‘Heinous’ gas attack in Syria kills dozens

1. Syria
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Babies and children under the age of eight are some of the scores of victims of the suspected gas attack on civilians in Syria – the worst in the country in years. [Ellen Francis/Reuters] The UN security council meets on Wednesday.

The Syrian military denies using chemical weapons but the UK’s foreign secretary Boris Johnson says it bears all the hallmarks of an attack by the Assad regime and said it is a “war crime.” British Prime Minister Theresa May is calling for an investigation. [ITV News]

Just days ago the Trump administration, through its ambassador to the UN Nikki Haley, said the focus of the US was no longer going to be on forcing Assad out.

But responding to the gas attack, White House Secretary Sean Spicer described it as “unacceptable” although claimed it was the result of Obama’s failure to make good on his word that Assad’s use of chemical weapons would constitute a “red line”.

Spicer said it was in the best interests of the Syrian people that Assad no longer be their leader and said the attack was “heinous.” But he stopped short of saying what the US would do about it – saying he didn’t want to pre-empt the President. [Dan Merica/CNN]

“We’ve seen this movie before,” said Republican elder John McCain, before ripping both Obama and Trump.

McCain wants Trump to arm the Free Syria Army and commit to having Assad, who is backed by Russia and Iran, removed. Unlikely. [Eugene Scott/CNN]

As I’ve covered here before, ‘s foreign minister Julie Bishop is at odds with Britain over the question of Assad insisting he has a role to play in the transition. [Catch up]

Will this attack change that view? 2. US politics

Photo: Evan Vucci

The Wall Street Journal has a story with potentially major implications for travellers to the US from allied countries, including . [Laura Meckler] [The n]

The Trump administration could extend its so-called extreme vetting of visitors to citizens from the 38 countries that participate in the Visa Waiver Program – yes that includes .

This could mean handing over your telephone to border security so they can see your contacts and text messages, your private Facebook and browsing activity. Sounds like a boon in the pre-paid cellphone market in the US for travellers opting to leave their phones at home.

In other news, the Trump administration has withdrawn funding from the UN Population Fund, the largest provider of contraception globally. [Fairfax] 3. Aus politics

Philip Lowe speaking at the Reserve Bank Board Dinner in Melbourne. Photo: Pat Scala

It seems every day there is a new credible voice lending weight to Labor’s calls to wind back negative gearing and capital gains tax concessions. On Tuesday night it was none other than Reserve Bank Governor Philip Lowe blasting “taxation arrangements” and irresponsible interest-only loans for the skyrocketing price of housing in Melbourne and Sydney. [Peter Martin/The Age]

The budget will contain a plan to recoup $25 billion in the black and cash economy. [Nassim Khadem/The Sydney Morning Herald]

Scott Morrison deployed full “it’s the vibe” mode when asking those pressing for economic modelling on what sort of benefit the tax cut for businesses turning over up to $50 million would add to the economy, when he urged the pub test instead.

Michelle Grattan is particularly excellent on this. [The Conversation]

The Grattan Institute believes the boost could be worth as little as 0.2 per cent growth per year (for $24 billion cost). [James Massola and Eryk Bagshaw/Fairfax]

Not for the first time is Morrison proving to his colleagues that he was promoted out of his depth when Turnbull made him Treasurer.

Attorney-General Senator George Brandis in the Senate at Parliament House. Photo: Andrew Meares

Gratts also has a scoop on the London appointment. Turnbull wants to send Attorney-General George Brandis to Stoke Lodge but is delaying the decision. Uh oh. [The Conversation]

The High Court is due to rule on Family First Bob Day and whether he is an eligible Senator. [ABC]

Preference Whisperer Glenn Druery claims he’s stopped Pauline Hanson from claiming even more seats in numerous elections, including recently in Western . [David Lipson/Lateline] 4. UK politics

Theresa May says like Winston she prefers “jaw-jaw” over “war-war” but the situation involving Gilbraltar became a little more serious on Tuesday when the government of the overseas territory said the Spanish navy made an illegal foray into its waters. Illegal incursion into #British#Gibraltar Territorial Waters by Spanish Navy patrol ship Infanta Cristina this afternoon. #BGTWpic.twitter苏州夜总会招聘/IkYadi8XNn??? HM Govt of Gibraltar (@GibraltarGov) April 4, 2017 Photo: AP

More is known about the motives behind the St Petersburg metro terror attack.

