Australia 01 (May 08 - Jan 11)

[-dol-]

I am surprised at the rapid unravelling in Australia.

For the best part of this 2 decades, this was the best-performing developed economy in the world - even better than the US. The Lucky Country has everything going for it in this commodities boom. Reversion to mean? Bust follow boom?

A rate cut looks likely as weak economic data is coming through. Looks like a rough ride in store for the A$.

[kennynah]

dol :

wah...so late u burning incense ah?

talking about currencies....buy Viet Dongs loh...before they hit the limelight...if one believes they will emerge better eventually...but i think wait until inflation abates

better sell singapore dollar as well...

start buying USD on dips

start selling euros on rallies

let;s see if H2 has any commentaries on currencies overall...

[helios]

a while ago, i saw their pitch ... this news should bring tourism into your perspective.

02-August: Australia - Tourism Australia has hired film director of Baz Luhrmann and his Bazmark production team to spearhead A$50 million international campaign to promote Australia. The "special campaign" will run from October until the middle of next year and will be used until newly appointed creative agency DDB develops its own brand campaign for the national tourism body.

Australia's minister for tourism, Martin Ferguson, said the campaign will be loosely based around Baz Luhrmann's forthcoming movie Australia, but will not be about the film itself.

The TV, cinema, print, and online campaign will be rolled out in major markets in Europe, Asia, and North America.

"These are challenging times for the tourism industry and I hope this campaign will motivate people around the world to visit Australia," Ferguson said.

"The Government is committed to addressing the supply-side constraints presently affecting the industry through the development of a National Long-term Tourism Strategy, as well as supporting the work of Tourism Australia as our national tourism marketing agency."

Source: Marketing-Interactive.com

[helios]

and in terms of retailing spaces ...

3-August: GLOBALISATION has pulled millions of people in developing countries out of poverty. It has sent goods, services and people around the world, linking humanity into a vast network of communications and commerce that has ultimately benefited everyone.

But, still. In the case of one American coffee giant, globalisation deserved to fail. Starbucks makes really bad coffee.

Starbucks is almost entirely pulling out of Australia — closing 61 of its 84 stores. In Melbourne, just 5 of the 16 stores are tipped to remain.

Access the full Article from TheAge.com.au
here's the link:http://www.theage.com.au/opinion/memo-starbucks-next-time-try-selling-ice-to-eskimos-20080802-3oyp.html?page=1
Article Title: Memo Starbucks: next time try selling ice to Eskimos

[-dol-]

dol :

wah...so late u burning incense ah?

talking about currencies....buy Viet Dongs loh...before they hit the limelight...if one believes they will emerge better eventually...but i think wait until inflation abates

better sell singapore dollar as well...

start buying USD on dips

start selling euros on rallies

let;s see if H2 has any commentaries on currencies overall...

k - was inspired by you... so I set my alarm and woke up to test the theory that you are really 24/7

You serious about buying US$ on dips?
It looks to be on a slippery slope to oblivion if the Fed continue revving their printing presses. This recent rally is a welcome relief to my long-suffering HK$ and US$. I might just be one of those poor souls ready to dump them on the market... just waiting for Jim Rogers to give the all clear...

I am still keeping my S$ - trusting the govt and MAS for now.

I think the yen looks interesting.

[kennynah]

dol : my good brudder :

about usd's strength.... i guess, i was just guessing.... maybe i trust my charts way too much.... usually, not so smart people, are chartists... becos cannot handle all the figures, a skill needed to do FA....

so, if u have time...maybe u can see my ang kong on eur/usd pair....here

viewtopic.php?p=17253#p17253

[-dol-]

k - keep those nice charts coming for dim-witted ones like me.

I agree with you about the USD strengthening against the Euro.

[kennynah]

dol : shhhhhhh....(soft whisper) actually it will either go up or down...so, actually 50% chance either way....just pick one direction.. but just between u and me ok...our little secret.....

[HengHeng]

Personally i'm still bullish on Aussie as least until the end of this year with chances that aussie might hit a top come end of the year and go into a at least 2 year withdrawal due to its over inflated properties. I waiting for the bubble to burst over there before entering. My suggestion for those holding aussies properties can come out come out first.

Grab some FDs at high interest and hold for 2 years.. when bubble burst , though aussie drop but u would find urself rich enough to buy maybe 2 for the price of one.

This is mine personal view.

