Labor says slow growth ‘is a damning indictment of the economic stewardship of Scott Morrison and Josh Frydenberg’. Australia has fallen into a per-capita recession for the first time in 13 years, as a slowing economy buffets the government’s strong economic message just three months out from the federal election.
Scott Morrison has increasingly staked the Coalition’s election chances on the economy, warning repeatedly “the economy will be weaker under Labor”. This week the prime minister again sounded the alarm that voters could see a return to 1991 recession conditions under a Shorten government.
Morrison honed his message in a speech to the Australian Financial Review Business Summit on Tuesday, shaping the election as a contest between “enterprise and envy”.
Scott Morrison again links Labor with recession after previously ruling it out Read more
But Australian Bureau of Statistics data released on Wednesday show the economy grew by 2.3% over the year, and just 0.2% for the December quarter, short of the Reserve Bank forecast of 0.
6% and market expectations.
However it was the “GDP per capita” measure that caught the eye of the market and economists.
Population grew 0.4% in the quarter, meaning per capita economic growth has fallen into negative territory for two consecutive quarters, -0.
1% in September and -0.2% in December, for the first time since 2006.
The technical definition of a recession is negative growth in two consecutive quarters. While the labour market has continued to grow, spending has not, with a weakening east coast housing market another indicator of a tightening economy.
The ABS data shows population growth helped sustain the economy, presenting a further problem for the government which has indicated it would like to reduce the migration intake cap, although Morrison has warned that cannot be done at the expense of the economy .
In response to the figures, the Australian dollar fell to a two-month low, from US70.
88c to US70.34c.
Economists at the investment bank JP Morgan predicted the Reserve Bank would be forced to cut interest rates twice this year in order to stimulate the slowing economy, starting with a reduction as early as July.
The falling currency and the prospect of cheaper borrowing was a boon for the ASX200, however, with the index rising 46.3 points, or 0.75%, to 6,245.
The treasurer, Josh Frydenberg , focused on the good news while delivering the results, complete with a slide show.
“Australia continues to grow faster than any G7 nation except the United States,” he said.
While companies are doing well, workers and households have been left behind | Greg Jericho Read more
“Over the past 12 months, more than 270,000 new jobs were created and more than eight out of every 10 of these jobs were full-time.
Frydenberg said the proportion of the working-age population in employment was at a record high, and pointed to a 2.4% increase in non-mining investment over the quarter.
“There is also continuing evidence that private business investment is benefiting from increased public infrastructure investments as firms invest in machinery and equipment to deliver these projects.”
Josh Frydenberg (@JoshFrydenberg) Worth remembering that in 2000 & 2006 the Howard Govt had consecutive quarters of negative GDP per capita growth & Rudd & Gillard had 5 negative quarters.
Better indicator of living standards is real net national disposable income per capita which is above its 20 yr average.
March 6, 2019 But the government is struggling to balance the new figures with its warnings of what a future Labor government could do to the economy.
“If the Labor party have their chance to implement $200bn of taxes, that is nearly the size of the New Zealand economy … and that is what they are going to lay over the Australian economy ,” Frydenberg said.
“The Labor party used to believe in a tax to GDP ratio, they used to believe in a cap to the amount of tax you could spend.
But now they no longer believe in that.”
The shadow treasurer, Chris Bowen , said while Morrison “was warning in his normal political fashion, scaring [people] about the prospect of a recession under a Labor government, the simple fact is there is a per-capita recession on today”.
“This is a damning indictment of the economic stewardship of Scott Morrison and Josh Frydenberg.
“Wages are not growing fast enough … we have now had eight quarters of negative productivity growth.”
Labor has not committed to saying when it would implement its grandfathered negative gearing policy , given the slowing housing market and falling house prices across east-coast cities.
But in his own speech to the AFR Business Summit, Bill Shorten said Labor’s plan for the economy was more than just one policy.
It was time to look at setting a living wage, he said, not a minimum wage.
Topics Australian economy Coalition Scott Morrison Australian politics Labor party Business (Australia) Interest rates Australia news.