The perpetrator has been named as a 22-year old male from Kyrgyzstan linked to radical Islamist groups. [Fairfax] 6. Spotify premium

I haven’t used iTunes since I switched to Spotify about four years ago and almost instantly decided premium was worth the ad-free and mobile experience.

Spotify has 100 million users (half subscribers) but is loathed by sections of the music community including popstars Beyonce and Jay-Z who bought rival service Tidal (and then memorably tried to promote it as though it was some kind of social movement, by encouraging their club of mega-rich musician pals to turn their social media profiles blue accompanied by the cringeworthy hashtag #TidalForAll.)

The stars complain their music is streamed for what amounts to be a pittance in royalties, leading to some to boycott Spotify entirely (like Taylor Swift) while others delay the release of their albums on the platform to boost sales and downloads (like Adele.)

Adele performs at Etihad Stadium in Melbourne, . Photo: Graham Denholm

Now Spotify, which still operates at a loss, has signed a deal with Universal music to stream new albums for two weeks to its premium customers before all tracks are released to general users.

Spotify hopes to sign deals with Sony and Warner, ahead of a stock market flotation. [BBC]

And that’s it from me today, you can follow me on Facebook for more.

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‘Mr Probity’: the ethics adviser scrutinising the land titles sell-off

Former NSW Mining Minister Ian Macdonald found guilty of misconduct in public office leaves court, Sydney. 30th March, 2017. Photo: Kate Geraghty Photo: Kate GeraghtyThe man hired to cast his ethical eye over the land titles registry privatisation is the same person who once declared former mining minister Ian Macdonald had “acted within [his] powers” when he gave a lucrative exploration licence to a friend.
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Fairfax Media can reveal the probity adviser on the Berejiklian government’s 35-year lease of Land and Property Information (LPI) is Rory O’Connor, managing director of professional services firm O’Connor Marsden and Associates (OCM).

Mr O’Connor, known as “Mr Probity” on Macquarie Street, has scrutinised several controversial deals of Labor powerbrokers, including the sale of Currawong union retreat and the Blackwattle Bay lease.

He attracted media attention after OCM concluded in a 2010 report for the Labor government that Mr Macdonald had “acted within the powers afforded to him” when he granted, without tender, an exploration licence to Doyles Creek Mining, a company chaired by union boss John Maitland.

When the O’Farrell government took power, it obtained a second opinion from Clayton Utz, which found OCM’s report was “deficient in several significant respects … specifically, it did not adequately review the conduct of the minister”.

In 2013, the Independent Commission Against Corruption (ICAC) found Mr Macdonald had acted corruptly by “gifting” the licence to Mr Maitland out of a “desire to benefit his mate”.

Now, Mr Macdonald is facing jail time after a Supreme Court jury last week found him guilty of criminal misconduct in relation to the Doyles Creek deal.

The Berejiklian government is expected to announce this week the consortium that has won the right to operate LPI – a monopoly provider of essential titling and registry services – for the next 35 years.

A leaked Treasury document shows Mr O’Connor has been hired to “ensure the procedures adopted in the [LPI] transaction are fair, equitable and conducted in accordance with the established probity framework”.

The Labor opposition is attempting to repeal the legislation enabling the LPI lease, saying fees will increase, jobs will be sent offshore, and title insurance will be forced upon home buyers. Blackwattle Bay marina

Fairfax Media can also reveal Mr O’Connor conducted a “probity quality assurance review” of NSW Maritime’s 2009 decision to award the tender for a maritime development on the Blackwattle Bay site to Joe Elias, an associate of the family of former Labor minister Eddie Obeid.

The tender was presided over by then Labor ports minister Joe Tripodi and then NSW Maritime’s CEO Steve Dunn. Mr Tripodi appointed Mr Dunn to his position at the behest of Mr Obeid.

Mr O’Connor found “no evidence of inappropriate processes or activities or that any party was unfairly discriminated against or given advantage over another”, according to Roads and Maritime Services.

