1 / 71

Market Update

Market Update. John Flavell General Manager, NAB Broker. Australian property riding on China’s back. Aussie John sells to which bank?. AFR, Nov 2012. Lenders face off on out-of-cycle rate cuts. Europe delays, US ‘fiscal cliff’ threatens growth: G20. AFR Dec 12.

sumi
Download Presentation

Market Update

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Market Update John FlavellGeneral Manager, NAB Broker

  2. Australian property riding on China’s back Aussie John sells to which bank? AFR, Nov 2012 Lenders face off on out-of-cycle rate cuts Europe delays, US ‘fiscal cliff’ threatens growth: G20 AFR Dec 12 Britain on the brink of ‘triple-dip’ recession AFR Nov 12 Japan posts record trade deficit Australian Broker Feb 2013 BBC News, Feb 2013 AFR, Jan 2013 China’s investment in Australia cut in half Congress votes to extend US debt limit BBC News, Jan 2013 Australian, Oct 2012

  3. Financial markets have turned surprisingly optimistic. Equity markets up, fear index down.

  4. European sentiment may be bottoming but not their economy • European confidence still at historic lows • But might have bottomed – re ECB and Fed • Delaying Basel 3 liquidity will help further • But can’t say the same about their • economy

  5. Our forecast suggests moderate on-going US growth Model based on: Real interest rates, House prices, Equity prices, Oil prices, TWI (currency), Commodity prices, Credit rationing and lags.

  6. China Growth outlook: We expect further acceleration of growth to around 8 ¼% in 2013 – with policy helping

  7. World still very multi speedDeveloped v Developing

  8. AUD a proxy for global risk appetite and commodities. And of course China Model driven by: commodity prices; USD/EURO – as measure of USD weakness; long and short run rates; relative unemployment; relative equity markets and VIX.

  9. Near- term Australian growth also constrained by consumer caution. • Saving ratio remains around GFC levels in trend terms • Deposit inflow both by consumer and (especially) business strong • Personal (credit card) and business credit currently around flat to negative • Home loans at 5% a 30 year low

  10. Flattish house prices not helping perceptions of wealth. May be turning now but don’t expect much going forward • House price expectations at end 2012 have turned slightly positive • Very different by state – WA still strong: SA and VIC less so. • Over the medium term our model wants moderate growth. • Accelerating in near term but then flattens out by end 2013 as unemployment rises

  11. Interest rates • Our expectation RBA will cut by 75bps in 2013 to 2.25% • First cut probably May • As unemployment rises to 5.75% by mid-late 2013, RBA will need to respond again • We expect a final cut in late 2013 as mining phasing heralds further labour market weakness (say November) • Forecasts imply a bottom in rates between 2 and 2.5% depending on extent of the slow down

  12. Australian economic forecasts * at end of period; ** through-year growth

  13. Customer deposits Source: NAB Weekly Advertised Term Deposit Rates since 2007 ^Represents advertised term deposit rates, used here as a peer comparison. These make up less than 15% of total term deposit costs.

  14. Term Wholesale Funding * Includes Covered Bonds Source: NAB Treasury

  15. Short-term Wholesale Funding Source: Bloomberg

  16. Overall funding cost picture Source: NAB Treasury & Bloomberg

  17. In summary • Environment will remain volatile both globally and domestically • Confidence running ahead of the fundamentals • Domestic downturn in growth post peak of mining boom • Property prices sideways • Credit growth slow • Cash rate down

  18. Social media a missed opportunity for brokers MFAA uses social media to promote brokers The Adviser, May 12 Small firms say LinkedIn works, Twitter doesn’t Your choice: Embrace social media or bust New App promotes brokers to borrowers Wall St Journal, Jan 2013 Twitter move to Australia ‘imminent’ Australian Broker, Jan 2013 AFR, Jan 2013 The Adviser, Nov 12 5 tips for engaging clients on Facebook Get to grips with Gen Y or lose out, say brokers Australian Broker Jan 13 Broker News, July 2012 19

More Related