Chaotic Egypt teeters on collapse, warns general

EGYPT’S Defence Minister, General Abdel Fattah al-Sissi, has warned that the state is at risk of collapse.

Failure to resolve the situation ”could lead to grave repercussions if the political forces do not act” to tackle it, General Sissi said on his Facebook page.

”The continuing conflict between political forces and their differences concerning the management of the country could lead to a collapse of the state and threaten future generations,” he said.

The comments posted on Tuesday were extracts from a speech he gave to students at a military academy.

He further warned the political, economical, social and security problems facing Egypt constituted ”a threat to the country’s security and stability”.

Earlier, thousands of demonstrators flooded the streets of Egypt’s three Suez Canal cities in defiance of a night-time curfew imposed by President Mohammed Mursi after dozens were killed in clashes with police.

Witnesses said protesters took to the streets of Port Said, Ismailiya and Suez City on Monday night as the 9pm curfew went into effect to stage ”breaking the curfew” demonstrations.

The protesters chanted slogans against Islamist rule, ”Fall, Fall the rule of the guide [of the Muslim Brotherhood]”, referring to Dr Mursi who hails from the Brotherhood.

Mahmud Abu al-Majd, of Port Said, said: ”We are on the streets because no one can impose their will on us. We won’t bow to the government.”

In Ismailiya, witnesses said the protesters decided to hold football matches on the streets as part of their protests.

Yet for all those who took to the streets on Monday, there were just as many who stayed home, thinking Dr Mursi has not had a chance to solve Egypt’s intractable corruption and economic problems. They think that protesters should honour the June election results that elevated Dr Mursi to the presidency and speak at the ballot box in coming parliamentary and eventually presidential elections.

”Don’t tell me people are going to the street because they have a hard life. They are taking revenge for the killings,” said Mohammed Noor, 26, of Port Said. ”It is like waves of vengeance. It will continue until one side gets tired or this turns into a real revolution with real leaders.”

Dr Mursi on Sunday declared a month-long state of emergency in the provinces of Port Said, Suez and Ismailiya after riots that left about 50 dead and hundreds wounded.

In a television address he also slapped curfews on the provinces from 9pm to 6am.

The main opposition grouping, the National Salvation Front, which is fractured among many smaller parties, said on Monday that it would not hold national reconciliation talks with Dr Mursi, a position, some protesters said, that made the opposition seem as tone deaf as the President.

Protesters rejected a military takeover, noting that the generals had assumed power after Hosni Mubarak stepped down and had failed in 18 months of rule to bring about reform.

On Monday, the Islamist-dominated Senate ratified a law that would grant the armed forces powers of arrest.

In the US, the Obama administration condemned the unrest.


The original release of this article first appeared on the website of Hangzhou Night Net.

Sharemarket feeling more adventurous

THE bullish behaviour of the sharemarket in recent months and particularly for the past nine days suggests we are in a ”risk on” phase – in other words, investors are pulling money out of the saver haven, the bond market, and putting it into shares.

It has been a couple of years since the market has witnessed such positive sentiment, and Tuesday’s rise took place despite a weaker lead from the US market.

The market has been edging up for a couple of years but without gusto and volume. Thus the question needs to be asked: what has changed the sentiment?

In theory, shares should rise in response to a belief that corporate profits will grow. But there is little hope that earnings will improve in proportion to the gains made

recently on the ASX. When the interim profit season reports come through over the next few weeks they may be better than current expectations but they won’t be strong. Some companies will post robust earnings, but plenty will be treading water or doing well just to stabilise profit falls.

Manufacturing, retail, construction, tourism and aviation (to name the obvious few) are still struggling and the companies engaged in these industries will not fare well in the coming reporting season, therefore the recovery in the market has almost nothing to do with profits getting better – it is virtually all sentiment driven. So are we just redefining what we consider to be appropriate price-earnings ratios?

There are a bunch of external factors that are playing into this: the immediate risk of a European financial implosion has eased and the prospect of falling off the US fiscal cliff has been averted.

But the US recovery is tepid and there is general recognition that Europe will not grow for years. Both still have massive debt problems that need to be dealt with.

The only real positive is that recent data out of China suggests that its growth rates may be starting to recover, but these are very early signs.

