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Australia &

New Zealand
weekly.

Week beginning 20 January 2020


„ Australia: Westpac-MI Consumer Confidence, labour force.

„ NZ: CPI.

„ Asia: Lunar New Year January 25.

„ Europe: ECB policy decision, ZEW survey.

„ US: manufacturing and housing updates.

„ Canada: BoC policy decision.

„ Markit surveys, manufacturing and services.

„ Davos summit, January 21 to 24.

„ Key economic & financial forecasts.

Information contained in this report current as at 17 January 2020.

Westpac Institutional Bank


Westpac weekly

The week that was

Global trade has been on the market’s mind this week as the Specifically, although the December retail sales outcome
US/China trade deal was signed and the U.S.M.C.A legislation met the market’s expectation, this followed a disappointing
passed the US Senate – the latter removing trade risks between November outcome. Moreover, sales growth in both months
the US, Canada and Mexico. (on a headline and underlying control-group basis) is best
regarded as modest not strong, averaging 0.3% and 0.2% per
On Wednesday, the US and China finalised their stage 1 trade month respectively. Ahead, we expect business investment
agreement, signing the deal and releasing its full terms. In line to remain weak, employment growth to soften further and
with the announcement made before Christmas, the US will consequently the recent subdued pace of household spending
refrain from increasing tariffs further and will also halve the to persist through 2020. To our mind, this will justify further
15% rate introduced on circa $120bn of imports in September FOMC rate cuts in 2020.
2019 to 7.5%. However, the 25% tariff on $250bn of imports will
remain in place indefinitely. Coming back to Australia, housing finance posted another
robust gain in November, 1.8%, to be up 5.9%yr. Investor credit
In return, China has pledged to increase imports from the US grew more strongly in the month than owner-occupier loans,
by $200bn over the next two years (benchmarked against respectively 2.2% and 1.6%. However, owner-occupier credit
2017 import levels) across manufacturing, energy, agriculture remains the primary driver of the recovery that began in May
and services. China has also agreed to provide US firms with 2019, gaining 20.5% versus 10.9% for investors. For the latter, note
greater access to some sectors of its economy and to increase also that this gain follows a sharp correction from early-2017.
protection around intellectual property. Existing tariffs on US
goods will however remain in place. As we go to press, Q4 China GDP was released. In the
December quarter, annual growth again printed at 6.0%yr.
A full resolution to this conflict is reportedly not an option until This leaves 2019 growth at 6.1%, near the bottom of authorities
after the next US Presidential election in November 2020 and 6.0%–6.5% target announced at the beginning of the year, but
will also depend on China’s willingness to make further changes in line with our own expectation.
to economic policy and regulation. Moreover, the reduction in
tariffs under stage 1 is conditional on China achieving the $200bn As we highlighted through the past 12 months, this has been
increase in imports from the US over 2020 and 2021, which will a particularly challenging period for China. This is not only
prove very challenging. As a result, the remaining tariffs will likely because of tensions with the US, but also owing to broad-based
remain in place through to at least the end of 2021 and, during this weakness in investment across the economy. The latter is the
time, a further escalation of tensions will remain a risk. result of structural change in the economy and financial sector
which authorities saw as necessary to improve the quality of
From the data to hand, most notably the PMI detail (the US the nation’s investment as well as its financial stability.
ISM manufacturing index at 47.2; China’s NBS manufacturing
PMI at 50.2), it seems that China is adapting to the persistent In assessing the outlook, it is notable that the quarterly growth
pressure on trade and growth whereas the US is struggling. As pace has, more or less, remained constant through the year.
we continue to emphasise, the prime risk for the US’ economy The take-home here is that the primary loss of momentum was
is if the weakness apparent in manufacturing and business from 2018 into 2019 and since then that the growth pulse has
investment across the economy spreads to employment and stabilised.
hence consumption. This dynamic would see the FOMC ease
further in 2020, as growth falls below trend and PCE inflation The deterioration we see in growth ahead is only at the margin
remains at or below their 2.0%yr target. and restricted to the coming six months, resulting in year-
average growth in 2020 overall of 5.8%.
Employment and wages were certainly growing at a more
modest pace at the end of 2019 than when it began, and the Next week, the focus will turn in Australia to consumer
most-recent retail sales outcomes point to this deceleration sentiment and the labour market. In the US, the Senate
now affecting consumption. Impeachment trial of President Trump is due to get underway.