However, it is worth noting ICAC has since found Mr Tripodi, Mr Dunn and Mr Obeid had acted corruptly in an unrelated matter – the Obeid family’s Circular Quay leases.

Mr Elias’ Blackwattle Bay development never happened, and with the Berejiklian government’s $250 million plan to build a new Sydney Fish Market, he is in for a windfall. Currawong union retreat

Mr O’Connor also wrote a probity report on Unions NSW’s 2007 sale of its Currawong holiday retreat to Eco-Villages, whose directors were Allen Linz and Eduard Litver. KWC Capital Partners, founded by David Tanevski, brokered the sale.

Amid outrage that Currawong didn’t go to the highest bidder, Labor MP John Robertson asked Mr O’Connor to do a probity report and review the relationship between Mr Tanevski and Mr Linz.

Mr O’Connor’s report failed to ascertain that Mr Linz owned half of KWC Capital Partners and failed to note that Mr Linz, Mr Tanevski and Mr Robertson had been in business together.

Later, he said there was “no provision in the agreement” to disclose Mr Tanevski and Mr Linz’s business relationship.

He told Fairfax Media at the time that he was unable to explain these anomalies as he no longer had access to his working files, but could confirm the work was conducted in “good faith”.

The Currawong sale returned to the spotlight when ICAC found that in the dying days of the Labor government in March 2011, then land department chief Warwick Watkins and then planning minister Tony Kelly had acted corruptly in backdating a letter to allow Mr Linz to sell Currawong to the government. Concerns rejected

Mr O’Connor, a probity practitioner with more than 20 years’ experience, told Fairfax Media that OCM was a leader in its field and a member of state and federal probity panels.

In regards to the “interim” Clayton Utz report, he said he had significant issues with its content and quality.

“Indeed Clayton Utz acknowledged that they did not have access to the briefing papers and instructions provided to OCM, which obviously also limited the extent to which they were in a position to assess our work,” he said.

Mr O’Connor said following the report, OCM’s accreditation was reviewed and reaffirmed.

He said OCM won the LPI contract through a competitive tender process.

“We are surprised that anyone would [have concerns about our involvement], and reject any such concerns,” he said.

A Treasury spokesperson said the government conducted a competitive tender process in accordance with strict government procurement processes.

“The current probity advisers … are taken from a panel that are required to undergo an extensive evaluation process to ensure they have the integrity, capability and experience to represent the state on these matters,” she said.

Opposition Leader Luke Foley said it beggars belief the Berejiklian government would rely on Mr O’Connor to run the rule over the integrity of the LPI privatisation.

“Nothing about this sale makes sense and that is why of all of this government’s privatisations, flogging off our safe and secure land titles system is the single dopiest,” he said.

Read letters to the editor concerning the LPI privatisation on December 5, December 10, February 3, March 14, March 29, April 3 and the Herald’s editorial.

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Melbourne University to offload Sturt Street car park site

Melbourne University has moved to offload a large vacant site in Southbank now used as a public car park as it seeks funds to build the new home for the Melbourne Conservatorium of Music nearby.
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The university has placed a 4176 square metre plot on the market at a time of peaking demand in the property cycle when developers are pushing hard out on the CBD’s fringes.

The site at 268 Sturt Street, located behind a small nature reserve on the corner of Sturt Street and Kings Way, is used as a public car park.

Land in Southbank typically fetches around $7500 per square metre.

A site of that size in Sturt Street could fetch up to $30 million, a significant boost for the university, which faces construction of its new $105.5 million Melbourne Conservatorium of Music this year.

Melbourne University announced last year it would begin building the conservatorium after gaining a lease extension from the state government and a $3.5 million grant for a site next to the Melbourne Recital Centre and Southbank Theatre at the other end of Sturt Street.

Colliers International’s Trent Hobart, Bryson Cameron and Brett Griffith have been appointed to market the site by Charter Keck Cramer, which has acted on behalf of the university.

The university has extensive inner city campuses and is one of the central city’s largest landholders.

Its director of campus strategy Long Nguyen said the Sturt Street site was surplus to the university’s needs and its sale would help fund future projects.

“After assessing our current portfolio and project pipeline, along with the buoyancy of the current development market, we determined that the capital value of this asset could be strategically reallocated into future projects,” Mr Nguyen said.

