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Australia business conditions jump in dec survey


´╗┐SYDNEY Jan 28 A measure of Australian business conditions jumped to its highest in more than 2-1/2 years in December as sales and profitability improved markedly, while confidence held steady at long-run average levels, a survey found on Tuesday. National Australia Bank's survey of more than 400 firms found the surprising turn in conditions was underpinned by a low interest rate environment, higher asset prices and a softer Australian dollar. The report's index of business conditions rose 7 points to +4 in December, with its measure of sales and profitability both surging 10 points. The employment measure also improved but still implied a flat labour market. Its main measure of business confidence was steady at +6, consistent with its long-run average.

"Most industries recorded improved conditions for December - especially transport, wholesale and the services industries more generally - but, manufacturing and construction were both notable exceptions," said NAB's chief economist, Alan Oster. Oster said the sustainability of the jump may be questionable given subdued forward orders, a run-down in inventory and still-low capacity utilisation. He also said employment conditions remained soft.

Still, the jump in business conditions should be welcome news to the Reserve Bank of Australia (RBA) which has been counting on a revival in business investment to offset the drag from a cooling mining boom. The central bank cut interest rates to a record low of 2.5 percent back in August and has been holding steady since amid signs the stimulus was slowly working through the economy.

Oster still believes that rising unemployment will lead the RBA to cut rates again, albeit not until late 2014."The combination of near-term better business conditions and especially the unexpectedly strong Q4 underlying inflation print has caused us to move our next rate cut call from May to November," he said. He noted there was little sign of inflationary pressure in the NAB survey, with labour and purchase costs holding steady.

Australias first guardian to launch islamic pension in january


´╗┐Dec 20 Melbourne-based First Guardian plans to launch an Islamic pension fund in January, collaborating with some of Australia's most well-known Muslim organisations to tap the country's $1.5 trillion private pension system, the world's fourth largest. The fund has received regulatory approval and documentation is in the final stages, said Almir Colan, director at the Australian Centre for Islamic Finance who worked with First Guardian in the design of the product. The fund has been developed with the Muslim Community Cooperative of Australia and the Islamic Council of Victoria, the governing body for the state's Muslim community, has endorsed the product as well, Colan added. This would give much-needed support for the superannuation product, as Australia's pension products are known, to reach a small and scattered Muslim consumer base that has yet to fully embrace retirement savings."In the Muslim demographic you have many first- or second-generation Australians where superannuation is not usually a priority," said Colan, who also lectures on Islamic finance at Melbourne's La Trobe University.

"It is a matter of financial literacy as well."First Guardian's Islamic pension would be the second such product in Australia in as many years, after Sydney-based Crescent Wealth launched its own last year.

Islamic fund managers screen their portfolios according to religious guidelines such as bans on tobacco, alcohol and gambling, in much the same way as socially responsible funds. The fund would also seek to attract other ethically minded investors, as First Guardian follows the United Nations principles for responsible investing. But unlike their ethical counterparts in Western markets, many Islamic fund managers still struggle with a lack of scale, so tapping pension pools is seen as one way of boosting assets under management.

Growth targets thus remain conservative: First Guardian could raise A$30 million to A$40 million ($27-$35 million) for its Islamic pension fund in its maiden year, aiming for A$100 million within three to four years, Colan added."The A$100 million is a very important figure, as it is a break-even point for most of these products."The fund will use the globally recognised screening rules of MSCI to form the basis of its investment universe, but would incorporate an additional layer of screens every three months to refine the list further, said Colan. Private pension schemes are also making inroads in majority-Muslim countries such as Pakistan, Turkey and Malaysia, with early experience suggesting Islamic fund managers can benefit from such efforts. ($1 = 1.1295 Australian dollars)