anz nsw overview

8/22/2019 ANZ NSW Overview

1/16

7 AUGUST 2013

CONTRIBUTORS

Warren Hogan

Chief Economist+61 2 8037 0063

[email protected]

Cherelle Murphy

Senior Economist+61 2 6198 5010

[email protected]

Dylan EadesEconomist

+61 2 8037 [email protected]

NSW IN FOCUSAUSTRALIAN ECONOMICS

ANZ RESEARCH

NSW RECOVERY MAY UNDERPIN THE TRANSITION FROM MINING BOOM

In recent months, the New South Wales economy has shown signs of genuinerecovery and is now outperforming the rest of Australia. This comes after a

decade when the NSW economy underperformed with its share of national output

slipping by around 4 percentage points to 31% in 2012. This note examines whether

the early signs of an upturn in NSW, Australias most populous state, are likely to

continue.

Examining NSWs economic outlook not only assists our understanding of around onethird of Australias economy but also provides some insight into how smoothly

Australia might transition from the mining investment boom to a more broad based

growth story.

There remains much uncertainty around the outlook for the Australian economy at themoment. However, we conclude that there are a number of reasons why NSW

may grow at an above average rate and play a central role in leading the

national economy in the transition to stronger non-mining growth over the

next few years.

The improved NSW outlook contrasts with the more negative outlook in the miningstates and in Victoria, where an overhang of housing construction is likely to weigh on

growth. It also contrasts with NSWs own recent history. During the early 2000s IT

bust and global financial crisis, the NSW economy slowed more sharply than the rest

of Australia and employment growth was weaker.

We also examine the relationship between the US business cycle and the NSWeconomy concluding that a strong relationship still exists due to linkages related to

financial markets, financial services and the headquartering of multinational firms in

Sydney. Our analysis suggests that although China is increasing its influence on the

national economy, the US economy remains a major driver of the NSW cycle.

FIGURE 1: NSW AND US GDP GROWTH

-4

-3

-2

-1

0

1

2

3

4

5

6

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Annual%c

hange

NSW US

Forecasts

Sources: ABS, Bloomberg, ANZ
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Australian Economic Update / 7 August 2013 / 2 of 16

A DECADE OF UNDERPERFORMANCE COMES TO AN END

From 2000 until 2012, the NSW economy grew more slowly than the rest ofAustralia, at an average annual rate of 2.1% compared to 3.5%. Figure 2 below

shows NSW economic growth, proxied by state final demand plus net exports, was

weaker on average than the rest of Australia through most of this period. The NSW

economy and employment growth were more heavily impacted by the bursting of the

tech bubble in 2000-01 and the global financial crisis around 2007-09. These

downturns were relatively more severe than the rest of Australias. This is likely due

to the over-representation of the financial and insurance services industries and IT,

media and telecommunications industries in NSW.

FIGURE 2: THE LOST DECADE

-4

-2

0

2

4

6

8

87 89 91 93 95 97 99 01 03 05 07 09 11 13

New South WalesNew South Wales, decade averageAustralia (excluding New South Wales)Australia (excluding New South Wales), decade average

Annual%c

hangeinstatefinaldemand

plusnetexports(trend)

Sources: ABS, ANZ

Another reason for underperformance in NSW was the slowdown in dwelling

investment which slipped as a share of domestic demand in NSW much more than in

other states and territories from around 2005 (Figure 3). This followed a period of

strong activity in the late 1990s, where NSW and in particular Sydney, led the

national housing boom of 1998-2003.


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FIGURE 3: NSW DWELLING INVESTMENT AS A SHARE OF DOMESTIC DEMAND VERSUS

REST OF AUSTRALIA

3

4

5

6

7

8

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

New South Wales Australia (excluding New South Wales)

Dwellinginvestmentas%

ofstatefinaldemand

Sources: ABS, ANZ

NSW business investment, while continuing to grow, slipped relative to the rest of

Australia as a share of state final demand (Figure 4). NSW has not participated in

the mining investment boom to the same degree as Western Australia, Queensland

and the Northern Territory although coal mining is still an important contributor to

the state economy.

