AXA

Here is an update on the Australian Wealth Management (AUW) provided by Australian market analyst UBS.

Australian Wealth Management (AUW) Markets impact Q108 FUM, Q2 looking flat

Retail FUM down 9% in the quarter:

AXA Asia Pacific (AXA) has a $6.50 share price target and an unchanged neutral rating from Australian Stockmarket analyst Macquarie Research Equities.

AXA Asia Pacific (AXA) Q108 HK life stats - still underperforming

Event: Q108 HK life stats released:

AXA Asia Pacific Holdings (AXA) has maintained neutral rating and has a share price target of $6.50 from Australian stockmarket analyst Macquarie Research Equities.

AXA Asia Pacific (AXA) Bulking up while slimming down

Event: Buys financial planners, sells closed annuity portfolio:

Here is an Australian Energy update from Australian market analyst UBS.

What do WPL, STO and OSH look like at US$100/bbl oil price parity for LNG?

Is our LT assumption of US$10/mmbtu conservative?:

We have recently upgraded the UBS our oil price forecast by a material amount, but we have left our long term Asia Pacific LNG pricing assumption of US$10/mmbtu unchanged. Is this too conservative?

Asia Pacific LNG prices are moving towards oil price parity:

The New Zealand Budget announced two additional incentives to encourage greater participation in the KiwiSaver Scheme - A matching credit by the Government of up to $20pw for contributions; and a proposed reduction in the corporate tax rate from 33% to 30% from 1 April 2008. KiwiSaver is expected to further accelerate double-digit growth in the NZ wealth management market over the next decade (ANZ, AMP, CBA and AXA biggest beneficiaries), and the proposed tax cuts hold positive implications for stocks like IAG, AXA, AMP, and SUN. The Budget changes will encourage far higher participation in KiwiSaver, as individuals can only capture the Government/employer 'handouts' if they remain in KiwiSaver and contribute the minimum 4% themselves. At the same time, the Budget changes will result in a more than doubling of the minimum contribution rate. A person opting to contribute at the 4% minimum will also receive up to $20pw (assuming a gross salary of $500pw) directly from the Government plus (eventually) a matching 4% employer contribution (3% of which is essentially funded by the Government). Prior to the Budget, the introduction of KiwiSaver was expected to underpin double-digit growth in the NZ wealth management market over the next decade. The proposed changes will further accelerate industry AUM growth, with participation expected to rise materially (from 25% by 2014 assumed previously) along with contribution rates. ANZ is the leader in NZ super, followed by AMP, CBA and AXA. Moreover, six investment firms (ASB, AMP, ING, Mercer, AXA and Tower) were recently appointed as default providers for the KiwiSaver Scheme and stand to win the lion's share of flows given likely employee apathy towards investment manager selection. The reduction in the corporate tax rate also holds positive implications for IAG (~12% of 2007(E) NPBT is NZ), AXA and AMP (~8.9% and 6.4% of after-tax business profits respectively), and SUN (~3% of NPBT on a pro forma basis). The NZ tax cuts are much more relevant to the banks than KiwiSaver. With the banks having between 10–24% of profit sourced from NZ and wealth management a small portion of this, the 3% reduction in the corporate tax rate is much more meaningful for the banks in the short term than the KiwiSaver changes. This will add 0.5–1.0% to bank earnings, spread over FY08 and FY09, with ANZ benefiting the most and NAB and CBA the least. Although CBA should benefit most from the KiwiSaver changes, the NZ wealth management business currently generates a little over 1% of group earnings.

Observations provided by analyst UBS with regards to the insurance sector in Australia: Trends in motor and home are similar: IAG looks to have stemmed mkt share losses with a stabilisation in growth. PMN continues to outperform operationally. SUN's mkt share is steady, but top line momentum is slowing. In motor: IAG price led competition hurt premiums in the Dec half, though PMN looks to have fared relatively well.

There are a few listed insurance companies listed on the Australian Stock Exchange (ASX) such as QBE, AXA, AMP, IAG and SUN. QBE remains Citigroup Investment Research's (CIR) stand out pick. Despite its strong recent run, CIR still view QBE as their top pick in the Australian insurance sector. It looks likely to report a very strong result – their 22.2% insurance margin forecast is top of the market and we flag upside risk.

AXA has a Buy, Medium risk stock recommendation with an unchanged share price target of $7.30 from stock analyst, Citigroup Investment Research (CIR). CIR have noted that AXA Asia Pacific Holdings (AXA) have had "spectacular growth" in Asia in countries including Indonesia, Philippines, China and Thailand. Hong Kong growth slowed slightly with 23 percent growth. Their Australian and New Zealand investment products grew strongly with super and investment products showing strong growth.