Lyft IPO — What to know in markets Friday
Lyft takes centerstage on Friday. The ride-sharing company is gearing up to have the biggest tech IPO in two years, at least until rival Uber hits the market. On Thursday evening, Lyft priced its stock at $72 per share , valuing the company at over $20 billion. The stock will debut Friday morning on the…
Lyft takes centerstage on Friday.
The ride-sharing company is gearing up to have the biggest tech IPO in two years, at least until rival Uber hits the market. On Thursday evening, Lyft priced its stock at $72 per share , valuing the company at over $20 billion. The stock will debut Friday morning on the Nasdaq under the ticker LYFT.
And some Wall Street analysts have initiated coverage of the stock ahead of the highly-anticipated IPO.
DA Davidson was the first to get bulled up on Lyft. On March 19, the firm initiated Lyft as a Buy and slapped a $75 price target on the stock.
Analyst Tom White argued, “LYFT is the #2 player in U.
S. ridesharing, but has grown its market share from 22% to 39% in the past two years. LYFT has benefited from PR/management/operational stumbles at its largest competitor, but is deftly maximizing the benefits by aggressively differentiating its brand/mission around socially-conscious values and corporate responsibility. This is good PR, but also good for business.”
Then on Thursday, Wedbush initiated Lyft as Neutral with an $80 price target. “The brand loyalty of Lyft has been quite impressive as the company continues to attract drivers and riders with its brand associated with corporate responsibility and social values, an impressive formula to go after the $1.2 trillion market spent annually in the US,” analyst Dan Ives wrote in a note to clients.
Heidi Chung is a reporter at Yahoo Finance.
Follow her on Twitter: @heidi_chung .
Follow Yahoo Finance on Twitter , Facebook , Instagram , Flipboard , LinkedIn , and reddit .
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Hong Kong has licensed its first three digital banks — and tech giants may lose out (TCEHY, HSBC, BACHY, BABA, ACN, GS)
Mekebeb Tesfaye 0m This is an excerpt from a story delivered exclusively to Business Insider Intelligence Fintech Briefing subscribers. To receive the full story plus other insights each morning, click here . The Hong Kong Monetary Authority (HKMA), the territory’s de facto central bank, has granted the first set of its long-awaited digital-only banking licenses,…
Mekebeb Tesfaye 0m This is an excerpt from a story delivered exclusively to Business Insider Intelligence Fintech Briefing subscribers. To receive the full story plus other insights each morning, click here . The Hong Kong Monetary Authority (HKMA), the territory’s de facto central bank, has granted the first set of its long-awaited digital-only banking licenses, reports Bloomberg. Business Insider Intelligence The first batch of approvals has been given to firms that have partnered with Standard Chartered, Bank of China Hong Kong, and Chinese digital insurance firm ZhongAn, and the firms intend to begin operating within nine months. Although at least two of the joint ventures — with Standard Chartered and ZhongAn, respectively — had been expected to receive approval, the decision not to award licenses to Chinese tech giants Tencent and Alibaba affiliate Ant Financial has surprised many observers, per the Financial Times. Here’s what it means: The licenses should ignite competition by giving holders access to a hugely profitable banking market where consumers continue to be frustrated by their options.
Hong Kong’s banking sector is heavily dominated by a handful of incumbents.
The four largest lenders — HSBC, Bank of China, Hang Seng Bank, and Standard Chartered — account for 66% of retail banking loans and 77% of mortgages, per Bloomberg citing Goldman Sachs. And their share of the market is lucrative: For example, two-thirds of HSBC’s global profits last year came from its retail and wealth management operations in the territory, reports Reuters. However, the new licenses are anticipated to put up to 30% or $15 billion of Hong Kong’s total banking revenues up for grabs — threatening the big four’s entrenched position. Hong Kong registers among the lowest rates of customer satisfaction for a developed economy due to a lack of banking competition. Only 59% of consumers in Hong Kong say they like their bank, compared with 62% of global consumers and the 74% who say the same in the US. Further, less than half (43%) of bank customers in Hong Kong say they have a positive experience when visiting a bank branch, compared with the 57% of global consumers who say the same; and it’s significantly less than the 74% of US customers who report having a positive experience, per an Accenture survey seen by Business Insider Intelligence. Increased competition ushered in by the new license holders should force the old guard to up their game and ultimately improve these customer satisfaction numbers.