FIGURE 4: NSW BUSINESS INVESTMENT AS A SHARE OF DOMESTIC DEMAND VERSUS

REST OF AUSTRALIA

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

New South Wales Australia (excluding New South Wales)

Businessinvestmentas%

ofstatef

inaldemand

Sources: ABS, ANZ

But recently there has been a turnaround. Over the past year, the NSW

economy appears to have grown at a faster pace than the rest of Australia. Activityin NSW (as measured by state final demand plus net exports) is above its trend rate,

while the rest of Australia has slowed to below its trend rate as shown in Figure 2. A

similar pattern is seen in employment growth, with NSW growing faster than its


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trend rate while the rest of Australias employment growth has slowed. As Figure 5

highlights, the net 83,500 jobs created in NSW (in trend terms over the year to

June) was greater than the net job gains to the rest of the country.

FIGURE 5: CHANGE IN EMPLOYMENT LAST 12 MONTHS, BY STATE

-20 0 20 40 60 80 100

NSW

Vic

WA

Qld

SA

ACT (trend)

NT (trend)

Tas

Change in employment over latest 12 months (sa, 000s)

Sources: ABS, ANZ

This has not been reflected in the NSW unemployment rate, which rose to 5.4% in

June, from a low of 4.7% last year. But higher unemployment is mostly due to a

rising participation rate as shown in Figure 6. The improvement has been unique to

NSW and suggests that a brightening economic outlook is encouraging workers to

seek jobs. Similarly, the employment to population ratio, which fell throughout the

country in the aftermath of the GFC has started to recover in NSW only.

FIGURE 6: PARTICIPATION RATE, BY STATE

59

61

63

65

67

69

05 06 07 08 09 10 11 12 13 05 06 07 08 09 10 11 12 13

66

68

70

72

74

76

Participationrate,trend,%

AUST NSW VIC QLD SATas WA (RHS) ACT (RHS) NT (RHS)

Participationrate,trend

,%

Sources: ABS, ANZ


5/16


Another positive labour market development particular to NSW in recent months

has been a fall in workers who were working less than 35 hours a week for

economic reasons (ie. because they have been stood down or are on short time due

to insufficient work). In all other states, there has been a rise in the numbers of

workers in this category.

FIGURE 7: SHORT ON HOURS FOR ECONOMIC REASONS, BY STATE

0

5

10

15

20

25

30

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

000s

0

15

30

45

60

75

90

000s

NSW Victoria QLD SA WA Tasmania Australia (RHS)

Sources: ABS, ANZ

The early signs of recovery in the NSW state economy are encouraging, particularlyrecent labour market developments. Indeed, we expect the outperformance of the

NSW economy to continue for several reasons. As shown below in Figure 8, ANZs

forecasts highlight that we expect the NSW economy is the most likely to pick-up

and perform above its decade average, even though growth is likely to remain below

the actual rates of the mining states (which should benefit from strong resource

export volumes in the coming few years).

FIGURE 8: ANZ GROSS STATE PRODUCT FORECASTS

0.5

2.1

3.5

2.32.4

4.0

6.7

4.4

1.75

3.253.25

4.25

2.5

2.0

1.25

0.0

5.5

5.0

4.5

2.02.252.0

1.5

3.5

0

1

2

3

4

5

6

7

TAS SA ACT VIC NSW QLD WA NT

Percent

11-12 12-13f 13-14f 10 yr average

Share of

- economy 1.7% 6.3% 2.2% 22.2% 30.7% 19.3% 16.3% 1.2%

- population 2.2% 7.3% 1.7% 24.8% 32.1% 20.1% 10.8% 1.0%

Sources: ABS, ANZ


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The main reasons for our optimism about NSW are:

NSW demonstrates closer correlation with the US economy than the rest ofAustralia and the US economy is recovering. This is in contrast with our other

major growth driver, China which is slowing, albeit from higher growth rates.

We see a more positive outlook for the financial and insurance services industryin Australia compared to recent years, which we believe is in part a direct

consequence of the recovery in US economy and stronger demand for housing

and related finance. Nearly 45% of Australias financial and insurances industry is

based in NSW.

The benefits of a lower interest rate environment are filtering through the NSWeconomy, particularly to housing construction which is also gaining momentum

from pent-up demand following several years of underinvestment.