The revival in sentiment appears to be about mitigation of the negatives rather than the appearance of the positives, but this has a flow-on effect. The sharemarket is making us wealthier and so is the property market, which is also showing signs of gains.

Investors are therefore increasingly prepared to take a bet on shares – which pushes up prices and, in turn, serves to reinforce that confidence.

But are businesses and consumers bullish enough to translate this sentiment into action or just take a punt on the market?

The latest business confidence survey by the National Australia Bank released on Tuesday answers that question. While it posted a sharp increase in December, it was all about those external indicators, like aversion of the European debt crisis and the US fiscal cliff. A more thorough read reveals that businesses are still concerned about forward orders and future capital expenditure.

There is nothing in any official or unofficial data to suggest that companies are prepared to invest. The mining industry spending spree that has been sustaining the economy for the past couple of years will peak this year.

The improvement in commodity prices – in particular iron ore – has resulted in an overdue rerating of large resources companies, which has helped to push up the equities market.

And the enlarged appetite for risk has spurred gains in volatile stocks such as Macquarie Group, which has become something of a bellwether for risk.

At the same time investors seem to be hedging their bets. Big gains in the low-risk and higher-yield stocks such as banks, non-discretionary retail and Telstra suggest that there is still a degree of caution being exercised.

This week Woolworths and Coles’ parent Wesfarmers will release quarterly sales numbers that should demonstrate that consumers are still spending on non-discretionary items, but the outlook for the discretionary stocks is not so good. To the extent these companies can improve their positions relies on cutting costs and structural change.

These are the companies in which investors are prepared to gamble.

While they may be reweighting out of bonds and into equities Australian households are not prepared to divert from the now well established trend of reducing household debt.

According to a Dun & Bradstreet survey, fewer people are prepared to take on debt in the near term and therefore demand for credit remains weak or flat.

One of the consequences of this is that debit card use is on the incline and debt delinquencies could fall.

None of the above is designed to suggest that the equity market rally is over. It’s chicken and egg – but the egg seems to be coming first.

The original release of this article first appeared on the website of Hangzhou Night Net.

Regulator slams Macquarie unit

Macquarie Equities has signed an undertaking.AUSTRALIA’S biggest stockbroking firm, Macquarie Equities, has been forced by the corporate regulator to have an independent investigator oversee its operations after the broker was found to have ”serious compliance deficiencies” over four years.

Macquarie Private Wealth, the retail division of investment bank Macquarie Group, has been lambasted by the Australian Securities and Investments Commission for ”recurring deficiencies” which the corporate regulator claims may have led to Macquarie giving clients inappropriate advice.

The regulator is concerned that hundreds of its brokers and advisers failed to keep proper client records – as required under financial services laws – which may have also resulted in some of the firm’s clients not having enough information to make informed decisions.

ASIC chairman Greg Medcraft said clients of stockbrokers needed to be confident they were informed – a key requirement to ensuring financial services were provided efficiently, honestly and fairly.

”Our surveillance found Macquarie Private Wealth fell significantly short of this mark,” Mr Medcraft said.

As a result of an enforceable undertaking entered into by Macquarie, the broker must meet the Australian Securities and Investments Commission monthly to report back on risk testing and progress on its plan to overhaul its compliance systems. The undertaking marks one of the biggest compliance agreements between a stockbroker and regulator in recent times.

The undertaking comes amid a prolonged downturn for full service stockbrokers. While the stockmarket has started gaining traction in recent months, volumes remain thin amid broader investor caution. This has prompted many brokerages, including Macquarie, to make deep cuts to staff.

A Macquarie spokeswoman said the broker was committed to the changes set out in the enforceable undertaking signed on Tuesday.

”We take our obligations to regulators very seriously. We have a strong track record of compliance practice and if concerns are raised, we work diligently to resolve them. Accordingly, we have been working and will continue to work constructively with ASIC,” the spokeswoman said.

The problems were first identified by Macquarie Equities during a 2008 internal review of the client files kept by hundreds of Macquarie representatives.

”Those reviews indicated compliance deficiencies involving a significant number of the representatives, which were recurring and not reported to ASIC … nor were they rectified in all cases,” Macquarie’s retail division head Peter Maher said in the enforceable undertaking.

BusinessDay first revealed the investigation in September last year. The ASIC review found up to 80 per cent of staff were not following the rules.