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been
taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or
by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
2
Westpac weekly

New Zealand: week ahead & data wrap

2020: The good, the bad, and an election In terms of monetary policy, the boost to the economy from low
interest rates is now undeniable and has been seen most clearly
For our first issue of 2020, we’re taking a look at how the in the housing market. House prices have continued to push
New Zealand economy has been tracking, and some of the key higher, with annual house price inflation rising to 6.6% in the year
areas that we’ll be watching over the year ahead. to December. Westpac has long predicted this upswing in house
prices, and our forecast for 7% house price growth may come
good even sooner than we expected. Gains in prices have been
Some of the wind came out of the economy’s sails last year, with widespread, with prices in Auckland up 4% and other regions up
GDP growth slowing sharply in the first half of 2019. However, an average of 8.9%. We think continued solid gains are on the
that slowdown followed solid growth in previous years. In fact, cards in the early part of 2019.
the latest updates on New Zealand’s GDP have revealed that
economic activity in recent years has been substantially stronger
than initially thought. While earlier estimates suggested that This strength in the housing market is important for two reasons.
economic growth had been tapering off through 2018, more First, New Zealander’s hold large amounts of their wealth in
detailed information on economic conditions have become owner-occupied or investment properties, and the pick-up in
available over time, and they’ve revealed that the economy grew house prices over the past year has seen households opening up
by 3.2% over 2018 - a pace that was on par with the previous year. their wallets again. With house price growth set to take another
That result is even more impressive given that population growth step higher over the coming months, we expect that there will be
was slowing during that time. related strength in household spending.

It now looks like economic activity is turning up again. However, The second reason why the pick-up in the housing market is
we’re still seeing mixed conditions across the economy, which important is that the RBNZ is likely to be more circumspect about
suggests that the pick-up in growth could be gradual (at least in the need for further OCR reductions. Economic activity has already
the near term). been a little hotter than the RBNZ had been assuming. And with
signs that house prices and spending are heating up, they’re likely
to feel comfortable staying pat for some time yet. Consistent with
GDP growth was a respectable 0.7% in the September quarter. In that, we made a change to our forecasts for the Official Cash Rate
addition, the final months of 2019 have seen signs of resurgent late last year. We no longer expect the RBNZ will cut the OCR in
household demand, with consumer confidence on the rise and February, or at any point over the first half of 2020.
nominal retail card spending up a solid 1.8% over the December
quarter. There’s also a large and growing pipeline of both
residential and non-residential construction work. We still think that the longer-term risks for the OCR are to the
downside and have pencilled in a rate cut for August. That’s
because even with an extended period of solid economic growth,
However, it’s a mixed picture when we look at the business inflation is struggling to reach the 2% mid-point of the RBNZ’s
sector. Recent surveys of business activity point to continued target band (on this front, we expect that next week’s CPI report
sluggishness in demand, especially in the services sector. In will show that headline inflation has risen to 1.8%, but core inflation
addition, many New Zealand businesses are wrestling with a is struggling to break higher). There’s also the risk of continued
number of big challenges. Operating costs, including wages, have softness in the global economy. We will continue to update our
been pushing higher in recent years, while fierce competitive OCR forecasts as and when required by new information.
pressures have limited price increases in a number of sectors.
That combination of sluggish demand and pressure on profit
margins means that many businesses are reluctant to take on new The other big factor that will boost demand over the coming
staff or expand their operations. year is fiscal policy. Large increases in fiscal spending have been
announced in previous years, and late last year the Minister of
Finance announced a further $12bn of new investment spending
Despite such challenges, we still think that a pickup in focused mainly on transport projects. With the 2020 election
New Zealand GDP growth is on the cards over 2020. That’s due coming into sight, we think that further sizable spending
to continued support from monetary and fiscal policy, which increases will be coming. That’s likely to include increases in
together are giving the economy a powerful shot in the arm. transfer payments, pay rises for public sector employees, and
some boost to health and education services.

