ASX may enter bond market


Published in the Daily Telegraph, July 2009

Offering state and Commonwealth Bonds on the share market would enable retail investors to get their hands on a valuable product previously not available to them.

The move, announced by the Australian Stock Exchange last week, has been welcomed.

"Access to debt funding through the issue of bonds has traditionally been sourced through wholesale markets," Wealth Within chief analyst Dale Gillham said.

"But due to lack of liquidity in this market it is now proposed both state and federal governments have the opportunity to source cash from Australians by way of trading bonds on the stock exchange.

"For retirees looking for risk-free income, bonds are a great investment vehicle provided they can lock in a higher term interest rate than the cash rate.

"[But this] is debatable right now given the effect on the economy resulting from the sub-prime meltdown. 

In my opinion investors looking to generate wealth or increase retirement savings while interest rates are low would be better off in other investment vehicles."

The stocks to watch over the coming week, according to Thebull.com, include ANZ, which finished last week up to $16.15.

This is because of reports that the British bank, Standard Chartered, and ANZ were about to divide up the Asian assets of the besieged Royal Bank of Scotland. 

Also of interest is BHP, which finished down 87c to $33.43, because it is set to sell its Yabulu nickel refinery in Queensland and book $US675 million in write downs.

Eyes will be upon Rio Tinto, down $2.15 to finish at $49.60, after trading in shares resumed after a halt while underwriters moved shares that were not picked up during its equity raising.

This resulted in acceptances to 94.76 per cent of the new stock, according to Thebull.com.

The week ahead's major event will be the meeting of the Reserve Bank of Australia on Tuesday, which will determine the direction of interest rates. Most experts believe they will remain the same. Jobs are big on the agenda also.

Today the ANZjob advertisements survey for June is released and on Thursday the Australian Bureau of Statistics releases its labour force data for June.

"Without a doubt, the most important release [this] week will be the Australian labour force figures for June," Federal Treasurer Wayne Swan said.

The jobless rate hit a five-year high of 5.7 per cent in May after the surprise fall in April.
Federal budget forecasts for this quarter are for a jobless rate of 6 per cent.

Also out this week is data on housing finance for May (on Wednesday).


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