The Fifty-First State?

As doubts rise about the long-term returns from US bonds, Australians, alone, can't get enough of Uncle Sam's stuff.

Aussies Follow US Bears

It's not just on national security that Australia is marching to the US's beat; Australian investors are being lured to the US like moths to a flame. The latest US Treasury figures show Australian fund managers are pumping superannuation and other funds into US markets even faster than US markets are burning it up. In the three months to the end of August, Australian investors poured a net $US6.3 billion ($11.5 billion) into US corporate bonds, equities and Treasury bonds - the highest figure in history. National Australia Bank strategist Greg McKenna said Australia's appetite for badly performing US assets appeared to be unrivalled. He says of the first-world investment market, it does seem Australians are the only ones that are continuing with gusto to buy US assets. "Australians have burnt a lot of cash investing in the US over the past couple of years," McKenna says. Privately, some fund managers and equity strategists blamed the accelerating push into US markets on the "tyranny" of asset consultants, who they say are pushing managers to increase exposure to foreign assets but denying them the flexibility to deviate from weighting indices. (Source: SMH)

Cigarette Company Fined For 'Fashion Advertising'

Philip Morris and an associated advertising agency have been fined $24,000 for breaching advertising laws. Philip Morris Wavesnet pleaded guilty to advertising a brand of cigarettes during a national fashion event in Sydney called Fashions Future Designers. The event was sponsored by Philip Morris and the venue was decorated in the company's colours and other suggestive advertising techniques. They included models who sold cigarettes from a specially built stand. The two companies have also been ordered to pay $70,000 in court costs. (Source: ABC)

Recovering Fairfax Beefs Up Board

John Fairfax Holdings has appointed Victorian entrepreneur and former Liberal Party luminary Ron Walker to their board, causing shareholder murmuring at the company's annual meeting in Melbourne.The apparent lack of media and advertising expertise of the new directors was raised by shareholder activist Stephen Mayne and his views were echoed by other shareholders at the meeting. Walker, chairman of the 2006 Commonwealth Games Committee and the Australian Grand Prix, will assume a directorship in January next year and be joined on the board by Qantas chairman Margaret Jackson and Woolworths chief executive Roger Corbett. Former Coca-Cola Amatil chief executive Dean Wills was named as the new Fairfax chairman. Departing chairman Brian Powers insisted Mr Walker was a man of "high integrity" who will add a bit of Melbourne to a Sydney-centric board. (Source:SMH)

Companies Told to Expense Options

Corporate Australia is finally to be held accountable for the widespread use of options and share grants in executive remuneration, after accounting authorities issued a draft requiring companies to expense against profits the cost to shareholders The Australian Accounting Standards Board yesterday gave companies until January to comment on the exposure draft standards released yesterday, which will bring Australia into line with international accounting rules from 2004. But the CPA has warned that a lack of knowledge among Australian accountants of option pricing models would make it difficult for many practitioners to implement proposals for expensing share options in company accounts. CPA technical director Jim Dixon said proposals for the expensing of share options released yesterday for public comment by the Australian Accounting Standards Board would require accountants to be familiar with the mechanics of share-pricing models. (Various Sources)

Macquarie Takes Back Seat On Options

Never one to lead the reform road, the Macquarie Bank plans to wait and see how its international investment banking peers treat options before deciding whether to dispense with them as a form of executive pay. But the bank has warned that while rules forcing companies to expense options against profits in their accounts from 2004-05 are heading in the right direction, there are a number of "quirks" to be ironed out for the new standards to be effective. On Thursday the bank is expected to report a net profit for the September half-year of about $160 million, up from $130 million previously but dragged down by investment writedowns on new infrastructure funds including Macquarie Airports. (Source: SMH)

New Tel Close to insolvency

Peter Malone is under mounting pressure to appoint a voluntary administrator to his telco company New Tel as evidence emerges of hundreds of thousands of dollars of shareholders' funds being spent every month Mr Malone and friends and family. His lavish lifestyle has been underwritten by New Tel for the past three years, with his small head office in Perth now costing more than $800,000 a month to run, according to sources. Tesltra has offered to forgive 50 per cent of the $12 million Telstra is owed by New Tel Malone takes advice on running the business. Optus, owed $6 million by the junior telco, is understood to have offered the same deal. One source explained both companies do not wish to force administration on New Tel just five weeks before Christmas "and look like the bad guys", with about 240 jobs on the line, mostly in Sydney. But according to sources, Mr Malone has rejected Telstra's offer, saying instead he had plans to take over Kerry Stokes' mobile phone company B-Digital. (Source: The Australian)

Murdoch Defends BSkyB Boss

In the UK, Rupert Murdoch has been forced to launch a robust defence of the corporate governance record of the BSkyB satellite broadcasting operation, including the £7 million ($19.6 million) paid to chief executive Tony Ball. He was also forced to defend a perceived lack of independence among BSkyB directors. The backlash from investors at the satellite broadcaster's annual shareholders' meeting in London overshadowed unexpectedly good quarterly results. Murdoch, BSkyB's chairman, said he "did not agree" with the accusations that the interests of directors were not sufficiently aligned with those of all shareholders. Ball's £7 million pay award came at the end of a year during which the group recorded a record £1.2 billion loss and suffered a 25 per cent fall in its share price. Part of the package includes a guaranteed £500,000 bonus. (Source: SMH)

R.M. Williams moves to China

Bootmaker and Australian icon R.M. Williams has broken with 60 years of tradition by shifting manufacturing offshore. But the outfitter to bushmen and the fashion-conscious alike stressed that it would import only lower-cost items such as logo-bearing T-shirts, a few other shirts, and baseball caps. Concerned about defending the brand identity of the 60-year-old company, chief executive Hamish Turner said all design and development would continue in Australia. He said the decision to move some manufacturing to China came down to the fact that "the prices of the offshore produced items will be more competitive". (Source: SMH).