Current account deficit jumps, Bernanke cautious on US recovery: Economy Roundup

The current national account deficit has risen by a seasonally adjusted 23% to $16.1 billion during the September quarter, according to the latest figures from the Australian Bureau of Statistics.

The figures show the deficit on the balance of goods and services rose by $4.2 billion to $5.4 billion, while the primary income deficit fell by 10% to $10.7 billion.

There was a turnaround of $4.8 billion on the June quarter surplus on goods and services, with a deficit of $3 billion – a development which is expected to take 1.8 percentage points away from GDP growth in the September quarter.

Lawyers representing the investors in the managed investment scheme of collapsed business Great Southern have filed an application to prevent Bendigo and Adelaide Bank from listing investor’s defaults with credit reporting agencies.

A lawyer from ERA Legal has told Business Spectator the application will stop Bendigo from revealing the identities of investors who have been unable to repay loans.

Shares open flat after weak leads from Wall Street

The Australian sharemarket has opened flat today after weak leads from Wall Street, where comments from Federal Reserve chairman Ben Bernanke sparked investors’ anxiety.

The benchmark S&P/ASX200 index was up 1.94 points or 0.04% to 4678.4 at 12.10 AEST, while the Australian dollar opened slightly lower to US91c.

ANZ shares have declined 0.5% to $21.85, while Commonwealth Bank shares have also fallen 0.7% to $53.43. Westpac shares declined 0.5% to $23.78, while AMP gained 0.3% to $6.18.

Westpac Banking Corporation chief executive Gail Kelly has defended the bank’s decision to lift its variable home lending rate by 45 basis points last week, a 20-point rise above the 0.25% increase announced by the Reserve Bank of Australia.

“These are difficult decisions and we spent an awful amount of time [deciding to raise rates],” Kelly told an investor briefing. “In the mortgage world in particular… pricing hasn’t really reflected the additional cost of funding.”

Also in the banking sector, ANZ has agreed to buy the loan and deposit books of AWB’s rural services business, Landmark Financial Services, in a deal that will involve about $160 million in capital.

The company said it would make the acquisition worth about $2.7 billion at net book value, with chief executive Mike Smith making a statement to the ASX.

“This transaction is consistent with ANZ’s strategy to become a super regional bank… The Australian agricultural sector is well placed to benefit from growth in global population and food demand over the next 10 years, particularly in Asia.”

Woolworths is reportedly battling with Tabcorp Holdings regarding the purchase of pub group National Leisure & Gaming, according to the Australian Financial Review.

The publication has reported the two companies are head-to-head over a possible purchase, with NLG chief executive Andrew Jolliffe saying the company has been searching for methods by which to inject capital.

United Minerals has pulled itself out of a proposed rights issue, with the company saying it will not proceed with the deal which included up to 15.51 million of new options.

“It was a condition of BHP Billiton’s offer that the rights issue not proceed,” UMC said in a statement. “This condition of the offer has now been satisfied.”

Dubai government denies asset sale to fund debt repayment

Overseas, the Dubai government will not sell any of its assets in order to meet the obligations of state-owned Dubai World, which has gained exposure worldwide for its recent debt problems.

“Part of obtaining finance is selling assets… belonging to the company and not the government,” director general of Dubai’s department of finance Abdulrahman al-Saleh said in an interview on Al-Jazeera.

“There is confusion in the media that the government plans to sell assets… the company has foreign investments and real estate investments abroad. There is nothing to prevent selling these assets.”

On Wall Street, investors grew nervous after Fed chairman Ben Bernanke said while the economy is improving, the unemployment rate could still continue to rise.

“We still have some ways to go before we can be assured that the recovery will be self-sustaining,” he told the Economic Club of Washington. “Also at issue is whether the recovery will create the large number of jobs that will be needed to materially bring down the unemployment rate.”

“Right now we are still looking at the extended period, given that conditions remain – low rates of utilisation, subdued inflation trends, and stable long-term inflation expectations,” he said in response to a question. “That remains where we are.”

The Dow Jones Industrial Average gained just 1.21 points or 0.01% to 10,390.11.