But the review ended in early 2010 in favour of a new coaching and training program. Two years later a second internal review found that ”a significant proportion of representatives were classified as needing improvements” in client record keeping.

ASIC launched an investigation in December 2011 and over eight months found the internal compliance systems were ”of limited effectiveness”. In particular, it was concerned that Macquarie failed to comply with obligations ”regarding the provision of personal advice, general advice and execution-only dealing transactions, including necessary detail in advice documents to enable retail investors to make informed decisions.”

Macquarie has agreed to hire an independent expert – approved by ASIC – to judge the risk framework at the firm against ”generally accepted standards”.

The expert will look at how Macquarie pays its staff, the internal structure and accountabilities, development within the company, competence among advisers, and how documents are created and filed.

A preliminary report is due within four months.

Macquarie has also agreed to help report to ASIC any clients who claim to be adversely affected by the sloppy behaviour of Macquarie’s representatives.

The original release of this article first appeared on the website of Hangzhou Night Net.

Future of retail still uncertain

AS THE summer’s sales come to an end, analysts have offered a mixed outlook for retail investment with signs that institutions and super funds have turned towards shopping centres, pursuing high yields, but Australia’s continuing ”retail revolution” means the long-term outlook remains unclear.

A report released by consultancy firm Urbis shows shopping centres have outperformed all other property sectors in the past five years, and will continue to draw significant institutional and superannuation fund investment.

Urbis national director for valuations and property advisory Matthew Cleary said Australia’s largest shopping centres had returned 6.9 per cent per annum over the past five years, with results for the past three years even stronger at 9.6 per cent.

Mr Cleary said low growth and low inflation meant investors were now searching for strong yields, and retail centres appealed because of their limited supply, stable returns, consistent income streams and low vacancy rates.

Urbis’ optimism is at odds with BIS Shrapnel’s 10-year retail property forecast (2012-22), released last July, which suggested commercial property investors would shift from retail property to high-performing office and industrial developments because an oversupply of retail space occurring concurrently with increased online and/or overseas shopping meant Australia’s retail heyday was over.

CBRE’s national director of retail investments, Steve Lerche, said the outlook was unsettled.

”Investors will pay a premium for A-grade stock,” he said, ”but secondary stock is going to find it much, much tougher.”

Lower interest rates meant some investors were looking to the retail sector for stronger yields but they were choosing property carefully.

Mr Lerche said Australian retailing had been relatively stagnant for 20 years or so and cheaper overseas travel (and the shopping it allowed), and increased online shopping, meant Australian shopping centres no longer had a captive audience and would need to innovate and mature.

Subregional shopping centres – those with 10,000-30,000 square metres and one discount department store and a supermarket – could do well, he said.

The original release of this article first appeared on the website of Hangzhou Night Net.

It can be torture in high-stakes games

CALL it the plane of pain. These days, it’s a luxury private jet, ferrying high-rollers back and forth between Asia’s capitals and Crown’s Australian casinos.

While some might say the business of landing Asian whales on Australian shores is a little murky, VH-CCC, one of three Gulfstreams owned by James ”Slim Jim” Packer’s Crown Limited may have a far darker past.

According to data compiled by plane-spotters at website airframes杭州夜网, VH-CCC may be one of the planes used by the CIA for so-called ”rendition” flights of terror suspects in the aftermath of the September 11 attacks.

The controversial program allegedly involved kidnapping suspects, some of whom were then handed over to torturers.

While Crown no doubt treats its high-rollers to nothing but the best as they carve through the sky from Macau, Hong Kong or Jakarta, conditions on board the CIA’s flights were not quite so Mahogany Room.

In one case involving VH-CCC, reported by The Guardian in 2005, two Egyptian men seized in Sweden allegedly had suppositories inserted into their anuses before being wrapped in plastic nappies and put on the plane, which flew them to Egypt for torture.

Before delivery to Crown in 2007, VH-CCC was known as N126CH, according to airframes杭州夜网 data. And before that it worked through a string of rego numbers, including N379P – the number under which Guardian journalists tracked its movements.


THE failed SKYShades business backed by Brisbane Broncos founder Barry Maranta and golfer Greg Norman committed ”severe” breaches of the franchise code, according to Australian Competition and Consumer Commission staff.

