Property giants harassment claims; property hits $12tr; CBA shares dumped

Property giants harassment claims; property hits $12tr; CBA shares dumped

News in brief

The value of the Australian dwelling market has pushed beyond $12 trillion, with house prices outpacing units, and regional areas taking a greater share of the overall pie. The housing market is three times the size of the superannuation system, and four times as much as the total amount of bank deposits across the country.

 

Commonwealth Bank made $2.6 billion in the first three months of this financial year, as it grew its home lending and household deposits base, but it wasn’t enough to satisfy investors who sold off CBA stock, with the bank’s share price dropping by six per cent yesterday.

 

Consumer confidence has turned positive for the first time in nearly four years while business conditions are now at their highest level since early last year.

 

BHP must pay almost $100,000 for failing to ask its mining workforce whether they wanted to work on Christmas Day and Boxing Day following a landmark judgment. The Federal Court has fined the mining giant $15,000 and ordered it to pay a total of $83,700 to 85 workers in Queensland for breaching national employment standards.

 

US President Donald Trump hosted Syrian President Ahmad al-Sharaa yesterday, the first time a Syrian head of state has visited the White House since it became independent in 1946.

Fear-o-meter

There is growing evidence of strength in the local economy, not least data released yesterday that shows a surprising surge in consumer confidence. The Westpac Melbourne Institute reading is the highest in seven years, if you discount the COVID period.

 

Maybe the number is a rogue number. These surveys don’t tend to jump by 12 per cent month-on-month, as the October reading did. Or maybe not. Higher consumer confidence is a lead indicator for household spending, which comprises about half of GDP.

 

Also yesterday, the National Australia Bank business conditions measure hit its highest level since March last year, although sentiment has waned slightly.

 

Meanwhile, Commonwealth Bank boss Matt Comyn said the Australian economy remains resilient, economic growth is recovering, and disposable income is rising for many households. He should know given the debit and credit card data, home and business lending portfolio, and deposit base the bank has.

 

A stronger economy is good news, although it does introduce inflationary pressures, and diminishes the chance of another interest rate cut.

Fear & Greed Q+A today

Commonwealth Bank shares fell 6.6pc yesterday. For a long time analysts have said CBA is very expensive - so was a sell-off inevitable?

 
"Commonwealth Bank, its PE ratio, is 28-29 times earnings. ANZ, it's about 17 times earnings. Westpac and National Australia Bank are more like 19, 20 times earnings. Now, if you think all the major banks are kind of the same, right? So they're all going to be giving taking deposits, they're all going to be giving home loans and business loans. Some will do better on cost, some will do better on tech, but broadly, if the economy is growing, the banks grow, then how do you distinguish between ANZ and Commonwealth Bank?

 

Well, one way is that ANZ is much, much cheaper than Commonwealth Bank. And what we've seen over the past few months is all these bank analysts saying, well, Commonwealth Bank at 29 times earnings compared to ANZ at 17 times earnings, or Commonwealth Bank really needs to be outperforming the market to actually justify that premium price.

 

Yesterday, in the home lending market and in deposits, they were better than the market, but they're only slightly better than the market. So analysts are looking at that saying, well, we think they should be a lot better than the market, but they're only slightly better than the market. Therefore we're going to sell off. This isn't just a bank thing either, it goes into all the sectors."

 

General information only. Seek professional advice before making investment decisions.

Commercial property giants CBRE and JLL are under fire following allegations of harassment and other inappropriate behaviour by senior employees. CBRE says it is investigating allegations that a senior employee sexually harassed a colleague this year and that managers at the group were in inappropriate workplace relationships. An employee allegedly “placed his hands down the pants of [an] employee … without consent at a CBRE event”, according to the Australian Financial Review. At JLL, several agents are now suing the firm, alleging complaints were mishandled and ultimately ended in their termination. The list of allegedly poor workplace behaviour continues to grow. In recent years we have had allegations and examples of dreadful behaviour in media companies, financial service companies, federal and state parliaments, mining, technology, early childhood education, hospitality and retail. Now we can add property to the list.

Greed-o-meter

Rank	State or Territory
1	South Australia
2	Tasmania
3	Northern Territory
4	Australian Capital Territory
5	New South Wales
6	Queensland
7	Western Australia
8	Victoria

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Victoria has been rated the worst state or territory to do business in Australia for the second year in a row. The Business Council of Australia's Regulation Rumble report compares the states and territories across 10 categories, ranking them on planning systems, payroll taxes, property taxes and charges, retail trading hours, workers’ compensation premiums, and a handful of other metrics. South Australia has once again been ranked #1.

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Source: BCA, reported in The Australian Financial Review