As for Euro i think they are printing far too much money. Go look at their M5 money supply number. It is suggesting that they are printing money like FED to aid the economy over there so that it seems like economy there is booming but i think Spain , Italy and maybe france is likely to burst either this year or next. Raise rates? TO sell bonds to help their printing of money ?

Well i'm not so sure on Euro at the moment.. maybe the printing of money would make euro more accessible to the world but i seriously doubt it might take over the world currency at least for the next 5 years. Europeans are lazier than Americans and even Asians. Their colonial times already over yet still dreaming.

Kenny da ge u look me too up lah me small boy anyhow pong one. My comments cannot be put on plate one. Later let people laff.

[financecaptain]

Always beware of "hot stocks"...

'Fast Eddy' leaves ABC Learning investors reeling'
By Greg Hoy

ABC Learning requested a trading halt on its shares four days ago (http://www.childcare.com.au)
Video: ABC Learning shares continue to plummet (7.30 Report)

Until six months ago, the world's biggest child care operator, ABC Learning, looked like one of Australia's great corporate success stories.

Looks can be deceiving, as ABC's investors discovered the hard way.

Beneath the smiling veneer there is deep trouble in the kids' kingdom, Australia's most heavily Federal Government-subsidised company.

ABC Learning requested a trading halt on its shares four days ago, as a deadline loomed for its latest financial results.

Bear in mind the company had already flagged that it would have to declare a pre-tax loss of $437 million - information that triggered a further slump in the share price.

That has now fallen from last year's high of $8.80 to just 57 cents at the latest trading halt.
No doubt investors can expect more soothing rhetoric from the multi-millionaire founder and CEO Eddy Groves, but there are many who are no longer listening.

The rise and rise of enigmatic founder, known to many market analysts as 'Fast Eddy' for the speed of his speech, now seems somewhat souffle-esque, as bank lenders, government, prominent Australian investors and thousands of small shareholders awake to the painful reality they may have been taken for one of the biggest rides in Australian corporate history.

Deborah Brennan, a professor at the University of NSW Social Policy Research Centre, says ABC Learning could be one of the most spectacular public policy disasters seen in recent time.
"[It] is something that could become a case study, I think, in many business schools and public policy schools around the world," she said.

IMF Australia's John Walker says his company was approached by shareholders involved in ABC Learning, and was asked to look at whether or not there were potential breaches of the Corporations Act.
He found that the company never really made money over the last four years.

Mr Groves managed to attract finance to spawn an empire of 1,136 ABC child care centres across Australia, 2,000 across the globe, and in so doing, mislead the market, the nation and the world as to the company's financial viability.

"I didn't buy it five years ago, I didn't buy it three years ago, I didn't buy it last year and I wouldn't buy it today," Clime Capital's Roger Montgomery said.

'Fast Eddy', the man

Mr Groves is a gambler with a high-rolling history in casinos from the Gold Coast to Las Vegas.
But his ballooning child care corporation, established in partnership with his wife Le Neve, from whom he separated, gambled mainly with other people's money - and lots of it.

Behind the facade was a massive real estate play, but on the surface a listed child care service, which attracted a total of $3.5 billion in bank securities, investors' money, and heavy federal government subsidies.
It was the equivalent of $1 million a day in child care rebates. All of which were then filtered through a labyrinth of private companies closely related to Mr Groves himself.

The first ABC Learning acquisitions and the 1, 2, 3 Global group of companies were privately owned by the elusive Don Jones and his wife Heather, until this month when she ceased to be a director.
As Mr Jones' company individually employs less than 50 people, they are not required to lodge financial returns with ASIC.

Professor Brennan says as business analysts and researchers dig more deeply into ABC Learning, it is becoming clear that the company did not make the profits it did in the past through bulk-buying nappies.
"We are actually talking about a very complex corporate structure, and I think that the guardians of the public purse have really not been watching closely enough what has been happening," she said.

Sadly, Mr Groves was not available for interview.

We hoped to ask him why, having raised almost $3.5 billion over 3.5 years, ABC needed to raise even more money in June just to pay the interest on its bank securities.

Where has the money gone? Has profitability been an illusion, given the costly questions the new auditors have posed about previous accounting practices?

It appears from 2005 until 2007 ABC paid about $1,040 million to buy leases and childcare licences from so-called developers - particularly Mr Jones' companies - who would return funds back to the centre to achieve its budgeted revenue.