The proposed sale of the car park follows BRW Rich Lister Lloyd Williams offloading the Southbank premises of his property development outfit Hudson Conway at 250 Sturt Street to a mainland Chinese company for $11 million.

Mr Williams had wanted to develop a 40-storey residential tower on the 832 square metre site, a proposal rejected by planning minister Richard Wynne before a scaled-down 16-level apartment was subsequently approved.

A super site nearby in South Melbourne sold this March for $41 million to the Langer family’s GLG Group.

Private owner Aviation Consolidated Holdings sold the 4641 square metre property, opposite South Melbourne market, which was on 10 separate titles, bounded by Cecil, York, Northumberland and Market streets.

Netanyahu investigators hoping for chat with globe-trotting Packer: reports

As NSW gaming authorities conduct a probity check on James Packer ahead of his planned return to the Crown Resorts board, the news from overseas is not getting any better for the billionaire casino mogul.
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An Israeli investigation into lavish gift giving to its Prime Minister, Benjamin Netanyahu, has been extended as the police have been unable to interview key figures including Packer, according to reports from Israel.

Reports state the graft investigation, which was meant to be completed by now, will continue for another two months as some judicial inquiries abroad still haven’t been carried out. This includes setting a date to question the globe-trotting Packer.

Mr Packer declined to comment on the reports, and there is no suggestion of wrongdoing on his part.

The long-running investigation by Israeli authorities is into the lavish lifestyle enjoyed by Netanyahu’s family, and alleged benefactors such as Packer who have funded the acquisition of champagne, cigars, fine clothes and jewellery.

In the case of Packer, this reportedly includes luxury holidays and hotels for the PM’s family, as well as free tickets to concerts given by his then fiancee, Mariah Carey.

Israeli state employees and elected officials are forbidden from accepting gifts, but Mr Netanyahu has characterised the items in question as personal gifts from friends.

Packer has a home in Tel Aviv, which has the Netanyahu family as a neighbour – as well as long time Packer family friend, Hollywood mogul Arnon Milchan.

“Spending time with Arnon and Prime Minister Netanyahu has been an amazing eye-opener for me and it reinforces how lucky we all are in ,” Packer told The Daily Telegraph in 2015.

According to earlier reports, Milchan recruited Packer to help fund the gift giving after tiring of the demands from the Netanyahu family.

The reports, from what has been a heavily leaked investigation, state that Netanyahu was questioned by police investigators for a fourth time, last week.

It comes on top of Packer’s China woes, with the ongoing detention of 14 Crown staff. The China crisis triggered a sweeping restructure of his gambling empire and a retreat to the safer shores of .

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Rates on hold amid increasing concern about house prices

The Reserve Bank of has held the cash rate steady at 1.5 per cent for the 12th consecutive month amid growing pressure for it to increase rates to contain soaring house prices.
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The futures market is pricing in no change in rates until late 2018, when there will be an increase.

In the year to March 31, Sydney home prices climbed 18.9 per cent, Melbourne prices 15.9 per cent and the average of capital city prices 12.9 per cent.

In the past week, both the n Prudential Regulation Authority and the n Securities and Investments Commission have announced tighter rules and increased supervision of banks’ lending to investors in an effort to contain the growth in lending to investors to 10 per cent.

In a statement released in Melbourne as the board meeting concluded, governor Philip Lowe said growth in household borrowing, largely to purchase property, continued “to outpace growth in household income”.

“By reinforcing strong lending standards, the recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness,” he said.

“Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions. A reduced reliance on interest-only housing loans in the n market would also be a positive development.

“Conditions in the housing market continue to vary considerably around the country. In some markets, conditions are strong and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for two decades.”

Dr Lowe is also expected to address the question of house prices on Monday night in an unusual televised address to an RBA board dinner in Melbourne.

CoreLogic head of research Tim Lawless the board was stuck “between a rock and hard place”.

“They aren’t likely to push rates higher just to quell housing market exuberance; doing so could push inflation lower and the n dollar higher as well as cancel out some of the much-needed stimulus that many sectors of the economy are benefiting from,” he said.

“On the other hand, the bank would be loath to push rates lower out of concern for adding further fuel to an already overheated housing market.”

