Australian Bureau of Statistics

Rate the ABS website
ABS Home > Statistics > By Release Date
ABS @ Facebook ABS @ Twitter ABS RSS ABS Email notification service
1301.0 - Year Book Australia, 2009–10  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 04/06/2010   
   Page tools: Print Print Page RSS Feed RSS Bookmark and Share Search this Product  
Contents >> Financial system >> Financial markets

FINANCIAL MARKETS

Financial markets are used by participants to either raise funds (e.g. by issuing securities) or invest savings (by buying securities and other financial assets). The major markets in the Australian financial system include the share market, bond market and money market. Descriptions and tables indicating prices and activity in various financial markets are provided in this section.

A significant influence in financial markets is the participation of institutional investors controlling large pools of investment funds. These pools are accumulated by collective investment institutions and are often managed on a fee-for-service basis by investment managers. A summary of the activities of these institutions is also provided.


Credit market

Credit may be defined broadly as funds provided to those seeking to borrow. However, analytically useful measures of credit usually exclude borrowings by financial enterprises because their main role is as an intermediary, that is, they borrow in order to lend. Also, lending and borrowing between enterprises which have a special relationship, such as between companies in the same group or between government agencies, are often excluded from credit measures because transactions between these bodies frequently are of a non-market nature. Similarly, some types of financial instrument, such as trade debts, are not considered to be part of an organised market. All of these types of transactions are omitted from table 27.12, which presents a summary of the demand for credit in Australia by the non-financial sectors. It includes raisings by the issue of both debt and equity securities. Table 27.13 shows details of household demand for credit.

27.12 DEMAND FOR CREDIT(a)

Net transactions during year

2006 - 07
2007 - 08
2008 - 09
$m
$m
$m

Funds (including equity) raised on conventional credit markets by:
Private non-financial corporations(b)
160 892
156 278
108 186
National public non-financial corporations
15 858
-734
179
State and local public non-financial corporations
2 948
9 904
23 967
National general government
-1 820
1 963
47 603
State and local general government
332
7 571
5 857
Households
128 433
106 024
71 441
Total
306 643
281 006
257 233

(a) Positive numbers indicate an increase in raisings. Negative numbers indicate repayment or redemption.
(b) Aggregates impacted by large corporate restructuring transactions.
Source: ABS Australian National Accounts: Financial Accounts (5232.0).

27.13 HOUSEHOLD DEMAND FOR CREDIT

Net transactions during year

2006 - 07
2007 - 08
2008 - 09
$m
$m
$m

Households demand for credit
128 433
106 024
71 441
Housing
91 504
90 108
84 646
Total Authorised Deposit-taking Institutions (ADIs)
54 905
123 288
122 882
Owner-occupied housing
38 144
89 346
96 851
Investment housing
16 761
33 942
26 031
Other lenders
36 599
-33 180
-38 236
Non-Housing Borrowing
36 929
15 916
-13 205

Source: ABS Australian National Accounts:Financial Accounts (5232.0); ABS Housing Finance (5609.0).



Stock market

The stock market is a mechanism for trading equities (shares), units in trusts, options, and some fixed-interest securities.

Operated nationally by the Australian Stock Exchange (ASX), which is responsible for the day-to-day running and surveillance of trading, the Australian system is electronic and conducted using the Stock Exchange Automated Trading System, allowing buyers and sellers to be located anywhere in the country.

The ASX classifies listed companies according to their major activity and produces indexes based on these classifications. Table 27.14 summarises the performance of the major indexes.

27.14 AUSTRALIAN STOCK MARKET INDEXES(a)

2006 - 07
2007 - 08
2008 - 09

All ordinaries
Index(b)
6 310.6
5 332.9
3 947.8
High(c)
6 435.7
6 873.2
5 351.4
Low(c)
4 878.1
5 130.1
3 090.8
S&P/ASX 200
6 274.9
5 215.3
3 954.9
Banks
14 771.1
10 378.0
9 629.0
Industrials
9 424.4
6 618.0
5 331.0
Resources
5 295.3
6 630.0
4 492.0

(a) Base 31 December 1979 = 500.
(b) Share prices on joint trading floors; June closing value.
(c) Over a 12-month period ending 30 June.
Source: Australian Stock Exchange; Reserve Bank of Australia; Standard and Poor's.


