Market Commentary
Australia ‘Bucking a Global Trend’ of Deregulation
InvestorDaily
The announcement of a royal commission may suggest tighter regulation for the Australian banking sector at a time when other regions are focusing on deregulation, says AMP Capital. Speaking to InvestorDaily, AMP Capital chief economist Shane Oliver said that the news of a royal commission – “another inquiry” – introduced an element of uncertainty into the financial services industry. “I think, in a nutshell, [the royal commission] just puts a bit more uncertainty around Australian banks and raises the prospect of more regulation at a time when the US is going in the opposite direction,” Mr Oliver said.
“It may mean that we’re well and truly into a period where we’re seeing relative underperformance of Australian banks versus US banks. So we’ve been bucking a bit of a global trend in that sense, and that may worry investors a little bit.” The implication of further tightening of regulation, among other things, could mean that foreign investors might find reason to “underrate” Australian banks, the chief economist added.
The rest of this article can be found at investordaily.com.au.