The NSW Governments recent windfall gains from leasing the ports of Botanyand Kembla plus its plans to privatise or lease a number of other significant

assets and sound budget management have facilitated a number of large-scale

transport infrastructure projects. More are likely. Partly offsetting these will be

lower capital spending by the recently heavily-capitalised electricity sector.

Falling commodity (especially coal) prices are likely to deter new major projectdevelopments, but with only 3% of its economy dependent on mining, NSW will

not feel the effects as much as WA and Qld.

We explore each of these drivers below and point out where there are also

downside risks.

NSW CORRELATION WITH THE UNITED STATES ECONOMY

Over the past three decades Australian GDP has shown a strong correlation with the

US economy. In recent years however, this appears to have lessened while Australias

correlation with China has increased. The impact of the GFC on the US economy and

the China led mining boom are the main reasons for this.

Our analysis suggests that the NSW economy has maintained a strong correlation

with the US economy through this past decade despite the rising correlation with the

Chinese economy at the national level. As shown in Figure 9 the long-term correlation

(10yr rolling) between the Australian economy (ex. NSW) and the US has gradually

declined from around 0.35 in the late 1990s to 0.15 in the past five years. For NSW

the correlation is now higher than in the late 1990s at over 0.40.


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FIGURE 9: 10-YEAR ROLLING CORRELATIONS WITH THE US

0

0.1

0.2

0.3

0.4

0.5

0.6

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

10-yearrollingcorrelation

Australia (excluding NSW)-US NSW-US

Sources: Bloomberg, ABS, ANZ

There is certainly evidence to suggest the NSW correlation with the US (GDP), is

stronger than the rest of Australias correlation with the US economic cycle.

FIGURE 10: NSW AND US GDP GROWTH

-4

-3

-2

-1

0

1

2

3

4

5

6

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Annual%c

hange

NSW US

Forecasts


Our forecasts indicate that the US economy is on the verge of a sustained expansion

following a weak and patchy five years. While our point forecasts have growth of

around 3% for the US economy in 2014 and 2015, our analysis of the risks suggests

these are firmly to the upside. Given this historical correlation, our outlook for the US

is supportive of continued expansion for the NSW economy.

One reason this may be the case is because of NSWs exposure to the financial andinsurance industries (see section below). There are also a large proportion of

multinational companies headquartered in NSW, which may mean US economic

conditions and confidence have a relatively large impact in NSW.


8/16


Despite the rise of China and the importance of Chinese economic activity to

Australia, the US economy is still an influential force. Much of the economic impact

operates through the NSW economy via financial and confidence linkages. In our

view, this boost to NSW from a stronger US economy will create positive spillovers to

the surrounding state economies of Queensland and Victoria over time. Indeed, a

potentially important factor in Queenslands difficult recent history has been the soft

NSW economy.

FINANCE AND INSURANCE SERVICES POTENTIAL

Around 45% of Australias financial and insurance services are based in NSW

including key financial markets and major international banks. The industry has

grown rapidly over the last 30 years and now contributes around 14% of NSW gross

value added, which is more than any other single industry.

FIGURE 11: NSW INDUSTRY STRUCTURE, 2002 AND 2012

0 2 4 6 8 10 12 14

Arts and recreation services

Agriculture

Other services

Rental, hiring and real estate services

Utilities

Accommodation and food services

Administrative and support services

MiningRetail trade

Information media and telecommunications

Education and training

Public administration and safety

Wholesale trade

Transport, postal and warehousing

Construction

Health care and social assistance

Professional, scientific and technical services

Manufacturing

Ownership of dwellings

Financial and insurance services

NSW 2002 NSW 2012% of Gross Value Added, 2011-12


Financial and insurances services were significantly impacted by the GFC.

Employment in this industry has only just recovered to be around the level recorded

in early 2007. While Australias financial institutions have weathered the GFC in a

relatively strong position, many international banks have been shrinking, including in

Australia.

There is further room for upside in this industry following the recovery in the US

economy and especially its financial services industry, lead by the improvement in

financial market activity which is likely to filter through to confidence more generally.

An improvement in the housing cycle, which we discuss more fully below, will also lift

demand for finance and insurance services (due to increased demand for housing and

related finance).

