The Courier-Mail

Big di­vide on wealth widen­ing

- AN­THONY KEANE

IN­COMES have been ris­ing for the na­tion’s rich­est house­holds while Mid­dle Aus­tralia has stag­nated.

New fig­ures from the Aus­tralian Bureau of Sta­tis­tics show the av­er­age in­come for the top 20 per cent of house­holds has climbed 7 per cent in two years to $2037 a week.

How­ever, earn­ings for the mid­dle 20 per cent of house­holds were up just 1.3 per cent to $843 a week.

The ABS House­hold In­come and Wealth data shows the av­er­age in­come for all house­holds was $998 per week in 2013-14, while their av­er­age net worth was $809,900, up from $764,500 two years be­fore and driven by ris­ing house prices and su­per­an­nu­a­tion.

So­cial re­searcher Mark McCrindle said the gap be­tween high-in­come house­holds and the rest had been widen­ing for 20 years.

“And that’s af­ter the tax sys­tem has done its best to even the score,” he said.

The wealth­i­est house­holds now earn more than five times as much as the bot­tom 20 per cent, and their av­er­age net worth is 70 times higher – $2.5 mil­lion ver­sus $35,500.

ONE of Aus­tralia’s big­gest cor­po­rate fundrais­ing pro­grams — the Com­mon­wealth Bank’s $5 bil­lion cash call — risks be­com­ing a fizzer, an­a­lysts say, as global share­mar­kets de­te­ri­o­rate.

Shares in the bank yesterday fell be­low the price of new stock be­ing of­fered to re­tail in­vestors in its rights is­sue, the sec­ond big­gest in Aus­tralian history.

CBA shares hit an in­tra­day low of $71.26, be­low the $71.50 of­fer price an­nounced last month, be­fore re­bound­ing in line with the broader mar­ket to close at $72.15. It means Aus­tralia’s big­gest bank is just a bad trad­ing day away from a sce­nario where in­vestors can buy ex­ist­ing shares more cheaply on the open mar­ket than the new share on of­fer.

That leaves in­vest­ment banks Mor­gan Stan­ley and UBS fac­ing a po­ten­tially hefty bill af­ter they com­mit­ted to un­der­write the pro­gram, com­mit­ting to soak up any short­fall when the of­fer closes at 5pm next Tues­day.

The CBA has al­ready raised $2.1 bil­lion from in­sti­tu­tional in­vestors but is seek­ing another $2.9 bil­lion from re­tail or “mum and dad” in­vestors.

Gold­man Sachs is in the same boat as UBS and Mor­gan Stan­ley, al­beit to a much smaller de­gree, as un­der­writer to Myer’s poorly re­ceived $221 mil­lion rais­ing an­nounced ear­lier this week.

The strug­gling re­tailer has of­fered in­vestors two new shares for ev­eryy five they own at 94 each af­ter r this week tabling a 70 per er cent slide in net profit for the year to June. Its shares plunged to an all-time low of 90 on Thurs­day be­fore lift­ing to 93 yesterday. An­a­lysts said that for the CBA, such a slump in its share price would have seemed un­think­able when it launched its bumper cash call on Au­gust 12. That of­fer, of one share for each 23, was priced at an at­trac­tive dis­count to its then share price (the equiv­a­lent of $81.77 al­low­ing for re­cent ad­just­ments).

Since then, in­vestors have been swamped by a tidal wave of bad news, spooked mostly by signs that China’s slow­down could prove long-last­ing and its gov­ern­ment has run out of ideas on how to ar­rest its share mar­ket rout.

Do­mes­tic fig­ures have done lit­tle to re­store con­fi­dence this week, with the latest growth and con­sumer spend­ing fig­ures both un­der­shoot­ing ex­pec­ta­tions. The bench­mark ASX 200 fell 8.6 per cent in Au­gust and is off to a rocky start in Septem­ber. The Aus­tralian dol­lar fell to a fresh sixyear low of US69.82 yesterday. The na­tion’s big­gest lenders have been hit with the chal­lenge of find­ing more funds to meet stricter cap­i­tal re­serve rules af­ter the bank­ing reg­u­la­tor, the Aus­tralian Pru­den­tial Reg­u­la­tion Au­thor­ity, said in July an ad­di­tional $28 bil­lion would likely need to be sourced. Op­tion­sX­press an­a­lyst Ben le Brun said the CBA had con­sis­tently traded at a pre­mium to other in­ter­na­tional banks but was now be­ing dragged back to the pack.

“It’s po­ten­tially also at the bot­tom of the cy­cle for bad and doubt­ful debts,” he said.

“I’d be shocked if it didn’t find plenty of sup­port at these prices,” he said.

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