Dr Lowe said the economy was continuing its transition following the end of the mining investment boom with recent data consistent with ongoing moderate economic growth.

“Most measures of business confidence are at, or above, average and non-mining business investment has risen over the past year,” he said.

“At the same time, some indicators of conditions in the labour market have softened recently. In particular, the unemployment rate has moved a little higher and employment growth is modest. The various forward-looking indicators still point to continued growth in employment over the period ahead. Wage growth remains slow.”

On the announcement, the n dollar slipped from US76.04?? to US75.80??

UBS economist George Tharenou said there was not enough change in the outlook to shift the RBA’s “neutral” stance.

“They see an improved global backdrop … and moderate domestic growth, which is now coupled by an elevated focus on household leverage,” he said in a note.

“However, the RBA has already shown a clear willingness to use further macro-prudential tightening, rather than the ‘blunt stick’ of rate hikes.

“Indeed, as inflation remains “quite low”, and the labour market “softened recently”, they are showing little near-term urgency (in contrast to prior cycles) to back away from a record low cash rate.”

ANZ Research’s Felicity Emmett said the RBA was clearly concerned about the risks from rising household debt, but its comments around domestic inflation and wage growth were little changed.

“On balance, we expect that the combination of persistently low inflation and strong house price growth is likely to keep the bank on hold for a prolonged period,” she wrote.

Ixom signs anew at 1 Nicholson

Chemicals company Ixom has signed a lease on three floors of 1 Nicholson Street, Melbourne’s first glass skyscraper.
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The 18-storey building’s landlord Charter Hall’s Direct Office Fund did the deal directly with Ixom, formerly the chemicals arm of mining services company Orica.

The tower in the north-east fringe office precinct, designed by Bates Smart, was built for ICI in 1960. That firm changed its name to Orica in 1998 and sold the chemicals business to Blackstone in 2015.

Head of Charter Hall Direct Steven Bennett said Ixom, which had previously sublet through Orica, now had a direct eight-year lease with the landlord on 2750 square metres in the building.

“They wanted security with their own long-term lease,” said Mr Bennett, who declined to reveal the rent terms.

“Once tenants have got into the building they don’t want to leave. We haven’t had any empty space available in the building since 2003,” he said.

But for the first time in 14 years Charter Hall has three floors at the top of the building available.

Mining services company Arup is moving in the fourth quarter of 2018 to Lend Lease’s $2 billion Melbourne Quarter project at Docklands.

“They’re moving because they’ve outgrown the space,” he said.

“From our point of view it’s a great time to be in the market and we think we’ll set a new benchmark. We’ve had good interest so far,” he said.

Recent research from Cushman & Wakefield indicates Melbourne prime rents have grown 8.7 per cent in the past year to an average $373 a square metre with incentives remaining stable at 30 per cent.

The building has recently had a substantial upgrade with $4 million spent on the lifts and a further $500,000 on end-of-trip facilities.

The Direct Office Fund (DOF) has a $1.025 billion portfolio of 10 buildings, with 75 per cent of its property in Sydney and Melbourne, with Brisbane and Perth making up the balance.

It is open to investors and returns 6.25 per cent a year in income.The unlisted property fund is making a concerted pitch for new investors and is now accessible through a range of investment and superannuation platforms.

The East Melbourne office precinct is very tightly held and has a vacancy level of about 1.5 per cent compared with Melbourne’s CBD vacancy of 6.4 per cent. The area is close to parklands and serviced by several tram routes and Parliament station.

A few doors down from 1 Nicholson, St Vincent’s Hospital has leased 837 square metres at 486 Albert Road.

The hospital will take out level one of the Catholic Archdiocese of Melbourne’s St Patrick’s Centre, formerly the VECCI building.

The deal was done by JLL leasing agent Richard Norman at between $350 and $370 per square metre net for five years.

The hospital is shifting its administrative team to make way for the St Vincent’s Hospital’s Aikenhead redevelopment project, a biomedical engineering research and education centre.

McAfee rebranding creates pure-play cyber security company

Global cyber-security firm Intel Security has been renamed McAfee and now operates as an independent company, completing a split from Intel that was flagged in September.
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Intel continues to own 49 per cent of the new entity, which was valued at $US$4.2 billion ($5.5 billion). Private equity investors TPG and Thoma Bravo own the remaining 51 per cent.