A downside risk however comes from the business sector with business confidence

and investment subdued at present. This is not suggestive of a pick up in demand for

credit from the business sector. A stronger US economy and rising financial asset


9/16


prices suggest that we may be at a low point for confidence. There may be some

improvement in these indicators after the election once there is certainty about the

countrys political future, particularly if a majority government is established.

HOUSING CONSTRUCTION UPSWING

Past interest rate cuts by the RBA and pent-up demand for housing as well as policy

measures from the State Government are gaining traction in the NSW residential

housing market. Dwelling investment and building approvals have been picking up

and house prices in Sydney have risen beyond their 2010 peak (the only other capital

city where house prices have risen to new records is Darwin). NSW housing turnover

has also increased with auction clearance rates rising significantly. High housing

prices could help to stimulate further activity, especially in the investor sector as

property returns become more attractive.

Figure 12 below comparing population growth and housing starts shows the extent of

under building in NSW in recent years, which has lead to significant undersupply of

housing stock.

FIGURE 12: HOUSING STARTS VS POPULATION GROWTH, NSW

-80

-60

-40

-20

0

20

40

60

80

100

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Housing Starts

Population Growth

%d

eviationfrom

long

runaverage

Sources: ABS, ANZ

The NSW Government has specifically sought to address the undersupply of housingby doubling the first home owners grant to AUD15,000 but restricting it, and stamp

duty concessions, to new housing with a value of less than AUD650,000. (The 2013-

14 Budget said the number of first home owner grants was more than 60% higher

than a year ago suggesting that these policies have been initially successful in

attracting this segment back to the market). It has also used the proceeds of

Government building sales to fund infrastructure around new housing lots and

increased its planning budget to focus on facilitating housing in suitable locations.

We expect there is further growth in housing construction ahead given pent-up

demand and improving affordability. Indeed, there is still a significant gap between

the movement in the cash rate and dwelling approvals as below in Figure 13.

Moreover, given general softness in the economy and an absence of inflationary

pressure, we think the Reserve Bank is likely to keep interest rates at multi-

generational lows for the foreseeable future.


10/16


FIGURE 13: NSW RESIDENTIAL BUILDING APPROVALS VS RBA CASH RATE

1

2

3

4

5

6

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Dwellingbuildingapprovals,

000spermonth

1

3

5

7

9

11

Cashrate,inverted

NSW dwelling building approvals, trend (LHS)RBA cash rate, inverted (RHS)

GST

introduction

Sources: ABS, RBA, ANZ

PUBLIC SECTOR INVESTMENT

The 2013-14 NSW budget dedicated most of the AUD4.3bn proceeds attained from

the long-term leases of Port Botany and Port Kembla to transport infrastructure. The

projects currently planned include the North West Metro-Rail Link and WestConnex

Road Project. Partly offsetting this will be lower investment by the recently highly

capitalised electricity sector.

FIGURE 14: UPWARD REVISION TO NSW PUBLIC INVESTMENT PLANS IN 2013-14

BUDGET

0

2

4

6

8

10

12

2008 2010 2012 2014 2016

AUDbn

General government infrastructure spending as a t Dec 12

General government infrastructure spending as a t Jun 13

forecast

Sources: NSW Budget Papers, ANZ

But we are likely to see more public sector investment slated for coming years.

Treasurer Baird has announced the sale of the State's largest power producer,

Macquarie Generation, which could raise AUD1.6-AUD2bn. This is in addition to other

electricity generation businesses and the lease of the Port of Newcastle. The proceeds

from these will be at least partly be spent on state infrastructure (although in practice


11/16


they pay off debt first), continuing the Governments policy to utilise its assets for the

productive good of the economy.

If the NSW Government is successful in attaining a mandate to sell NSWs electricity

transmission businesses following the 2015 election, as it plans to do, the likely funds

would be substantial (reports suggest around AUD30bn) and further infrastructure

plans would likely follow. The outlook for NSW public sector investment is much more

positive than in other states, where constrained fiscal conditions and less ambitious

asset sales plans exist.

As was demonstrated in the Victorian state economy over the past two decades a

period of well targeted and sustained urban infrastructure spending can be a major

positive force for investment more generally in the local economy. The opening up of

new transport corridors and the upgraqding of existing infrastructure can led to new

residential, commercial and retail investment in those locations. A meaningful pick-up

in construction activity will create jobs and boost confidence across households and

businesses.

