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Insights

Australian ETFs surpass $50bn

Posted by Anton Murray Consulting on . Posted in Funds Management News

InvestorDaily

The Australian exchange-traded fund industry has overtaken the $50-billion milestone, according to the newly published report by BetaShares. The 2019 Half Year Review reported that the sector grew by 25 per cent in the first six months of 2019, adding $10.1 billion in funds under management (FUM) and up from $2.7 billion in the first half of 2018. Trading volume increased by 11 per cent compared to the second half of 2018.

Last week, ETF assets in Australia were forecast to reach $100 billion by 2022 by a Stockspot report, which would double the sector’s size during the next three years. BetaShares chief executive Alex Vynokur said the pace of growth of the Australian ETF industry is well on the rise. “Over the past few years, ETFs have become a popular choice for Australian investors to diversify their portfolios, which were traditionally very skewed towards local equities,” Mr Vynokur said.

The rest of this article can be found at investordaily.com.au.

APAC Banks to Face Existential Choice

Posted by Anton Murray Consulting on . Posted in Market Commentary

InvestorDaily

A new report has found that banks in the APAC region are set to face an existential choice in order to stay competitive. The latest Asia-Pacific Banking Review from McKinsey & Company has warned that banks will have to choose between unlocking the potential of scale to boost productivity and capital or prepare to be acquired. McKinsey has been running the report for the last few years and this latest report reaffirms what the report found in 2016: that a storm was brewing due to macroeconomic growth and weakening balance sheets.

In the region, the industry is growing with profits before tax topping $700 billion, representing 37 per cent of global banking profit pools. But a closer look found that the banks are facing growing pains as they mature, including slowing growth, thinning margins and higher capital requirements. The growth has slowed too, with annual revenue growth between 2014 and 2018 down from double digits to just 5 per cent and profit pools slowing to just 3 per cent.

The rest of this article can be found at investordaily.com.au.

Hong Kong IPO issuers should be more cautious over pricing

Posted by Anton Murray Consulting on . Posted in News

FinanceAsia

Budweiser APAC’s IPO flop is a timely reminder for issuers and advisors to leave money on the table for prospective investors instead of squeezing every penny out of their pockets.

Hong Kong suffered yet another blow in its attempt to attract big-ticket listings on its stock exchange this year after Anheuser-Busch InBev last week decided to pull the plug on the spinoff of its Asian business.

Similar to many withdrawn initial public offerings, the Belgian brewing giant released a statement claiming that the decision to cancel Budweiser APAC’s HK$76.4 billion $9.8 billion IPO, which could have been the world’s largest this year, was partly due to prevailing market conditions.

However, while market conditions may be partially to blame, the situation may have been avoided by better managing investor demand and pricing expectations.

The rest of this article can be found at financeasia.com.

J.P. Morgan loses custody contract

Posted by Anton Murray Consulting on . Posted in Funds Management News

Financial Standard

A $34 billion public sector fund has appointed a new custodian, ending a 19 year-long relationship with J.P. Morgan. Funds SA has selected Northern Trust as its custodian, after a long tender process. In September last year, Funds SA said it had invited seven custodians to submit proposals: the incumbent J.P. Morgan, NAB, Northern Trust, RBC, State Street, BNP Paribas and Citi. It appointed Mercer Sentinel to advise on the tender process.

Funds SA chief executive officer Jo Townsend said: “We were very pleased with the level of interest and quality of submissions from the tender respondents. We look forward to partnering with Northern Trust during the next phase of Funds SA’s evolution.” “We would also like to acknowledge J.P. Morgan, whom we have had a very strong and productive relationship over many years during which Funds SA has changed and grown significantly.” Northern Trust will commence as the custodian in early 2020, following the transition.

The rest of this article can be found at financialstandard.com.au.

July 2019

Posted by Anton Murray Consulting on . Posted in 2019

Australian banks have been digitising for decades now, with branches becoming almost obsolete, and every major bank offering a mobile app. Neobanks take digital banking one step further. Neobanks are 100% digital and look more like a tech company than a bank to many. Capitalising on the low level of trust Australians have in the big banks since the Royal Commission, Neobanks are looking to disrupt the industry and increase competition – and it seems to be working.

There are a few key players in the Australian Neobank industry: Xinja, Volt, Douugh and Revolut. Their models are similar – no branches means low overheads, so they can offer lower interest rates. Neobanks also market themselves to younger, tech-savvy consumers as well as those running small businesses, who have arguably been somewhat overlooked by the big banks. Significantly, Volt was made an Authorised Deposit-Taking Institution (ADI) license in January and Douugh is planning on being the first Neobank to list on the ASX later this month.

It’s a similar story in Hong Kong, with virtual banking licenses becoming more commonplace. The Hong Kong Monetary Authority issued three licenses in March and suggested that more are expected to be granted later this year. As recently as May this year, Singapore’s MAS was reviewing allowing neobanks into The Lion City.

Whether or not Neobanks will really take off in Asia-Pacific remains to be seen. While some consumers will no doubt jump on board, traditional banks will likely still hold a large proportion of business for the moment. This is where the approach of ‘coopetition’ will be key to the success of Neobanks. The more prominent Neobanks have agreed to avoid poaching customers from each other, as this will do little to assist them in making a dent in the market. This favoured approach is a united front against big banks to allow more players to enter the game. It’s definitely an area to watch.

Aus ETFs projected to hit $100bn

Posted by Anton Murray Consulting on . Posted in Funds Management News

InvestorDaily

ETF assets in Australia have been forecast to reach $100 billion by 2022 in a new Stockspot report, which would double the sector’s size during the next three years. The fifth annual Australian ETF Research findings showed that ETFs increased by 26 per cent over the past year to $45.8 billion in funds under management (FUM). The online investment adviser expects Australian ETF FUM to reach $17 trillion in 2023, making up 0.6 per cent of the global market.

Index ETFs tracking Australian shares were observed to have one year returns of 13.1 per cent, contrasting against the average active exchange-traded managed fund (ETMF) tracking the local share market, which the report stated would give returns of 5.9 per cent. SPIVA research, Stockspot added, has similarly shown that 80 per cent of Australian fund managers have failed to match the index return over 15 years. ETFs saved investors a collective $300 million in 2018-19 according to Stockspot, compared to being charged a fee of 1 per cent per annum or greater with traditional active fund managers.

The rest of this article can be found at investordaily.com.au.