The bigger picture: Hong Kong’s efforts to remedy financial services competition and customer satisfaction may hurt established players, but it could also further entrench the position of some.
Although Hong Kong’s big four could be the biggest losers, the likes of Standard Chartered appear to be getting ahead of the curve. The chronic dissatisfaction of the territory’s digitally savvy consumers is a boon for the newly licensed firms, giving them an opportunity to scoop up customers at pace: 68% of customers use digital channels to check their bank accounts at least once a week, per Accenture. Moreover, while the likes of Ant Financial and Tencent haven’t yet received approval, their potential entry into the market could give the old guard a run for their money. However, the fact that Standard Chartered and Bank of China are among the players to be permitted first suggests established players are already in front of the trend. Given their vast resources and existing reach, the newly approved licensing could be an opportunity to maintain the status quo. So, while the licensing is generally good news for consumers, its business impacts for established and new entrants remain to be seen.
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Here comes Lyft… (LYFT)
John Sciulli/Getty Images for Lyft Lyft , the first ride-hailing company to hit the public market, began trading Friday on the Nasdaq stock exchange. Its shares opened at $87.24, jumping 21% from the $72 where they priced Thursday evening. That brought its valuation to just over $29 billion. Lyft shares gave back some gains in…
John Sciulli/Getty Images for Lyft
Lyft , the first ride-hailing company to hit the public market, began trading Friday on the Nasdaq stock exchange. Its shares opened at $87.24, jumping 21% from the $72 where they priced Thursday evening. That brought its valuation to just over $29 billion.
Lyft shares gave back some gains in the afternoon, but the company still carries a market value of roughly $27 billion. Several Wall Street analysts are already bullish on the world’s second-largest ride-share company.
Watch Lyft trade live .
Lyft , the first ride-hailing company to launch on a US public market, began trading Friday morning under the ticker ” LYFT .” Shares jumped 21% to $87.24 apiece as they opened, bringing the valuation to just over $29 billion.
The company priced its initial public offering at $72 per share the evening prior, at the upper-end of its expected range.
But the newly minted stock’s rally was fading by midday, as shares had given up around half of their opening gains by 1 P.
Lyft was trading just above $81 a share, below where they’d opened earlier in the session.
Lyft’s offering raised about $2.69 billion, which it plans to spend on “working capital, operating expenses, and capital expenditures,” as well as acquiring or investing in businesses, according to its S-1 filing with the Securities and Exchange and Commission.
While potential investors will have a chance to buy into one of the largest US-listed technology IPOs in recent years, one thing they won’t have is equal say in how the company is run.
That’s because Lyft will have a dual-class structure consisting of Class A and Class B shares. That means outside investors of the former are entitled to one vote per share while shareholders in the latter are entitled to 20 votes per share.
Investor appetite for Lyft’s publicly traded shares was strong heading into Friday’s debut despite the company providing no clear timeline for reaching profitability .
Lyft earlier this week raised its expected IPO range from between $62 and $68 a share to $70 to $72 after its offering was oversubscribed . In other words, demand for its IPO exceeded the number of shares issued.
Read more: READY FOR LYFT OFF: Lyft to IPO today at whopping $21 billion valuation
In the race to go public during what’s expected to be a banner year for high-profile IPOs — with Airbnb, Slack, and Peloton all expected to debut — Lyft is set to beat out rival Uber to the public markets.
“In our opinion while Lyft has clearly benefited from some of the negative PR issues that Uber faced in 2017/early 2018, going forward the battle for market share will be a bit more balanced,” Wedbush analyst Dan Ives said in a note to clients earlier this week.
Ives initiated coverage with a “neutral” investment rating and a 12-month price target of $80.
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