Profitability

Everything looked rosy as, under the old auditors, payments from these developers were not disclosed but were shown as revenue, without which ABC's profitability was poor to non-existent. Take, for example, 2006.
The IMF's Mr Walker says that 20 to 25 per cent of that year's profit earnings were derived from the sale of the right to provide employees to ABC-owned centres.

"About 20 odd per cent of that year's profit, by way of example, just wasn't as stated," he said.
"Similarly, the financial transactions that the company's entered into with developers, it turns out - and only recently disclosed - that a big portion of earnings is being derived by transactions with developers."

Though Mr Groves denies these are related party transactions, Mr Jones' companies have principally operated from ABC headquarters or offices. ABC's CEO was known to have been active in establishing at least one of them.

Mr Jones' companies appear to have received at least $880 million from ABC Learning.

If Mr Jones' companies are not related to Mr Groves', Queensland Maintenance Services (QMS), formerly known as Groves Corporation 2, run by Mr Groves' brother-in-law Frank Zullo, is.

QMS, listed at the same address as Mr Groves, was awarded $74 million for un-tendered work for ABC in 2006 alone - $100 million between 2003 and 2006.

When accounting issues began to emerge and the new auditors in February revealed a 42 per cent slump in half yearly profits, triggering a 70 per cent fall in shares, Mr Groves berated hedge funds for short selling his company stock.

Sadly that day, shareholders of this great Australian company got their first glimpse of ABC's modus operandi.
But ABC Learning centres soon set about re-branding many of its child care facilities, delegating their operation to a company called Neighbourhood Early Learning Centres, a private company owned by Mr Groves' brother-in-law.

Mr Walker says there was speculation as to whether or not they were arm's-length transactions.
"The concern of the market though, is that it wasn't informed of the fact that these transactions were generating or purporting to generate revenue being derived from the transaction rather than from fees being paid by parents," he said.

Domination

Before the new auditors lanced Mr Groves' burgeoning balloon, forcing a sale of assets, ABC was gluttonously gobbling up child care centres from the UK to America.

Last year, Mr Jones' 1, 2, 3 Global companies began approaching child care centres across Canada, triggering a wave of protests. ABC Learning denied any involvement, but the Canadians didn't believe them.
Professor Brennan was flown to Canada to talk about ABC Learning in Australia.

"It was a very strong activist and early childhood community in Canada that really wanted to ensure that public money is used for the benefit of children, and not for the growth of enormous private and corporate profits," she said.

"Canadians were asking me when I was over there 'How come you have designed a system that's allowed one individual to become the richest person in Australia under 40, and yet you have a system with poor quality standards, where 40 per cent of the staff have no qualifications whatsoever?'"

Huge losses

But there are many who have bought the Mr Groves story completely.

The Singapore Government's investment company last year spent $400 million buying shares at $7.30, to buy 12 per cent of the company, which has so far lost around $350 million in value.

And the Commonwealth Bank is believed to have almost a half a billion dollar exposure to ABC in loan securities or convertible notes, and another several $100 million more in senior debt.

And the Commonwealth is not alone. The total debt due for repayment in just two years is $1.45 billion.
In 2005, when he was with Merrill Lynch, Invesco's investment manager Andrew Perks was attacked after expressing concerns about ABC's tendency to overpay for acquisitions and how the company inflated the values of intangibles or non-physical assets such as brands.

"It was a market darling, it was fast growing, it was raising lots of equity, it was raising lots of debt, that's very attractive to bankers and to stockbrokers. But when I looked at it I was concerned that the ultimate shareholder might not have been sharing in that upside," he said.

"The asset side was largely intangible. I think it got up to almost $3 billion Aussie dollars at the end of June 2007.

"I am not sure what it would be at the end of '08, we are still waiting on that. And to put that into perspective that's almost three times the level of BHP."

Strong concerns about ABC's questionable revenues were directly brought to the attention of the regulator ASIC in 2006, but ASIC chose not to act.

The Federal Government also remains amongst the believers, even after its recent announcement the child care rebate would be increased to help parents cope with the increasing cost of child care, only to see ABC increase its fees.

There was little anyone could do. ABC remains Australia's biggest child care provider. But what happens if, in the worst-case scenario, it was to collapse? Assuming, of course, the banks allowed that to happen.
"I'm also quite critical of a number of politicians and policy makers, who I think have really turned a blind eye to what's been happening in child care in Australia, and who have not been very effective guardians of the public purse," Professor Brennan said.

"Without wanting to speculate at all about the future of ABC Learning, I would just make the point that such a level of exposure to a single company is a matter of great concern."