Table 27.15 shows the market value of Australian shares and units in trusts on issue - both listed and unlisted. It shows the amount on issue by sector of issuer and sector of holder of equities and units.


27.15 EQUITY MARKET(a) - 30 June

2007

2008

2009

Listed
Unlisted(b)
Listed
Unlisted(b)
Listed
Unlisted(b)
$m
$m
$m
$m
$m
$m

AMOUNTS ON ISSUE

Total equities and units in trusts
1 605 996
1 179 475
1 342 754
1 167 203
1 079 717
1 020 058

ISSUED BY

Private non-financial corporations
1 090 260
268 487
1 001 946
295 434
747 813
274 840
National public non-financial corporations(c)
-
6 918
-
7 503
-
6 277
State and local non-financial corporations(c)
-
77 739
-
66 393
-
39 790
Central bank(c)
-
9 703
-
10 616
-
11 964
Banks
308 631
11 783
221 016
13 678
230 369
10 270
Other depository corporations
1 108
36 645
442
34 985
283
34 201
Life insurance corporations
32 565
4 946
21 433
4 947
18 750
4 975
Other insurance corporations
37 785
38 434
27 316
37 042
28 106
37 276
Central borrowing authorities
-
30
-
30
-
30
Financial intermediaries
135 647
149 710
70 601
127 865
54 396
105 660
Rest of world
-
575 080
-
568 710
-
494 775

HELD BY

Private non-financial corporations
53 500
260 949
43 093
288 165
28 331
254 842
National public non-financial corporations
-
316
-
318
-
322
State and local public non-financial corporations
-
378
-
376
-
403
Banks
1 272
134 237
725
111 261
1 172
102 857
Other depository corporations
85
4 115
127
4 637
131
4 490
Life insurance corporations
83 149
91 668
73 608
84 726
56 222
73 546
Pension funds
362 000
248 403
301 491
251 597
221 748
211 372
Other insurance corporations
14 414
38 818
11 845
32 426
6 326
32 971
Financial intermediaries
192 372
79 534
140 435
66 768
110 656
53 959
National general government
18 215
19 600
13 320
29 408
11 892
34 415
State and local general government
4 767
89 764
3 564
76 567
2 550
44 615
Households
352 738
85 131
268 429
79 143
188 618
70 847
Rest of world
523 484
126 562
486 117
141 811
452 071
135 419

- nil or rounded to zero (including null cells)
(a) Includes units in trusts.
(b) The unlisted estimated market values are considered to be of poor quality. They should be used with caution.
(c) Net asset values.
Source: ABS Australian National Accounts: Financial Accounts (5232.0).



Money market

Liquidity management by Australian corporations, financial institutions and governments is conducted through an informally arranged market for deposits, loans and placements, and by issuance, purchase and sale of short-term debt securities. Selected rates in the market at 30 June are shown in table 27.16.

27.16 SHORT-TERM MONEY MARKET RATES(a) - 30 June

2007
2008
2009
%
%
%

11:00 am call
6.25
7.25
3.00
Bank-accepted bills - 90 days
6.42
7.81
3.25

(a) Per annum.
Source: Reserve Bank of Australia.


Money market securities have an original term to maturity of less than one year, often 30, 90 or 180 days. They are issued by borrowers at a discount to face value and carry no income payment other than the repayment of face value at maturity. To enhance liquidity, money market securities conform to standardised attributes concerning risk and discount rates. Because of the standardisation, the securities of different issuers are often combined in the one parcel of securities for trading purposes. There are two types of securities: bills of exchange and one name paper (promissory notes, treasury notes, commercial paper and bank certificates of deposit), both of which are covered by the Bills of Exchange Act 1909 (Cwlth). The risk of default of a bill of exchange is reduced by an acceptor or endorser adding their name to the security for a fee. Most bills of exchange traded in the market are bank-accepted bills. Promissory notes are issued by institutions whose credit worthiness is equal to or better than banks; they are not accepted by a bank and unlike bills of exchange they are not endorsed by the parties which sell them in the market. The Australian Government issues treasury notes, state governments and large corporations issue commercial paper and banks issue negotiable certificates of deposit. Table 27.17 shows the amount on issue by sector of issuer and sector of holder of the various types of money market securities.