LIMITED EXPOSURE TO MINING

NSW mining is dominated by the coal sector, and coal prices have fallen sharply since

late 2011 (in line with most other Australian commodity prices), deterring new

developments beyond current commitments. But with only around 3% of its economy

dependent on mining, we expect NSW will be much less negatively affected by falling

commodity prices than WA, NT and Queensland. Similarly, the labour market

consequences will not be as harsh with absolute levels of mining employment in NSW

below those in WA and Queensland.

FIGURE 15: INDUSTRY SHARE FROM MINING

0 5 10 15 20 25 30 35 40

ACT

TAS

VIC

NSW

SA

QLD

NT

WA

% industry share from mining

Source: ABS, ANZ

WHERE DO WE SEE REASONS FOR CAUTION?

There has been a sharp fall in the AUD which we expect to drift lower over the next

year. The recent depreciation can be explained by a few factors but largely reflects alagged response to lower prices for Australias exports, an actual/expected slowing in

domestic growth and concerns about slower growth in China. In our view, the AUD

should fall to a cyclical low point in 2015 of around USD0.84. The lower AUD means


12/16


financial conditions are easier and should start to assist the rebalancing of growth by

assisting the export and import competing industries that have recently suffered.

These include manufacturing, tourism and international education; all industries of

some importance to NSW. But they have become a smaller share of the NSW

economy over the last 10 years. Any decline in the AUD will have a less positive

impact than in the past. Relative to Victoria, South Australia and Tasmania which are

more heavily reliant on these industries, AUD depreciation will have a less stimulatory

effect to NSW industry1. (On the other hand if the AUD appreciates again the

economy is more insulated from the impact than in the past or relative to others

states.)

FIGURE 16: NSW INDUSTRY COMPOSITION COMPARED TO REST OF AUSTRALIA

0 2 4 6 8 10 12 14

Arts and recreation services

Agriculture

Other services

Rental, hiring and real estate services

Utilities

Accommodation and food services

Administrative and support services

Mining

Retail trade

Information media and telecommunications

Education and training

Public administration and safety

Wholesale trade

Transport, postal and warehousing

Construction

Health care and social assistance

Professional, scientific and technical services

Manufacturing

Ownership of dwellings

Financial and insurance services

NSW Average other states% of Gross Value Added, 2011-12

Source: ABS, ANZ

We do not see an immediately bright future for private business investment spending,

which has been particularly weak in recent years. Critical to a sustained expansion in

the NSW economy will be a turn around in non-mining investment. There is scantevidence of this yet, although as discussed throughout this paper many of the building

blocks of a recovery in business confidence and investment are being put in place.

1 We recognise this is a broad simplification of the impact of the AUD on the

NSW economy.


13/16


FIGURE 17: NSW BUSINESS INVESTMENT

Source: ABS, ANZ

Consumption growth has been soft and retail sales growth has been growing at a

below trend rate since 2011. This is likely due to weakness in employee

compensation, which has shown no signs of rising in line with better labour demand

in the state. This may be short lived however if improvements to labour demand

translate to wages.

FIGURE 18: REAL COMPENSATION OF EMPLOYEES

Source: ABS, ANZ

-6

-4

-2

0

2

4

6

8

10

12

14

16

86 88 90 92 94 96 98 00 02 04 06 08 10 12

Annual%c

hange

Australia (excluding NSW) compensation of employees

NSW compensation of employees

-5

-3

-1

1

3

5

90 92 94 96 98 00 02 04 06 08 10 12

%o

fGDP

Business investment (deviation from 5-year average)


14/16


Appendix 1: NSW FACT BOX

Annual GSP AUDbn (2011-12) 446 Net debt AUDbn (2013-14) 15.7Share of eco nomy % (2011-12) 30.7 Government Liberal-National since 2011

Population (Dec 12) 7,348,899 Premier The Hon Barry O'Farrell MP

Share of popu lation % (Dec 12) 32.1 Leader of opposition Mr J ohn Robertson MP

Share of employment % (av. 2012-13) 31.5 Treasurer The Hon Mike Baird MP

CPI %y/y (Mar qtr ) 2.8 2014-15 budget J une 2014

Unemployment rate %, sa (Jun) 5.5 Next election 28 March 2015

Employment %y/y (Jun) 3.5 S&P's credit rating AAA (Negative)

