Tuesday, May 12, 2020

China relations sour over tariff threat to Australian barley

It's a strange day when China thinks an Australian product is too cheap

Australia's souring relations with China have grown more bitter with the Morrison government given 10 days to stop the nation's barley producers being slapped with tariffs of up to 80 per cent.

Trade Minister Simon Birmingham said he was deeply concerned that "unjustified duties" may be imposed on Australia's barley exports which last year reached a drought-affected $600 million.

The nation's barley producers have been given 10 days to respond to a determination by China's Ministry of Commerce which has been conducting an anti-dumping investigation into Australian grain imports since 2010.

The ministry is considering two separate tariffs of 73.6 per cent and 6.9 per cent on Australian barley shipped to China.

China has alleged that Australian farmers produced barley at a price lower than its "normal" level through 2014, 2015 and 2016, undermining local producers.

The ministry's move comes as relations between Australia and China have deteriorated in the wake of the coronavirus pandemic. Australia wants an independent investigation into the origin of the virus.

Senator Birmingham said Australian barley producers, largely from Western Australia and South Australia, operated in a competitive global market without any trade distorting subsidies.

"We have worked with the Australian grains industry to mount the strongest possible case against China’s anti-dumping investigation," he said.

"We will use the remaining time before China finalises it’s decision to continue our efforts to resolve this matter satisfactorily and will seek to uphold the integrity of our world leading barley producers.

While Australia has launched anti-dumping cases against China, this is the first started by China against Australia.

WA Agriculture Minister Alannah MacTiernan said the move could not come at a worse time for her state's farmers who were just starting to seed this year's crop.

She said the WA government would directly lobby the Chinese consul-general on the issue which was a substantial threat to the state's farmers as they had few other markets for their high-quality malting barley.

“We strongly believe there are no grounds for the claims that Australian barley is being dumped or subsidised in the Chinese market," she said.


Students return to school in NSW and Queensland today - but there'll be no assemblies or combined lunch breaks and classes will look VERY different

Students in New South Wales and Queensland will return to school on Monday as the states inches towards relaxing COVID-19 restrictions.

Students in NSW will return for one day of face-to-face learning per week from Monday, with attendance to increase over the course of the term.

The state government is working towards a target of a full-scale return by term three.

The Berejiklian government on Sunday announced the easing of a broad range of restrictions as the state continues to flatten the curve.

Victorian premier Daniel Andrews - who will on Monday announce changes to lockdown rules as a May 11 state of emergency expires - has yet to reveal when students in the state will return to school.

But the return to classroom teaching comes as education authorities in Queensland prepare to enforce a range of measures to reduce the spread of the coronavirus.

While primary school students will be free to use play equipment, gatherings of pupils may be limited by staggered lunch breaks and play time.

The principal of Mango Hill primary school Tracy Egan told ABC News staff may even need to personally take children to their parents' cars to stop transmission.

'We'll be really using our stop, drop and go lane and we expect our parents will strongly support that,' Ms Egan said.

Hand sanitiser use will also be a priority in the classroom, as well as a ban at first on any events involving large congregations of students like assemblies.

Some schools are even planning to implement virus-proof protocols in their tuck shops and cafeteria - including an online-only order system.

The return to classrooms has come with a warning in NSW, with Premier Gladys Berejiklian promising any surge in numbers of confirmed cases could see a return to tighter measures. 'If there is evidence or if there is data that shows ... a huge spike, then we'll have to go backwards,' Berejiklian said.

'But similarly, if the data shows us that we're doing better than expected, we can move forward and be faster.'

The government has urged parents to be vigilant about their children's health and to keep them away from school if they exhibit any symptoms of coronavirus.

Social distancing guidelines will be maintained in classrooms and extra health measures will be in place, including additional cleaning and health equipment in sick bays.

Lunch breaks will also be staggered.

Ms Berejiklian said it is not compulsory to send children to school and parents would not be penalised for keeping them at home.

