In today’s talking points: South Australia takes on Australia’s big banks; Chinese domestics stocks to be included in MSCI Inc.’s international equity indexes; Ban of financial advisors and ASIC seeking more power; Millennials not as interested in home ownership
South Australia takes on Australia’s big banks
The South Australian government will introduce a new tax directed at the four big banks and Macquarie group. The banking sector in Australia has been very profitable in recent years, and local governments believe that big banks are undertaxed, and a legitimate source of revenue for local states. They have been receiving lower tax rates, due to their special treatment in regards to the GST, which has been estimated to be about $4 billion per annum. Commonwealth Bank, National Australia Bank, ANZ Bank, Westpac and Macquarie Group will receive increased tax rates in South Australia, with a similar structured tax rate to that of the federal government’s levy, which passed the senate this week. The new tax is estimated to generate $370 million over the next four years, and will only apply to a share of the bank’s liabilities equal to the state share of the national economy.
Read more at: smh.com.au
Chinese domestics stocks to be included in MSCI Inc.’s international equity indexes
After China joined the World Trade Organization (WTO), many analysts and China-watchers agreed that China’s integration with the international financial system was simply a question of time. However, recent developments in the story suggest that the plot may not be as predictable as expected. According to a statement released by a New York based company on Wednesday, Domestic Chinese stocks will be included in MSCI Inc.’s international equity indexes for the ﬁrst time, marking another win for China after the International Monetary Fund in 2015 granted the yuan the status of an oﬃcial reserve currency.
As analysts speculate about whether the entry of Chinese bonds into three major global indexes will be the next groundbreaking development, we can conclude that as was aptly pointed out by an independent analyst and a former chief Asia economist at Morgan Stanley, Andy Xie, when it came to the question of MSCI inclusion, at the end of the day: “Money talks.”
Read more at : Bloomberg.com
Ban of financial advisors and ASIC seeking more power
The Australian Securities and Investments Commission has banned many financial advisors over misconduct and are also seeking for more power after the banks that hire them.
In the last three years, over 100 financial advisors have been banned from the industry. However, The Australian Securities and Investments Commission lack the tools to go after financial licensees, particularly big banks.
Financial advice is a main focus for ASIC but has limitations within what they can do against the financial institutions. ASIC has a lack of power to ban senior managers and executives as well as the ability to seek disgorgement of profits.
Read more at SMH
Millennials not as interested in home ownership
In a recent report from Commsec, it has found that millennials are looking at trading shares to build wealth instead of investing in property.
Investing in online sharing is seen as an alternative to balance their finances and also save for financial goals. This is in relation with how many young people are using their money for travel, moving out of home, or even to rent and to build a buffer to take control of their savings.
Some of the top holdings are technology stocks like Xero and Wisetech. In more international terms, they favour big companies such as Apple, Google, and Amazon.
Read more at AFR