ACCC staff also alleged that SKYShades’ behaviour ”may cause significant financial loss” to investors who had signed up to distribute the company’s shade cloth. So far, investors have lost millions.

But the ACCC’s enforcement committee decided to drop the investigation on July 12 last year – the same day it was advised that creditors had taken court action to close down two SKYShades companies.

”They worked out after 12 months it was all crap,” Maranta told CBD.

Details of the investigation into SKYShades are revealed in internal ACCC documents, released to distributor Aaron Ycas under freedom of information laws.

Ycas sunk $33,000 into SKYShades in 2010 after attending an information session in Newcastle hosted by Maranta’s business partner Ric Hayter and featuring a life-sized cutout of Norman.

Norman may regret getting involved: SKYShades’ US arm went broke in mid-2010, owing the Great White Shark $145,000 in unpaid endorsement fees.

The ACCC documents show it first received complaints about SKYShades in January 2011.

Investigators believed SKYShades could be selling franchises, something the company denied.

”The breach of the code was assessed by the small business and fair trading group to be severe due to the fact that none of the code provisions was complied with,” ACCC staff said. ”This is most likely to SKYShades regarding the arrangement as a distributorship and therefore outside the code.”

Maranta said it was ”exactly right” that SKYShades didn’t regard the deals as franchises.

”We didn’t want a franchise, we wanted tradespeople,” he told CBD.

The ACCC eventually decided ”not to investigate the matter further”, New South Wales general manager of enforcement Geoff Williams told Ycas in an August 6 letter.

”It’s as though no one wants to do anything – it all seems too hard,” Ycas told CBD.

”We’ll just keep plugging away and keep the pressure up.”

Activists act

IS THIS the shareholder activist organisation so angry with chief executives it can’t bear to have one of its own?

After two years in the job, Australian Shareholders Association CEO Vas Kolesnikoff is to step down at the end of May, and won’t be replaced. Instead, a national operations manager and a research manager will report directly to the board.

While insisting the split was amicable, Kolesnikoff also told AAP: ”There are just insufficient staff to do the job and there’s just no support.”

Also on the way out is consultant and professional loudmouth Stephen Mayne, whose contract finishes about the same time. He’s got a new gig as City of Melbourne councillor.

Got a tip?

[email protected]杭州夜网

The original release of this article first appeared on the website of Hangzhou Night Net.

Investors push shares into bull market territory

OPTIMISM about a recovery in the global economy has seen the Australian sharemarket close higher for the ninth-straight day, despite insurers losing ground in the wake of storms and floods on the east coast.

The ASX 200 finished on Tuesday 1.1 per cent higher at 4889 points. It was its highest close since April 2011, with the big four banks all registering strong gains while defensive stocks such as Telstra hit multi-year highs.

The market is up more than 20 per cent since early June, entering what has traditionally been defined as ”bull market” territory. The leading S&P 500 index on Wall Street was around 17 per cent higher for the same period. Positive sentiment about improving economic data from the US and China, as well as the lifting of black clouds over Europe, also spread to business confidence, with the National Australia Bank’s monthly business survey released on Tuesday showing a sharp increase in the index for December.

At the same time, expectations of a Reserve Bank interest rate cut in February fell to 26 per cent, Credit Suisse data showed. Markets priced in a cut in the cash rate by 25 basis points for the year, and a 60 per cent chance of a second rate cut.

”Relative to six months ago, there has been quite a significant drop in the risks facing the global economy,” said UBS’s chief economist for Australia, Scott Haslem, adding that the

moderate economic outlook for 2013 had benefited for the removal of some ”tail risks”.

”We’ll never be without risk, but some of those tail risks around the longevity of the European project and the potential for the US to go over the fiscal cliff have certainly been diminished.”

Last week, the International Monetary Fund expressed cautious optimism in its outlook for the global economy this year, trimming its projected gross domestic product annual growth to 3.5 per cent amid continued weakness in the eurozone.

A greater appetite for risk has seen also bond prices fall globally, as news emerged that European banks were set to repay more than €130 billion of long-term loans to the European Central Bank. Some strategists have forecast a move out of bonds into stocks this year.

Westpac senior market strategist Damien McColough said within a ”risk on” theme where global growth was expected to be stronger, bonds would be very expensive. He said the global market rallies were a reflection of the reduction in risks rather than confidence in growth.

