Key Data for the Week
Key economic data released this week:
Thursday – US – Housing Price Index rose in July, up 0.2% from June. From July 2016 to July 2017, house prices were up 6.3%.
Thursday – US – Initial Jobless Claims declined 23,000, to 259,000, for the week ended 16 September.
Friday – AUS – Building Permits
Friday – EUR – Markit Manufacturing PMI
Friday – US – Markit Manufacturing PMI
It was a tough day for the Australian market yesterday, with nearly every sector finishing in negative territory. The ASX 200 index fell 0.94%.
Commonwealth Bank of Australia (CBA) has agreed to sell 100% of its life insurance businesses in Australia and NZ to AIA Group Ltd for $3.8bn. The sale price represents a FY17 pro-forma earnings multiple of 16.9x. The transaction is expected to complete in CY18 and will lift the bank’s CET1 capital ratio by 70bps to 10.8%.
CBA also announced a strategic review of its global asset management business, Colonial First State Global Asset Management, which may include an Initial Public Offering. CBA declined $0.22, to close 0.3% lower, at $76.07.
Tabcorp Holdings (TAH) and Tatts Group (TTS) stated yesterday they are reviewing the Federal Court’s decision to uphold an appeal by the ACCC against their merger. The Australian Competition Tribunal (ACT) advised it will hold a directions hearing on Tuesday, 26 September 2017. The TTS shareholder meeting to vote on the merger is still scheduled for 18 October 2017, although TTS warned the decision to remit the matter back to the ACT may impact the timing. TTS and TAH closed 1.4% and 1.3% lower, respectively.
The Australian futures market points to a 0.34% rise today.
Global share markets weakened overnight as investors continued to digest the news that the Federal Reserve would raise interest rates further. The Dow fell 0.2%, while the S&P 500 dropped 0.3% and the NASDAQ lost 0.52%.
In Europe, Germany’s DAX and France’s CAC 40 rallied 0.25% and 0.49% respectively, whilst the UK’s FTSE 100 lost 0.11%.
The growth of China’s emerging middle class has been one of our major themes for some time and the latest analysis of the Chinese economy highlights the impact they are having.
Outbound travel is one segment that is reflecting significant growth already and is expected to continue, given there are 400 million millennials who will drive spending on airfares, hotels, restaurants, sightseeing, theme parks etc., both domestically and abroad.
The growth in domestic travel will be a key driver of China’s shift from construction to consumerism. The Chinese government has planned to spend US$304 billion on resorts and holiday destinations to drive internal spending through to 2020.
Australia should also be a beneficiary of Chinese travel abroad.
Should you wish to discuss this or any other Investment related matter, please contact our Investment Services Team on (02) 4928 8500.
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