Hedge Funds Target Australian Banks

Australian Banks under fire by the Hedge Funds again

Rising bad loans and falling earnings are the trigger

It seems that the mainly international hedge funds have set their sights on the Australian banks yet again. Current data shows that the funds have ‘borrowed’ A$9bn worth of stock to sell short against the Big 4 banks in Australia. The trigger for this increase to record short selling against the banks started with the ANZ’s most recent result, which saw the bank cut its dividend and increase their bad and doubtful debt book for the first time since 2008.

Big 4 Banks results

Big 4 Banks results

Australian Banks have reported weaker results than last year

Outlook is less optimistic

The big 4 banks have reported for the half year and there have been some interesting outcomes. Essentially, the banks are way past their golden years.
With a higher cost of borrowing, combined with a lower margin on their lending, the big 4 are now finding life to be tougher than the past 8 years.

Outlook is less optimistic

The big 4 banks have reported for the half year and there have been some interesting outcomes. Essentially, the banks are way past their golden years. With a higher cost of borrowing, combined with a lower margin on their lending, the big 4 are now finding life to be tougher than the past 8 years.

Bubble, what bubble?

Bubble, what bubble?

The recent Commodity rally is not what it seems

The majority of trading happens at night

Earlier this year, the commodity market started to rally. In particular, the Chinese market saw a rapid rise in volume that make previous bubbles seem tame.

Over 2 months, daily turnover on Chinese future’s market rose by an astonishing US$183bn, which eclipses the previous booms seen in Chinese equities and even the Nasdaq boom of 2000.

Incredibly, the length of time held for these futures contracts barely lasted 3 hours for Steel and iron ore contracts.

Why China is the Big Worry

Why China is the Big Worry

Most people think that China is a great success story in being able to transition from Communism to Capitalism in a little over 1 generation, unfortunately that is not the case.

This article from Bloomberg takes a light-hearted look at the current woes facing the Chinese economy.

A quick look at the chart below shows the perilous state of Chinese debt levels

Negative Interest Rates in Australia?

Negative Interest Rates in Australia?

Negative interest rates are growing worldwide, is Quantitative Easing to blame?

The Reserve Bank cut rates to a record low, could we get negative rates?

The idea of Quantitative Easing (QE) has been established to allow more money to flow into credit markets and by doing so, increase the ability of banks to lend money. QE1 started back in 2008 when the US Federal Reserve stated they would buy bonds each month. They did this by issuing said bonds to their Primary Dealer network, whether they wanted them or not.