Free Trial

CBA On What Early Super Redemptions May Or May Not Mean For A$

AUSSIE

Thursday saw CBA note that "APRA data shows total super redemptions to 19 Jul '20 were A$28bn. We estimate roughly A$18bn was paid out under the first tranche (in FY 2019/20). This suggests an additional A$10bn has been paid so far under the second tranche. Applications for the second tranche close in September. As a result, total withdraws will exceed the government's initial estimate of A$29bn. It also exceeds our initial estimate of A$18bn. Nevertheless, the withdrawals are small in the context a total super pool of A$2.7tn as at June 2020. There has been little discernible impact on AUD so far. Market participants were concerned that early withdrawals could impact AUD if funds heavily sold foreign assets to meet redemption demand. This wasn't the case and we don't expect it will change during tranche 2." Their reasoning re: the impact, or lack thereof, is based on four pillars:

  1. Australian super funds have built up cash reserves.
  2. Funds don't appear to be selling an outsized share of foreign assets
  3. Any foreign assets funds might sell would make up only a small proportion of 'normal' daily turnover of spot AUD
  4. They expect fewer withdrawals under tranche 2.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.