Round–up of local data released over the last week


Date Release Previous Actual Mkt f/c
Tue 14 Q4 survey of business opinion –35.3 –26.1 –
Nov dwelling consents –1.3% –8.5% –
Wed 15 Dec food price index –0.7% –0.2% –
Thu 16 Dec retail card spending 2.9% –0.8% 0.1%
REINZ house price index (Seasonally adjusted) 1.6% 1.2% –
Fri 17 Dec manufacturing PMI 51.2 49.3 –

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been
taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or
by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
3
Westpac weekly

Data previews
Aus Jan Westpac-MI Consumer Sentiment Consumer Sentiment Index
Jan 22 Last: 95.1
index index
130 130
• Consumer Sentiment declined 1.9% to 95.1 in December from
97.0 in November. The Index has fallen 6.1% since the RBA 120 120
started cutting the cash rate in June and has been below
the 100 level, indicating pessimists outnumber optimists, 110 110
throughout the second half of the year.
100 100
• The January survey is in the field over the week beginning
January 13. It will capture the impact of the bushfire 90 90
emergency affecting much of Australia's south east that has
included widespread smoke pollution in the major capital 80 80
cities. As the survey is being conducted, much needed rain Sources: Westpac Economics, Melbourne Institute

is falling across parts of NSW, as well as some areas in Qld. 70 70


Recent conflict between the US and Iran may also impact Dec-03 Dec-07 Dec-11 Dec-15 Dec-19
sentiment.

• Note that the headline measure is adjusted to remove a


regular 'holiday bump' worth about 4pts in January.

Aus Dec Labour Force: employment Leading indicators of employment


Jan 23, Last: 37.2k, WBC f/c: -5k %yr %yr %yr %yr
Mkt f/c: 12k Range: -10k to +20k 50 5 80
jobs vacancies employment trend (lhs)
40 leading 3 qtrs (lhs) job ads trend - adv 7mths (rhs) 60
• Employment bounced a robust 37.2k in Nov following the employment (rhs) 4
–24.8k fall in October. In the last three months the average 30 40
monthly gain was just 9.5k compared to 8.9k in Oct and 3
20 20
31.2k in May. In the year employment grew 254.9k or 2.0%
a moderation from 2.8%yr in May. The six month annualised 10 2 0
pace was 1.6%yr. 0 -20
1
• The various leading indicators, Job Ads, business surveys and -10 -40
Consumer Sentiment, all point to employment growth slowing 0
-20 -60
to less than 2%yr. And the latest update from the ABS Jobs Sources: ABS, DESSFB, Westpac Economics. Sources: ABS, ANZ, Westpac Economics
Vacancies, the only survey of job vacancies rather than job -30 -1 -80
Sep-00 Sep-06 Sep-12 Sep-18 Nov-00 Nov-06 Nov-12 Nov-18
ads, is pointing to a much more significant slowdown.

• Westpac -5k forecast allows for some statistical correction


from the Nov bounce but we temper it due to the Nov
incoming rotation group having lower employment to
population than the sample as a whole. This fundamental
strength cautions against a larger correction in Dec.

Aus Dec Labour Force: unemployment rate Unemployment has a bump up in 2019
Jan 23, Last: 5.2%, WBC f/c: 5.3% %
%
Mkt f/c: 5.2% Range: 5.2% to 5.4% 6.5 6.5
Sources: ABS, Westpac Economics.

Est.
• In Nov unemployment fell to 5.2% (5.18% at two decimal 6.0 unemployment 6.0
places) from 5.3% (5.31% at two decimal places). Participation in 2019Q4

was flat at 66.0% but it did lift modestly from 65.96% to


5.5 5.5
66.00% at two decimal places, enough to see a slightly larger
than trend rise in the labour force of 23.4k. Nov also recorded
a 0.2ppt fall in underemployment to 8.3%. 5.0 5.0

• The unemployment rate lifted from 5.0% at the end of 2018 4.5 4.5
and hit 5.3% in Jun but since then has tracked sideways
around 5.2%-5.3%. Westpac is looking for a soft patch in
employment in early 2020 to lift unemployment to 5.6% by 4.0 4.0
the second quarter. Dec-10 Jun-12 Dec-13 Jun-15 Dec-16 Jun-18 Dec-19

• Holding participation flat at 66% will see unemployment print


5.3% with Westpac's employment forecast of -5k. Female
participation has been holding up total participation but
lately there are signs of female participation easing in NSW as
employment growth there slows.