Widely known for its antivirus software, US-based McAfee has more than 200 million customers and detects more than 400,000 new threats a day.

McAfee is installed on 300,000 devices across a range of n government agencies.

Corporate vice-president Brian Dye, who was in Canberra last week, said the spin-out delivered a pure-play cyber-security company with a strong focus on innovation.

Mr Dye said the separation involved back-end changes for McAfee, but for customers it was business as usual.

He described cyber security as “the most pressing technical issue of our time” and said the company’s strong focus was to automate protection.

“We have to free up the time of human beings because, until we do, this game won’t change,” he said.

“That’s why we want to be a stand-alone organisation, to bring the full force and focus to that problem.”

Mr Dye said McAfee would continue as a privately owned company but added there could be “opportunities in the future to go public or do a different strategic transaction”.

In news sure to disappoint founder John McAfee, who left the company in 1994, Mr Dye said a name change was considered but rejected.

In 2014 Mr McAfee said he was elated the business was being renamed Intel Security “freeing me from this terrible association with the worst software on the planet”.

Mr Dye said Mr McAfee had not been associated with the company for many years.”We looked at it very carefully,” he said.

“McAfee is a very well known and trusted brand. What we want to do is evolve a great brand, rather than spend a whole bunch of money on marketing.

“We’d rather spend our money on giving customers better security.”

Mr Dye said the company was striving for “day zero” protection.

“The vast majority of attacks are seen and have full fixes for them in two to four days after the original attack has happened,” he said.

“The challenge is how do we keep pushing day zero protection, something that no one has ever seen before.”

Mr Dye said this could be achieved through machine learning and building security on platforms.

“If we can engineer on a platform it’s easier for us to add new features and it’s easier for customers to adopt those new features,” he said.

“It doesn’t help us if we provide a great new technology that will solve today’s newest threat, and it takes customers 12 months to adopt it.

“In the speed of this market, and the speed with which attacks come and go and shift, customers have to be able to adopt things within weeks or months of when we produce them, not quarters or years.

“As you close one door the attackers try to open another one. It’s a never-ending cat-and-mouse game.”

Mr Dye said independent validation of McAfee’s strategy came from leading PC manufacturers, which ship the company’s antivirus software on new PCs.

“With machine-learning technology we take advantage of the fact we have hundreds of millions of users around the world on multiple platforms,” he said.

“We use the visibility from that to bake it into our learning algorithms and other updates that all our consumers get day in, day out without having any idea that it’s happening.

“We want them to explore safely and do their business safely when they need to without having to worry about cyber security.”

China will hand Trump the win he badly needs, says Mobius

SYDNEY, AUSTRALIA – APRIL 03: Mark Mobius, Executive chairman of Templeton emerging markets on April 3, 2017 in Sydney, . (Photo by Ben Rushton/Fairfax Media) Photo: Ben RushtonDonald Trump needs a win “badly” this week when he meets Xi Jinping, and the Chinese President will be more than happy to give it to him, says Mark Mobius, the world’s best known investor in emerging markets.
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The New York-born Mobius joined Templeton 30 years ago as president of the asset manager’s emerging markets fund, but his experience back a further decade, gives him an unparalleled depth of knowledge when it comes to this dynamic, diverse and volatile corner of the investment world.

Mobius, whose title is executive chairman of Franklin Emerging Markets Group, has twin bases in Hong Kong and Singapore. But he says he doesn’t regard either as a “home” as much as a place to hang his hat when he’s not travelling, which he does a lot. The 80-year-old investor still spends as many as 260 days of the year on the road.

And from his on-the-ground experience in the region, he says the view from Asia on the new American leader is more pragmatic than in the West.

“As we travel around and talk to business people, very often Trump is not uppermost in their minds,” Mobius says. “I think most of these people are practical – they know that when a politician says something, particularly in the US, it means nothing unless it’s acted upon.

“One of the things they like about Trump is that he’s a dealmaker, and they feel comfortable with that. I think the Chinese feel that way as well. They think that ‘well we can hold our own and we’ll be able to negotiate a deal with this guy – he’s not dogmatic’.”

