Binance for selling investment products without prospectuses and the Monetary Authority of Singapore banned Binance altogether and warned consumers it is not licensed.

In the United States, where it is banned, Binance is under investigation by the Department of Justice, the Internal Revenue Service, the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Last month, Reuters reported that Iranian traders continued to operate on the Binance exchange in contravention of international sanctions.

This month, the Dutch central bank DNB fined Binance for operating in the Netherlands without being registered.

Saving the best for last, Binance last year handed over confidential customer data to Russian security services so Vladimir Putin‘s agencies could trace the sources of bitcoin donations to jailed opposition leader Alexei Navalny. And then send those donors a polite warning letter?

Yet Andrew Bragg exercised his judgment to accept Binance’s sponsorship of his international travel. His powers of judgment of him are not unlike his powers of comprehension of him: inoperative.

Standing in the Senate corridor on Wednesday, Bragg told SBS News “There’s no question there are far too many vested interests in this building and if I had it my way, I would have it locked to the lobbyists.”

Lock out the lobbyists, says the former lobbyist for bank-owned super funds. Too many vested interests, says the guy whose jolly to California was funded by the crypto industry. Turns out Bragg’s self-awareness is also on the blink.