Operating budget balance AUDbn (2013-14) -1.9 Moody's credit rating Aaa (Stable)

Sources: ABS, NSW Budget Papers, NSW Parliament, S&P, Moodys, ANZ


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registered with the QCB, QFC Authority, QFC Regulatory Authority or any other governmental authority in Qatar; or authorised or licensed for offering, marketing, issue or sale, directly or indirectly, in Qatar.Accordingly, the financial products or services described in this publication are not being, and will not be, offered, issued or sold in Qatar,

and this publication is not being, and will not be, distributed in Qatar. The offering, marketing, issue and sale of the financial products orservices described in this publication and distribution of this publication is being made in, and is subject to the laws, regulations and rulesof, jurisdictions outside of Qatar and the QFC. Recipients of this publication must abide by this restriction and not distribute thispublication in breach of this restriction. This publication is being sent/issued to a limited number of institutional and/or sophisticatedinvestors (i) upon their request and confirmation that they understand the statements above; and (ii) on the condition that it will not beprovided to any person other than the original recipient, and is not for general circulation and may not be reproduced or used for anyother purpose.
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IMPORTANT NOTICE

Singapore. This publication is distributed in Singapore by the Singapore branch of ANZ solely for the information of accreditedinvestors, expert investors or (as the case may be) institutional investors (each term as defined in the Securities and Futures Act

Cap. 289 of Singapore). ANZ is licensed in Singapore under the Banking Act Cap. 19 of Singapore and is exempted from holding afinancial advisers licence under Section 23(1)(a) of the Financial Advisers Act Cap. 100 of Singapore. In respect of any matters arising

from, or in connection with the distribution of this publication in Singapore, contact your ANZ point of contact.United Arab Emirates. This publication is distributed in the United Arab Emirates (UAE) or the Dubai International Financial Centre (asapplicable) by ANZ. This publication: does not, and is not intended to constitute an offer of securities anywhere in the UAE; does notconstitute, and is not intended to constitute the carrying on or engagement in banking, financial and/or investment consultation businessin the UAE under the rules and regulations made by the Central Bank of the United Arab Emirates, the Emirates Securities andCommodities Authority or the United Arab Emirates Ministry of Economy; does not, and is not intended to constitute an offer of securitieswithin the meaning of the Dubai International Financial Centre Markets Law No. 12 of 2004; and, does not constitute, and is not intendedto constitute, a financial promotion, as defined under the Dubai International Financial Centre Regulatory Law No. 1 of 200. ANZ DIFCBranch is regulated by the Dubai Financial Services Authority (DFSA). The financial products or services described in this publication areonly available to persons who qualify as Professional Clients or Market Counterparty in accordance with the provisions of the DFSArules. In addition, ANZ has a representative office (ANZ Representative Office) in Abu Dhabi regulated by the Central Bank of the United

Arab Emirates. ANZ Representative Office is not permitted by the Central Bank of the United Arab Emirates to provide any bankingservices to clients in the UAE.United States. If and when this publication is received by any person in the United States or a "U.S. person" (as defined in Regulation Sunder the US Securities Act of 1933, as amended) (US Person) or any person acting for the account or benefit of a US Person, it isnoted that ANZ Securities, Inc. (ANZ S) is a member of FINRA (www.finra.org) and registered with the SEC. ANZ S address is 277 ParkAvenue, 31st Floor, New York, NY 10172, USA (Tel: +1 212 801 9160 Fax: +1 212 801 9163). Except where this is a FX- related or

commodity-related publication, this publication is distributed in the United States by ANZ S (a wholly owned subsidiary of ANZ), whichaccepts responsibility for its content. Information on any securities referred to in this publication may be obtained from ANZ S uponrequest. Any US Person receiving this publication and wishing to effect transactions in any securities referred to in this publication mustcontact ANZ S, not its affiliates. Where this is an FX- related or commodity-related publication, it is distributed in the United States byANZ's New York Branch, which is also located at 277 Park Avenue, 31st Floor, New York, NY 10172, USA (Tel: +1 212 801 9160 Fax: +1212 801 9163). Commodity-related products are not insured by any U.S. governmental agency, and are not guaranteed by ANZ or anyof its affiliates. Transacting in these products may involve substantial risks and could result in a significant loss. You should carefullyconsider whether transacting in commodity-related products is suitable for you in light of your financial condition and investment