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been
taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or
by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
4
Westpac weekly

Data previews
NZ Q4 CPI NZ CPI inflation
Jan 24 Last: +0.7%, Westpac f/c: +0.4%, Mkt f/c: +0.4% % chg % chg
6 6
• We expect a 0.4% rise in the Consumer Price Index for the
December quarter. That would take annual inflation to 1.8%, 5 Quarterly 5
up from 1.5% in September. 4 Annual 4

• Adding to inflation in the December quarter will be the 3 3


annual increase in the tobacco excise tax, as well as the
seasonal increase in international airfares. There have also 2 2
been solid increases in construction costs. On the downside,
1 1
we’re continuing to see muted growth in the prices of many
retail goods. 0 0
Sources: Stats NZ, Westpac
• Our forecast for inflation is above the RBNZ’s forecast for -1 -1
a quarterly rise of 0.2%. The difference relates to the more 2001 2004 2007 2010 2013 2016 2019
volatile tradable components.

• We expect that measures of core inflation will remain a little


below 2%.

ECB Jan policy meeting ECB asset purchase program - QE


Jan 23, deposit rate last: –0.5%, WBC: –0.5% €bn Net purchases €tn
100 Sources: ECB, Macrobond, ABS 3.0
• The minutes of the December policy meeting point to the Westpac Economics
Covered Bonds
Governing Council becoming more hopeful regarding the Corporate 2.5
80
economic outlook into year end. This does not mean they Public Sector
Purchase plan 2.0
anticipate a material strengthening in growth. Rather, they are
60
positive because they see signs of stabilisation instead of a Westpac fcs
To Dec 2020 1.5
further loss of momentum.
40
• For policy, this points to an unchanged stance in January. 1.0
That the renewed asset purchase program is now up and
20
running also grants confidence as it eases financial conditions 0.5
and provides ample liquidity to markets.
0 0.0
• If the US FOMC cuts the federal funds rate again in coming Jan 15 Jan 17 Jan 19 Apr 21
Total
months, the ECB will likely follow suit to balance the
relative policy stance and limit Euro upside. But a domestic
justification for a deposit rate cut or asset purchase pace
expansion seems unlikely for the foreseeable future.

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been
taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or
by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
5
Westpac weekly

Key data & event risk for the week ahead



Market Westpac
Last median forecast Risk/Comment
Mon 20
Jpn Nov industrial production (final) –0.9% – – Subdued global growth pulse continues to weigh.
UK Jan Rightmove house prices %yr 0.8% – – Subdued price growth to persist amid uncertainty.
US Martin Luther King Jr Day – – – Public holiday.
Can Dec Teranet house prices 0.2% – – Tight supplies boosting prices.

Tue 21
NZ Dec BusinessNZ PSI 53.3 – – Service sector conditions remains subdued.
Int Davos World Economic Forum – – – On between 21 and 24 January.
Eur Jan ZEW survey of expectations 11.2 – – Confidence in outlook remains robust.
UK Nov ILO unemployment rate 3.8% 3.8% – Labour market continues to show strength.

Wed 22
Aus Jan Westpac–MI Consumer Conf' 95.1 – – Weakened in 2019, sliding into pessimistic zone.
US Dec Chicago Fed activity index 0.56 – – Regional conditions mixed; but upside limited.
Nov FHFA house prices 0.2% 0.3% – Rates and labour market big positives for housing.
Dec existing home sales –1.7% 1.5% – Supply remains existing market's big concern.
Can Dec CPI %yr –0.1% – – Signs that cost pressures are gradually building.
Bank of Canada policy decision 1.75% 1.75% 1.75% The BOC has noted concerns about jobs creation.

