Australia shares edge lower on weaker bank stocks, NZ upbeat

(Updates to close)

July 17 (Reuters) – Australian shares slipped on Monday as
weak financial stocks offset gains from material ones as
investors braced for a possible expansion in capital rules for
banks amid rising concerns over risky lending.

The S&P/ASX 200 index dropped 0.2 percent, or 9.619
points, to 5,755.5 at the close of trade. The benchmark rose
0.5 percent on Friday.

Shares of the “Big Four” banks led sector losses that pulled
the benchmark into negative territory. The financials index
, down 0.9 percent at one point, ended the day off 0.4
percent.

Domestic media is speculating the Australian Prudential
Regulatory Authority (APRA) will announce new capital rules this
week for major banks. The government is looking at expanding the
regulator’s powers to include non-bank lenders.

“Financials are struggling to get into positive territory
and investors will continue to look out for the APRA
announcement,” said Tony Farnham, an economist with Patersons
Securities.

Giving into pressure from regulators, major banks have cut
back on home loans and institutional lending to real estate
investors in recent months, giving non-bank lenders an
opportunity to expand their loan books.

This has stoked concerns as the country’s sky-high household
debt and accelerating property prices prevail while wage growth
remains slow.

Financial stocks were also depressed by subdued rate hike
prospects in the United States following weak retail sales data.

One big loser on Monday was Telstra, which tumbled
1.9 percent, its biggest one-day loss in nearly 13 weeks.

Investors are worried that the telcom giant, whose shares
have fallen five straight days, will slash dividends as it faces
growing competition and earnings pressure, according to the
Australian Financial Review. [http://bit.ly/2vsrxy9]

Material stocks were supported by firmer oil and iron ore
prices and surging copper prices, which hit a two-week peak.

Index heavyweights South32 and Fortescue Metals
Group rose 4.7 percent and 1.9 percent, respectively.

New Zealand’s benchmark S&P/NZX 50 index closed 0.7
percent or 49.8 points higher to finish at 7,699.57. At one
point, the benchmark touched a record high intraday level.
(Reporting by Hanna Paul; Additional reporting by Urvashi
Goenka; Editing by Richard Borsuk)


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