'It's never been compulsory to force parents to do one thing or another, we've been very clear about that in New South Wales,' she said.

'But our strong recommendation is face-to-face teaching needs to start. 'We want to get to full-time face-to-face teaching as soon as we can - and the best health advice is schools are safe environments.'

Children meanwhile enrolled in kindergarten, prep, and years one, 11 and 12 will be the first cohorts to return to school in Queensland.

The state government will assess the statewide response to the partial reopening of classrooms this Friday, before the go-ahead is given for those in other year levels.

It is proposed students between years two and 10 will return to school from May 25.

The staged approach is part of the Queensland government's wider plan to reopen the state following the flattening of the coronavirus curve.

The NSW government on Sunday announced the winding back of restrictions from Friday, including allowing people to leave their homes for recreation.

The new relaxing of restrictions will allow up to five people to visit a home, including children.

Outdoor gatherings of up to 10 people will also be allowed, such as a physical training session or sitting down in a park.

Restaurants and cafes will also be allowed to have up to 10 patrons at a time, while ensuring they maintain social distancing of 1.5 metres between people and four square metres space per person.

A total of 10 guests will be allowed at weddings, and up to 20 people at indoor funerals and up to 30 at outdoor funerals.

Religious gatherings and places of worship can also welcome up to 10 worshippers.


Bank boss sees nascent signs of post-pandemic recovery

Australians have begun to emerge from a spending shutdown during the depths of the coronavirus crisis in a trend that gives the country’s biggest bank greater confidence about an economic recovery ahead.

Commonwealth Bank chief executive Matt Comyn said the bank had seen a rebound in household spending over the past two weeks after a dramatic 20 per cent fall in March and early April.

But in an exclusive interview, Mr Comyn warned that some employers would collapse and some households would need continued help from their banks well after the federal government is due to end its emergency assistance in September.

"The overall economic impact, particularly if you use spending as a proxy, has been nowhere near as large as it has been in some countries," Mr Comyn told The Sydney Morning Herald and The Age.

"What we have seen in the last fortnight is that we’ve started to pick up. That number of total spend is now down 10 per cent on the prior corresponding period. About two weeks ago we started to see a pick-up."

An early surge in requests to defer loan repayments has moderated, in another sign that Australian banks are in a better position than those overseas to handle the number of business and household customers having trouble making payments.

"The take-up was very rapid in that first week or two but it has tapered off," Mr Comyn said of the offer to customers to defer loan repayments for six months.

"I think it is broadly about 10 per cent of our home loan book, which is still significant. But, given the scale of the disruption to peoples’ lives and to the economy, it is certainly within the bounds of what we would have expected."

Mr Comyn, who also chairs the Australian Banking Association, said it was "broadly" true to say the bank had managed the loan deferrals through its own resources rather than relying on federal aid, but he praised the level of cooperation with the federal government.

As treasurer, Scott Morrison targeted the banks with a $6.2 billion levy three years ago and announced a royal commission after pressure from Labor to investigate a series of scandals over the abuse of customers.

Mr Comyn said he hoped the banking industry’s work during the coronavirus crisis could "reset some of the relationship" between business and the community.

The bank boss downplayed a report last month that Mr Scott Morrison had "roasted" the banks for being too slow, saying it was not "entirely accurate" even though some pressure over policies was to be expected.

"I certainly feel that we’ve done a lot over the last couple of months and I do think certainly our people and customers are seeing through our actions the real intent of both the Commonwealth Bank and the broader industry," he said.

Mr Comyn said the shape of the recovery was impossible to predict but some employers would not survive the downturn, especially in sectors that depend on international tourists.

"Realistically, it’s not going to be entirely smooth. I think the situation is just too uncertain and there are too many variables," he said.

"I think what we will see is that it will take some time before people have the same level of confidence to return to their daily lives and their economic activity."

While the JobKeeper payment of $1500 per fortnight has supported workers without increasing the official unemployment rate, the Commonwealth Bank is using other measures to gauge the impact on jobs and gross domestic product.

