insto - Australian financial markets

RBA surprised the market by leaving the cash rate unchanged this afternoon. Cash rate stood at a 49-year low of 3pct in October 2009 and after three 25bpts hikes in October, November and December the cash rate now stands at 3.75 per cent.

“If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term,” said Glenn Stevens, governor in his monetary policy decision.

As we reach what may become of the key dates in the financial industry, at least until the next boom starts in earnest, that is, many pundits are asking: “What have we learned?”

The answer from the investment banks seems to be a resounding “not much”.

The New York Times, in a comprehensive review over the weekend made the very powerful point that: “One year after the collapse of Lehman Brothers, the surprise is not how much has changed in the financial industry, but how little.”

One year later we still don’t know if the regulators choice to sacrifice Lehman Brothers was the right one. But we do know they will do whatever they can to not have to make that choice again. Reports Jonathan Shapiro and Jane Lee.

A year on since the Lehman Brothers failure, Caren Chesler, our US correspondent, sought answers. While the reasons for its demise are becoming clearer under the glare of 20/20 hindsight, what will be Lehman’s legacy is just as opaque as the practices that caused its collapse, as Chesler found…

Insto’s editor, Bernard Kellerman, spoke to Paulo Maia, HSBC Australia’s newly arrived CEO, about his plans for the rest of the year. Here’s some of what Maia had to say about HSBC’s pipeline of corporate bond deals:

INSTO: Where do you see the debt markets heading in the near future?

MAIA: Good question. I think most of the activity in the debt capital markets has included Australian financial institutions, some of which are also government backed, and you will see more and more of the corporates coming.

INSTO: When will this happen?

MAIA: I think sooner than you expect. We have a good pipeline of business.
Ours is a global business but we have a lot of regional focus. A lot of our distribution is done in Australia, and in this region. I would say the numbers of specialists that we have flying into the country to talk to our customers in terms of specific transactions have been unbelievably high in the last 3 or 4 weeks because of demand and interest from customers, who want to talk more about it. So we’ve been flying people from Hong Kong, from London, from Singapore, where most of these debt capital market specialists are located, and [they’re] visiting clients together with our people here. So I do believe the corporates are going to be there pretty soon.

US stock markets strengthened at the close despite poor retail and jobs data dampening strong numbers from Walmart.

The UK banks have a thing or two to teach our financial players when it comes to  boosting Tier 1 capital, says finance journalist Elizabeth Fry.

When it comes to reviving the domestic credit markets, it really is all about liquidity. Our columnist, Craig Saalmann*, has a suggestion to boost the market.

There has been a lot written and said about the challenges facing domestic credit investors. Not least is the cost of liquidity and the capacity to reallocate invested funds in a credit portfolio.

This week Mark Bayley explores liquidity and its effects on the Australian corporate bond market.

Still on the topic of resuscitating the Australian corporate bond market, I want to talk about liquidity; or the apparent lack of it.

Some investors have complained that the Australian corporate bond market lacked liquidity and depth during the recent financial market meltdowns, and even now the market is less liquid than many institutional investors would like. 

This week Mark Bayley* explores liquidity and its effects on the Australian corporate bond market. Mark is an independent credit strategist who writes a regular guest column for Insto. The views expressed are his own.

Still on the topic of resuscitating the Australian corporate bond market, I want to talk about liquidity; or the apparent lack of it.

Some investors have complained that the Australian corporate bond market lacked liquidity and depth during the recent financial market meltdowns, and even now the market is less liquid than many institutional investors would like.