objectives. ANZ S is authorised as a broker-dealer only for US Persons who are institutions, not for US Persons who are individuals. If youhave registered to use this website or have otherwise received this publication and are a US Person who is an individual: to avoid loss,you should cease to use this website by unsubscribing or should notify the sender and you should not act on the contents of thispublication in any way.2. Disclaimer for all jurisdictions, where content is authored by ANZ Research:Except if otherwise specified in section 1 above, this publication is issued and distributed in your country/region by ANZ, on the basis thatit is only for the information of the specified recipient or permitted user of the relevant website (collectively, recipient). This publicationmay not be reproduced, distributed or published by any recipient for any purpose. It is general information and has been prepared

without taking into account the objectives, financial situation or needs of any person. Nothing in this publication is intended to be an offerto sell, or a solicitation of an offer to buy, any product, instrument or investment, to effect any transaction or to conclude any legal act ofany kind. If, despite the foregoing, any services or products referred to in this publication are deemed to be offered in the jurisdiction inwhich this publication is received or accessed, no such service or product is intended for nor available to persons resident in thatjurisdiction if it would be contradictory to local law or regulation. Such local laws, regulations and other limitations always apply with non-

exclusive jurisdiction of local courts. Before making an investment decision, recipients should seek independent financial, legal, tax andother relevant advice having regard to their particular circumstances.The views and recommendations expressed in this publication are the authors. They are based on information known by the author andon sources which the author believes to be reliable, but may involve material elements of subjective judgement and analysis. Unlessspecifically stated otherwise: they are current on the date of this publication and are subject to change without notice; and, all priceinformation is indicative only. Any of the views and recommendations which comprise estimates, forecasts or other projections, aresubject to significant uncertainties and contingencies that cannot reasonably be anticipated. On this basis, such views andrecommendations may not always be achieved or prove to be correct. Indications of past performance in this publication will notnecessarily be repeated in the future. No representation is being made that any investment will or is likely to achieve profits or lossessimilar to those achieved in the past, or that significant losses will be avoided. Additionally, this publication may contain forward lookingstatements. Actual events or results or actual performance may differ materially from those reflected or contemplated in such forward

looking statements. All investments entail a risk and may result in both profits and losses. Foreign currency rates of exchange mayadversely affect the value, price or income of any products or services described in this publication. The products and services describedin this publication are not suitable for all investors, and transacting in these products or services may be considered risky. ANZ and itsrelated bodies corporate and affiliates, and the officers, employees, contractors and agents of each of them (including the author)(Affiliates), do not make any representation as to the accuracy, completeness or currency of the views or recommendations expressedin this publication. Neither ANZ nor its Affiliates accept any responsibility to inform you of any matter that subsequently comes to theirnotice, which may affect the accuracy, completeness or currency of the information in this publication.Except as required by law, and only to the extent so required: neither ANZ nor its Affiliates warrant or guarantee the performance of anyof the products or services described in this publication or any return on any associated investment; and, ANZ and its Affiliates expresslydisclaim any responsibility and shall not be liable for any loss, damage, claim, liability, proceedings, cost or expense (Liability) arisingdirectly or indirectly and whether in tort (including negligence), contract, equity or otherwise out of or in connection with this publication.If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to besecure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. ANZ andits Affiliates do not accept any Liability as a result of electronic transmission of this publication.ANZ and its Affiliates may have an interest in the subject matter of this publication as follows:

They may receive fees from customers for dealing in the products or services described in this publication, and their staff andintroducers of business may share in such fees or receive a bonus that may be influenced by total sales.

They or their customers may have or have had interests or long or short positions in the products or services described in thispublication, and may at any time make purchases and/or sales in them as principal or agent.

They may act or have acted as market-maker in products described in this publication.ANZ and its Affiliates may rely on information barriers and other arrangements to control the flow of information contained in one or morebusiness areas within ANZ or within its Affiliates into other business areas of ANZ or of its Affiliates.Please contact your ANZ point of contact with any questions about this publication including for furtherinformation on these disclosures of interest
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