Amazon creates panic

Investment chief says retail is being over-sold

INVESTORS are abandoning shopping centre landlords with too much haste in the panic over Amazon’s push into Australia, according to one of the nation’s most revered investment chiefs.

Major shopping centre owners such as Scentre, which owns Westfield centres in Australia, have been oversold in the stampede, Ross Barker says.

The chief executive of the Australian Foundation Invest- ment Company – the nation’s biggest listed investment company – says investors are drawing premature conclusions from Amazon’s announcement that it will launch a full online store in Australia.

“Everybody’s said ‘Amazon’s coming in, it’s going to affect (these) retailers’,” Mr Barker said.

“But you sit back and think, those iconic shopping malls, yes, they might have some challenges but do we think the current price is attractive for the medium-to-long-term? Probably.”

Australia’s listed shopping centre landlords have suffered deep market routs this year.

Scentre shares are down 11.4 per cent, while Vicinity Centres, which owns more than 80 centres is down 12.4 per cent.

Westfield Corporation, which owns Westfield-branded malls overseas, has fallen further still, down 15.9 per cent.

Mr Barker said there was “no doubt” companies such as Amazon were changing the marketplace for consumers.

But he said the “anticipatory fear” that had swept the stockmarket did not account for likely reactions from the competitors.

His comments follow reports last week that the US based online retail titan has settled on a site for its first distribution centre in Australia, at Dandenong, in Melbourne’s south east.

Mr Barker said that on the available evidence, many investors appeared to be overreacting to the perceived threat.

“Generally speaking, people magnify the impact – certainly in the short term – but you’ve got time to adjust when you see what is happening on the ground once they start doing things.”

He was speaking as AFIC posted a net profit for the year to June of $245.3 million – down 7.7 per cent from $265.8 million the previous year.

The slide came as investment income fell by $15.2 million, primarily due dividend cuts from broad range of large companies in its portfolio, and drops in trading income.

AFIC has held its final dividend steady, at 14¢ a share, fully-franked, for a total payout of the financial year of 24¢.