It’s in this context – Trump as a negotiator – that this week’s meeting between Jinping and his American counterpart is of particular significance.

“This meeting in Florida with Xi Jinping will be very, very important,” Mobius says. “It’s on everybody’s mind.”

Mobius believes the Chinese “have to come up with something that is positive for Trump”.

After the recent Congressional defeat of his healthcare legislation, Trump “needs success badly” from this week’s meeting between the two leaders. And Xi will be happy to give him one, Mobius says. What would a win for Trump look like?

“It would look like the Chinese saying that they are going to allow more American imports into China in certain categories, and it would also mean the Chinese would make investments in American manufacturing, in coal mining, in automobiles – things that Trump is talking about.

“And they’ll promise to hire more workers. From China’s point of view it’s peanuts; put a $1 billion in American manufacturing, what’s the big deal?

“I may be completely off base here, but that’s what I expect,” Mobius says.

Mobius points to the corporate “feelers”, which have already been put out. In January, Foxconn Technology Group’s chairman talked about a joint investment with Apple for a display-making facility in the US, although Apple has since apparently kiboshed the plan. Also in January, Alibaba boss Jack Ma said he would create 1 million new US jobs and help American companies export to China. What does China get?

“Peace,” Mobius says.

He points to the work of Michael Pillsbury, who he says is one of the policy voices to whom Trump listens, and in particular Pillsbury’s book, “The 100-year Marathon: China’s Secret Strategy to Replace America as the Global Superpower”.

“Pillsbury says the Chinese will not confront the US at this stage; they want a very peaceful, smooth international relations to allow them to build up their economy to the point where they surpass the US economy and then they say, ‘OK guys, we are in charge’.

“I think he’s right.”

The “sensitive areas” are around the South China Sea and North Korea, where Trump has recently threatened to “go it alone” to confront the pariah nation should the Chinese not help.

“But I think these issues are peripheral for Trump,” Mobius says. “The real issue is he wants to be re-elected, and if he doesn’t start delivering on his campaign promises he’s in trouble.”

Mobius thinks Trump would have experience dealing with Asian business people through his real estate deals and gambling operations. “You must remember that when you are running a casino you have a lot of Chinese customers,” he says.

He tells an anecdote of a wealthy Chinese businessman who bought an apartment in Trump Towers.

“He said that [Trump] would come around every month and invite him out for lunch or dinner to see if things were OK, so he got to know these people,” Mobius says. It’s also through this conversation that Mobius learnt that Trump tipped an amount equal to the bill.

Six childcare centres up for grabs

A portfolio of six newly developed Victorian childcare centres offered to the market for the first time are expected to fetch $50 million.
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The centres scattered across Melbourne’s middle suburbs from Point Cook in the west to Ashwood in the east have been developed by Bamfa Properties and LR & EC Enterprises, property records show.

Key attributes of childcare centres – stable long-term leases arrangements underpinned by guaranteed government-supported fees – have made them an investment market darling and keenly sought after.

Most of the centres in Ashwood, Hughesdale, Blackburn North, Point Cook, Carnegie and Mentone have 20-year leases to ASX listed G8 Education, Guardian Early Learning and Nino Early Learning Adventures.

The rapid expansion of institutional players like Goodstart (formerly ABC Learning Centres), Folkestone Education Trust, G8, Arena REIT and Affinity Education Group has also fuelled investor interest in the sector.

Marketing agents Savills ‘s Julian Heatherich said there was a shortage of good investment stock and “nothing like this has been put to market” for some time.

Mr Heatherich said he expected the centres to be sold individually or as one line to institutional investors.

Finding sites in middle-ring suburbs to construct childcare centres was a “difficult” task, he said.

Yields for stand-alone centres have sharpened significantly with all Victorian centres sold since February 2016 achieving sub 6.5 per cent yields, and in several cases near 5 per cent.

A childcare centre in Sayers Road Tarneit sold for $3.7 million on a yield of 4.96 per cent in September last year. Another in Berwick sold three months later for $3.425 million on a yield of 5.44 per cent.

The most recent sale in Pakenham achieved $5.12 million with a yield of 6.24 per cent.