Thu 23
Aus Dec employment, '000 39.9 12 -5 Leading indictor point to a softening in the labour market...
Dec unemployment rate 5.2% 5.2% 5.3% ...while robust participation points to rising unemployment.
NZ Nov net migration 4120 – – Annual migration remains at firm levels.
Eur ECB policy decision –0.5% –0.5% –0.5% On hold for now, but will act again if necessary.
Jan consumer confidence –8.1 –8.0 – Remains around average.
US Initial jobless claims, '000 204 – Firing is not expected to lift materially in 2020.
Dec leading index 0.0% –0.2% – Pointing to growth near trend.
Jan Kansas City Fed index –8 – – Regional conditions mixed; but upside limited.

Fri 24
NZ Q4 CPI 0.7% 0.4% 0.4% Seasonal rise in tobacco taxes. Retail prices still muted.
Jpn Dec CPI %yr 0.5% 0.7% – Inflation pressures absent, and will remain so.
Jan Jibun Bank manufacturing PMI 48.4 – – There is little reason to suspect a strong upswing...
Jan Jibun Bank services PMI 49.4 – – ... in activity across either sector.
Eur Jan Markit manufacturing PMI 46.3 46.7 – Manufacturing continues to be heavily impacted by global...
Jan Markit services PMI 52.8 52.8 – ... trade, but domestic demand is aiding services sector.
ECB speak – – – Villeroy on panel in Davos.
UK Jan Markit manufacturing PMI 47.5 48.1 – Domestic headwinds also a concern for UK manufacturers...
Jan Markit services PMI 50.0 50.7 – ... and their services sector, in addition to global growth.
US Jan Markit manufacturing PMI 52.4 52.8 – Much more positive than ISM. Smaller firms are benefitting...
Jan Markt service PMI 52.8 52.5 – ... from domestic demand, so too the services sector.

Sat 25
Asia Lunar New Year – – – Celebrations and holidays - the Year of the Rat.

Sun 26
Aus Australia Day – – – Public holiday observed on Monday.

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been
taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or
by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
6
Westpac weekly

Economic & financial forecasts

Interest rate forecasts


Latest (17 Jan) Mar–20 Jun–20 Sep–20 Dec–20 Mar–21 Jun–21 Dec–21
Cash 0.75 0.50 0.25 0.25 0.25 0.25 0.25 0.25
90 Day BBSW 0.87 0.70 0.45 0.45 0.45 0.50 0.50 0.50
3 Year Swap 0.80 0.65 0.50 0.50 0.60 0.65 0.70 0.75
10 Year Bond 1.18 0.90 0.90 0.90 0.90 0.95 1.00 1.20
10 Year Spread to US (bps) –64 –60 –55 –55 –60 –60 –60 –60
International
Fed Funds 1.625 1.375 1.125 0.875 0.875 0.875 0.875 0.875
US 10 Year Bond 1.82 1.50 1.45 1.45 1.50 1.55 1.60 1.80
US Fed balance sheet USDtrn 4.18 4.28 4.43 4.55 4.61 4.67 4.73 4.85
ECB Deposit Rate –0.50 –0.60 –0.60 –0.60 –0.60 –0.60 –0.60 –0.60
New Zealand
Cash 1.00 1.00 1.00 0.75 0.75 0.75 0.75 0.75
90 day bill 1.29 1.20 1.10 0.90 0.90 0.90 0.90 0.90
2 year swap 1.20 1.00 1.00 1.00 1.00 1.00 1.05 1.15
10 Year Bond 1.52 1.20 1.20 1.20 1.25 1.35 1.40 1.55
10 Year spread to US –30 –30 –25 –25 –25 –20 –20 –25

Exchange rate forecasts


Latest (17 Jan) Mar–20 Jun–20 Sep–20 Dec–20 Mar–21 Jun–21 Dec–21
AUD/USD 0.6894 0.66 0.66 0.67 0.67 0.68 0.69 0.72
NZD/USD 0.6635 0.64 0.64 0.65 0.65 0.66 0.66 0.67
USD/JPY 110.17 107 106 105 105 106 107 109
EUR/USD 1.1136 1.09 1.10 1.11 1.12 1.13 1.14 1.15
GBP/USD 1.3076 1.33 1.32 1.32 1.31 1.31 1.31 1.32
USD/CNY 6.8767 6.95 6.90 6.85 6.80 6.80 6.75 6.60
AUD/NZD 1.0391 1.04 1.03 1.03 1.03 1.04 1.05 1.08