27.17 SHORT-TERM DEBT SECURITIES

Amounts outstanding at 30 June

2007
2008
2009
$m
$m
$m

ISSUED BY

Private non-financial corporations
105 250
119 008
121 306
National public non-financial corporations
18
57
42
State and local public non-financial corporations
38
59
64
Banks
412 768
540 123
452 847
Other depository corporations
28 514
25 051
10 907
Life insurance corporations
9
5
5
Other insurance corporations
438
596
719
Central borrowing authorities
7 005
10 834
20 288
Financial intermediaries n.e.c.
39 017
43 717
31 704
National general government
252
339
17 347
State and local general governemnt
855
905
938
Households
22 088
25 479
27 216
Rest of world
3 674
3 968
3 488
Total
619 926
770 141
686 871

HELD BY

Private non-financial corporations
27 402
26 208
32 932
National public non-financial corporations
349
283
297
State and local public non-financial corporations
-
-
134
Central bank
14 473
39 554
9 787
Banks
253 734
325 164
340 727
Other depository corporations
53 497
62 770
47 705
Life insurance corporations
16 049
14 141
17 037
Pension funds
35 560
39 080
45 229
Other insurance corporations
11 703
11 103
10 629
Central borrowing authorities
26 853
25 933
27 479
Financial intermediaries n.e.c.
32 038
32 858
10 865
National general government
-
40 381
35 148
State and local general governemnt
2 389
1 408
2 947
Households
7 756
7 405
4 746
Rest of world
138 123
143 853
101 209
Total
619 926
770 141
686 871

- nil or rounded to zero (including null cells)
Source: ABS Australian National Accounts: Financial Accounts (5232.0).



Bond market

Bonds are issued with original terms to maturity of one or more years. Usually the investors are paid a set periodic interest, called a coupon, for the life of the bond and receive their initial investment back at maturity. Some bonds have variable interest rates, some have principal repayments indexed, and there are small amounts of zero-coupon or deep discount securities which are issued at a discount to face value. Governments, trading enterprises and financial institutions issue bonds to finance long-term requirements. For these entities, the bond market generally provides a cheaper source of funds than borrowing from banks and other financial institutions. Table 27.18 shows selected market yields at the end of June for a range of bonds.

27.18 BOND MARKET(a), Market yields - 30 June

2007
2008
2009
%
%
%

Treasury bonds
3 years
6.45
6.71
4.63
5 years
6.40
6.57
5.23
10 years
6.26
6.45
5.52
New South Wales T-corp bonds
3 years
6.72
7.29
5.19
5 years
6.76
7.19
5.74
10 years
6.66
7.02
6.23

(a) Per annum.
Source: Reserve Bank of Australia.


Historically, the main issuers of bonds have been the Australian Government and state governments, the latter through their central borrowing authorities. Corporate bonds are issued only by very large private trading and financial enterprises. Following the onset of the global financial crisis in late 2007, government and bank issuances have increased. Details of the amounts outstanding on bonds issued and held are shown in table 27.19.