Department of Education and Training data shows an estimated 1.67 million children attended approved care in 2015???16 with about $7.3 billion spent by governments on childcare fee assistance.

The federal government recently pushed through legislative reforms for the Child Care Benefit and Child Care Rebate to replace them with one means-tested payment called the Child Care Subsidy.

Under the changes families earning less than $65,000 a year will get a subsidy up to 85 per cent of their costs. The rate for families earning more than that, but less than $340,000, will gradually taper to 20 per cent.

Vita shares tumble on back of leaked Telstra document

A leaked internal Telstra document has revealed the telco giant is considering taking back control of some of its store network, potentially clashing with its major retail partner Vita Group.
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Vita shares tumbled on the news, closing 21 per cent down at $2.54.

Eleven of the identified stores are operated by listed company Vita Group, which is Telstra’s only Master Licensed Dealer and operates just over 100 of Telstra’s 350 stores around the country.

Vita released a statement to the market on Tuesday noting that conversations with Telstra are confidential.

“Telstra and Vita Group have enjoyed a strategic relationship for 22 years, presently governed by a Master License Agreement, which applies to all of Vita Group’s Telstra stores,” the company stated.

“The Master Licence Agreement has been extended a number of times, and currently extends to 2020.”

“The terms of the Master License Agreement are confidential and any significant changes to it are subject to mutual agreement.”

Internally,Telstra has identified 16 stores it believes would be more profitable if they were brought back into the Telstra Shop Network, because it would no longer have to pay sales commissions to licensees. It could take back control by not renewing the Telstra Dealership Agreement [TDA] with licensees, according to the document.

A Telstra spokesman said the document was only an “internal draft developed for discussion purposes”.

However, if Telstra goes ahead with these plans it would reduce by one tenth the number of Vita-operated Telstra stores.

This includes five stores in NSW – Macarthur Square, Tuggerah, Hornsby, Rouse Hill and Erina Fair – three in Western , Rockingham, Success and Midland Gate, and Queensland’s Chermside and Northlakes stores, and the Werribee dealership in Victoria.

“There are 16 identified stores to buy back which meet the ‘no regrets’ criteria,” the leaked document states. The ‘no-regrets’ criteria include being located in a major metropolitan shopping centre, if the regional director approves of the move, and if the store is likely to have a positive operating cash flow if it is part of the Telstra Shop Network rather than paying commissions to a dealer.

Telstra spokesman Steve Carey said “the document in question is an internal draft developed for discussion purposes only”.

“It does not reflect the viability of any of the stores listed, and no decisions can be taken on individual Vita sites due to the nature of the agreement,” he said.

“There are no current plans to amend our arrangement with the Vita Group. All conversations with Vita and individual licensees are confidential.”

He added Telstra regularly reviews its store footprint and licensee arrangements.

“The agreement we have in place with all our licensees clearly states when changes can be made and the process we must follow,” Mr Carey said.

The document noted the TDA non-renewal is underway at the independent dealership at Fountain Gate, believed to be the dealership on level two of the Westfield shopping centre.

The remaining four stores are independent dealerships in Robina, Qld; Joondalup, WA; and two in the Westfield mall in Carindale, Qld. iFrameResize({enablePublicMethods : true, heightCalculationMethod : “lowestElement”,resizedCallback : function(messageData){}, checkOrigin: false},”#pez_iframeA”);

In November 2016 Vita Group’s share price dropped 13 per cent in one day, from $4.71 to $4.09, on rumours Telstra was trying to cut dealer commissions in the latest round of negotiations. At its half year results Vita announced a 19 per cent increase in earnings but warned there will be “some softening of profitability” because a new remuneration structure has been introduced.

Vita operates stores for Telstra, FoneZone, One Zero Communications, and Sprout and recently launched SQDAthletica. It earns money from selling products and also receives commissions whenever customers sign up to a plan.

At an analyst briefing in November, Vita’s chief executive, Maxine Horne, who owns nearly 17 per cent of Vita shares, said Vita’s agreement with Telstra covereds all stores and expires in August 2020. She was asked if Kevin Russell’s appointment as Telstra’s group executive retail meant the telco would corporatise its store network, as Mr Russell had done at Optus.

She replied that there “hasn’t been any discussion and my response to that [is] it’s highly unlikely”.

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