”It’s really a removal about the real catastrophe or disaster premium that has been in market rates for some time. As opposed to confidence that the [global economies] are growing strongly, it’s more a confident belief that the worst-case scenario has been averted,” Mr McColough said. ”So that causes equities to remove some of the negatives and bonds to lose some of their expensive pricing.”

The director of research at Bell Potter Securities, Peter Quinton, said while stocks were trading in bull market territory, applying such a definition at this time was ”a little bit aggressive” for the Australian market.

”But having said that, I think there are very solid fundamental underpinnings to those 20 per cent risings,” Mr Quinton said. ”The brutal reality is … there’s still risks out there. But anybody who has been bearish about the stockmarket for the past six months has been proved dramatically wrong.”

Among the major banks on Tuesday, Westpac rose 67¢ to $28.22, Commonwealth Bank lifted $1.14 to $64.73, National Australia Bank found 48¢ at $27.72, and ANZ advanced 44¢ to $26.51.

Some insurance stocks fell as they began to feel the pain from ex-tropical cyclone Oswald, with more than 10,000 claims lodged and the damage bill set to rise above $100 million. Suncorp lost 21¢ to $10.70 as it said it had so far received about 4500 claims and expects more to come. Insurance Australia Group nudged up 1¢ to $4.93, and QBE dropped 31¢ to $11.28.

In the resources sector, BHP Billiton improved 7¢ to $37.17, and Rio Tinto firmed 9¢ to $66.15.


The original release of this article first appeared on the website of Hangzhou Night Net.

Plenty to drink in with Richmond pub makeover

THE Bridge Hotel in Richmond was previously a typical gaming hotel, fairly soulless.

Refurbished in the ’90s, the two-storey, Victorian-style pub was simply a series of bland spaces with no external areas. However, the owners of the recently transformed hotel wanted to create a drawcard destination, for locals and those travelling from further afield.

”Our clients were probably over- ambitious to start with. The initial scheme was to completely gut the building, leaving only the original Victorian facade,” says architect Justin Northrop, a director of Techne Architects.

When the budget was revisited, it was decided to incorporate as much of the building’s existing fabric as possible.

One of the main requirements was an outdoor garden or courtyard. As a result, the architects chose to remove the roof from the single-storey building in the centre of the development. And rather than create the typical beer garden, Techne Architects created a cobbled lane. Complete with ”shop fronts” and signage, this lane provides an escape from Bridge Road. The hoarding at the end of the lane also acts as a noise barrier. ”We wanted to create a variety of experiences, with intricate and layered spaces,” Northrop says.

Among the recycled facades fronting the lane is an outdoor contemporary fireplace, clad in glazed bricks. ”We didn’t want to create a pastiche-style movie set. But you get a sense of walking down one of Melbourne’s laneways,” Northrop says.

There are several different bar styles. The Havana bar, for example, includes a feature wall of recycled timber shutters and a bar front studded with cast-iron fireplace surrounds. The architects collaborated with Alleycat Creative, with 10 street artists making their mark on interior walls.

”There’s quite a lot going on here. The owners also brought objects and artefacts into the mix,” says Northrop, who says it’s advisable not to be too precious in developing the combination. ”It’s supposed to be eclectic,” he adds.

The diner, in the adjacent bar, has an American flavour. As well as a padded bar, there’s a 1930s pressed-metal ceiling and white wall tiles, like those you would find in a New York subway. ”We wanted to trigger people’s memories. Some of the finishes you would find in a typical inner-city hotel,” Northrop says.

The Loading Bay, at the rear of the hotel, designed for intimate gatherings, sets up another experience. Featuring a painted garage door and late 1960s chandelier, it’s a hybrid between grunge and glamour.

The Bistro, on the western side of the lane, caters for more formal gatherings although it’s far from formal. With taxidermy birds appearing to escape from their wire cage, patrons may find one eye on the menu, the other on the birds.

To create an outdoor feel, Techne Architects also included a Wintergarden, complete with suspended watering cans and plants. ”It’s become one of the most desirable areas in which to sit,” says Northrop, pointing out the northern light and foot traffic.

Themes continue on the first level, with everything from a bar with the ambience of a photo studio, to the Loft. The Loft, featuring a stencil of Keith Richards could equally be seen as the musicians’ digs.

The original release of this article first appeared on the website of Hangzhou Night Net.