27.19 BONDS

Amounts outstanding at 30 June

2007
2008
2009
$m
$m
$m

ISSUED BY

Private non-financial corporations
Issued in Australia
56 477
47 736
47 834
Issued offshore
53 207
64 225
97 673
National public non-financial corporations
Issued in Australia
629
629
799
Issued offshore
-
-
-
State and local public non-financial corporations
Issued in Australia
-
-
-
Issued offshore
-
-
-
Banks
Issued in Australia
73 506
103 911
129 849
Issued offshore
204 103
239 177
294 701
Other depository corporations
Issued in Australia
11 930
9 757
8 732
Issued offshore
14 261
11 217
7 980
Life insurance corporation
Issued in Australia
-
-
-
Issued offshore
1 488
1 825
1 541
Other Insurance corporation
Issued in Australia
461
432
282
Issued offshore
3 051
3 089
2 211
Central borrowing authorities
Issued in Australia
62 716
70 133
116 824
Issued offshore
30 305
32 121
19 597
Financial intermediaries n.e.c.
Issued in Australia
122 343
167 382
242 401
Issued offshore
92 750
69 061
54 601
National general government
Issued in Australia
55 356
57 779
88 255
Issued offshore
883
732
637
State and local general government
Issued in Australia
229
521
614
Issued offshore
-
-
-
Rest of the world
Issued in Australia
76 084
83 357
79 851
Issued offshore
83 453
84 274
103 525
Total
943 232
1 047 358
1 297 907

HELD BY

Private non-financial corporations
17 157
19 523
25 061
National public non-financial corporations
5
15
14
State and local public non-financial corporations
7
60
57
Central bank
42 647
39 643
75 657
Banks
56 695
130 400
220 681
Other depository corporations
24 351
19 154
23 097
Life insurance corporations
47 773
45 562
47 284
Pension funds
82 040
94 872
99 174
Other insurance corporations
36 862
37 012
38 039
Central borrowing authorities
9 526
10 238
14 598
Financial intermediaries n.e.c.
50 687
53 378
59 103
National general government
-
3 798
22 858
State and local general government
8 880
8 406
7 832
Households
6 942
6 085
5 119
Rest of world
559 650
579 212
659 333
Total
943 232
1 047 358
1 297 907

- nil or rounded to zero (including null cells)
Source: ABS Australian National Accounts: Financial Accounts (5232.0).



Foreign exchange market

The foreign exchange market is the means whereby currencies of different countries can be bought and sold. In October 1983, the Australian Government floated the Australian dollar, allowing its value to be determined by market forces with few exchange controls and little Reserve Bank intervention. Prior to 1983, the Australian dollar was pegged to a basket of currencies. The currencies in the basket were weighted according to their trading significance to Australia. Table 27.20 shows the value of the Australian dollar against major currencies.

27.20 VALUE OF AUSTRALIAN DOLLAR, Against major currencies

At last trading day in June

2007
2008
2009

United States of America dollar
0.8521
0.9694
0.8220
United Kingdom pound
0.4282
0.4882
0.4979
Japanese yen
105.4900
103.2000
79.3500
Euro
0.6376
0.6157
0.5842

Source: Australian Tax Office.


Currencies are traded for many reasons: because of exporting or importing requirements, investing or borrowing overseas, arbitraging (i.e. taking advantage of short-term discrepancies in rates) or speculating on possible exchange rate movements with a view to making a profit. Table 27.21 shows the daily average of foreign exchange turnover against all currencies. More recent information may be found in the Reserve Bank of Australia Bulletin Table F.10 (<http://www.rba.gov.au/Statistics/Bulletin/index.html>).

27.21 FOREIGN EXCHANGE TURNOVER AGAINST ALL CURRENCIES

Daily average(a)

2006 - 07
2007 - 08
2008 - 09
$m
$m
$m

Transactions by foreign exchange dealers(b)
Outright spot(c)
50 222
59 732
61 499
Outright forward(d)
15 113
11 524
9 954
Swaps
120 647
111 417
104 256
Options
3 680
2 923
2 752
Total
189 662
185 597
178 461

(a) Figures given are the average daily turnover for the financial year.
(b) Australian banks and non-bank financial intermediaries authorised to deal in foreign exchange.
(c) An outright spot transaction is one for receipt or delivery within two business days.
(d) An outright forward transaction is one for receipt or delivery in more than two business days.
Source: Reserve Bank of Australia.




Previous PageNext Page

Bookmark and Share. Opens in a new window


Commonwealth of Australia 2014

Unless otherwise noted, content on this website is licensed under a Creative Commons Attribution 2.5 Australia Licence together with any terms, conditions and exclusions as set out in the website Copyright notice. For permission to do anything beyond the scope of this licence and copyright terms contact us.