"I think the participation rate is going to fall and the hours worked could be down 20 per cent, and that’s a very good indicator of income and output," he said.

"Overall, the support that’s been put in place from the federal government has definitely played a role in softening that economic impact."

Mr Comyn would not comment on the bank’s financial performance, given he will release the results within days, but said some customers would not survive the downturn.

"For businesses that were struggling before February this year, it is going to be very difficult for them. There will be parts of the economy and some businesses that won’t be able to recover," he said.

"Our role is to provide, within reason, as much support as we possibly can to get as many viable businesses through this period and be able to facilitate broader economic growth and financial stability."


'On fast forward': Australian stocks stage recovery

Top stock pickers at investment bank UBS say Australia's sharemarket has staged a full recovery from the coronavirus pandemic, rallying 20 per cent despite a near-certain recession and widespread unemployment.

Most sectors have already "digested" the crisis and are looking ahead to the 2021 financial year, the bank claims, confounding analysts who expected a drawn-out recovery after pandemic scares fuelled a 40 per cent drop in early March.

"It's like the market is on fast-forward," Pieter Stoltz, equity strategist at investment bank UBS, told The Age and The Sydney Morning Herald. "I'm surprised at how quickly it's priced in this recovery."

Analysis by Mr Stoltz assessing what companies were set to benefit from the relaxing of coronavirus restrictions highlighted a number of businesses in the retail, transport and gaming sectors.

These included casino giant Crown, fashion retailer Premier Investments, toll road operator Transurban and buy-now, pay-later provider Flexigroup.

The local bourse has posed a stronger and more resilient upswing in the face of negative macroeconomic conditions, research from Mr Stoltz and his team reveals, which compares the ASX's recent recovery to other notable crises such as the global financial crisis (GFC)

Australia's unemployment rate will be at 9 per cent by Christmas, the Reserve Bank expects, and economists have pencilled in a near-certain recession, with the broader economy to contract 8 per cent by the end of June.

Despite this backdrop, Mr Stoltz said the market has already begun a long-lasting recovery, drawing a stark contrast to the GFC where the country avoided a recession but the market fell 54 per cent over 17 months before reviving.

Mr Stoltz said the economic 'hibernation' many businesses have been in since March will allow a swifter and more seamless return to normality, unlike other crises where investors faced months of uncertainty over the rate of recovery.

This has been reflected in the pace of earnings downgrades from analysts overtaking the rate of the price fall, reflecting a broad re-rating of companies to account for the post-crisis world.

"The speed of negative earnings per share forecasts has accelerated indicating that the market is close to fully digesting the impact of this crisis on company profits," Mr Stoltz said.

Other sharemarket experts are also hopeful about a potential turnaround. Pengana Capital chief executive Russel Pillemer said the market had already "baked in" any negativity associated with the coming recession or jobs figures, though he noted he was still being very cautious in the near term.

"You always need to be cautious in these highly volatile environments trying to pick a top or trying to pick a bottom," he said. "Contrary to popular academic belief, markets are not rational."

Looking towards the 2021 financial year, analysts are priming for huge earnings growth thanks to a lower base of earnings in 2020. Goldman Sachs recently forecasted retailer JB Hi-Fi's earnings before interest and tax to rise 21.3 per cent in fiscal 2021.

Mr Stolz said these bullish predictions will likely be short-lived, as overly optimistic analysts temper their expectations as earnings season draws nearer.

"Those 2021 numbers are likely to move down, so we probably won't see the high growth rates that consensus implies right now," he said.

But for Mr Pillemer, his sights are firmly set on 2021 and beyond, saying his funds' cash-on-hand are at record lows as they've poured money into snapping up undervalued stocks for the long term.

"We haven't seen these sorts of buying opportunities for many years because the market's been so finely priced," he said.

"I think the world's going to go through a soft period for a while, but if you can look through that it's a fantastic time to be investing."


 Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here

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