Australian economic growth forecasts


2019 2020 Calendar years
Q2 Q3 Q4f Q1f Q2f Q3f Q4f 2018 2019f 2020f 2021f
GDP: % qtr 0.6 0.4 0.5 0.5 0.5 0.6 0.5 – – – –
% yr end 1.6 1.7 2.1 2.1 2.0 2.2 2.1 2.1 2.1 2.1 2.7
Unemployment rate: qtr avg, yr end 5.2 5.2 5.3 5.5 5.6 5.6 5.6 5.0 5.3 5.6 5.3
CPI: % qtr 0.6 0.5 0.5 0.4 0.4 0.5 0.5 – – – –
% yr end 1.6 1.7 1.7 2.1 1.9 1.9 1.9 1.8 1.7 1.9 1.9
CPI trimmed mean: %qtr 0.4 0.4 0.4 0.5 0.5 0.4 0.4 – – – –
% yr end 1.6 1.6 1.5 1.7 1.8 1.8 1.8 1.8 1.5 1.8 1.7

New Zealand economic growth forecasts


2019 2020 Calendar years
Q2 Q3 Q4f Q1f Q2f Q3f Q4f 2018 2019f 2020f 2021f
GDP % qtr 0.1 0.7 0.6 0.6 0.7 0.7 0.8 – – – –
Annual avg change 2.8 2.7 2.3 2.0 2.2 2.3 2.5 3.2 2.3 2.5 3.0
Unemployment rate % 3.9 4.2 4.3 4.4 4.4 4.3 4.2 4.3 4.3 4.2 3.9
CPI % qtr 0.6 0.7 0.4 0.5 0.4 0.7 0.3 – – – –
Annual change 1.7 1.5 1.8 2.1 1.9 1.9 1.8 1.9 1.8 1.8 1.7

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort
has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect
assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
7
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This communication is being made only to and is directed at (a) persons who have professional experience in matters relating to investments who
fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (b) high net worth entities,
and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together
being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this communication or any of its contents.
The investments to which this communication relates are only available to and any invitation, offer or agreement to subscribe, purchase or otherwise
acquire such investments will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely upon this
communication or any of its contents. In the same way, the information contained in this communication is intended for “eligible counterparties” and
“professional clients” as defined by the rules of the Financial Conduct Authority and is not intended for “retail clients”. With this in mind, Westpac
expressly prohibits you from passing on the information in this communication to any third party. In particular this communication and, in each case,
any copies thereof may not be taken, transmitted or distributed, directly or indirectly into any restricted jurisdiction. This communication is made
in compliance with the Market Abuse Regulation (Regulation(EU) 596/2014).
Disclaimer continued
Investment Recommendations Disclosure

The material may contain investment recommendations, including information recommending an investment strategy. Reasonable steps have been
taken to ensure that the material is presented in a clear, accurate and objective manner. Investment Recommendations for Financial Instruments
covered by MAR are made in compliance with Article 20 MAR. Westpac does not apply MAR Investment Recommendation requirements to Spot
Foreign Exchange which is out of scope for MAR.

Unless otherwise indicated, there are no planned updates to this Investment Recommendation at the time of publication. Westpac has no obligation
to update, modify or amend this Investment Recommendation or to notify the recipients of this Investment Recommendation should any information,
including opinion, forecast or estimate set out in this Investment Recommendation change or subsequently become inaccurate.

Westpac will from time to time dispose of and acquire financial instruments of companies covered in this Investment Recommendation as principal
and act as a market maker or liquidity provider in such financial instruments.

Westpac does not have any proprietary positions in equity shares of issuers that are the subject of an investment recommendation.

Westpac may have provided investment banking services to the issuer in the course of the past 12 months.

Westpac does not permit any issuer to see or comment on any investment recommendation prior to its completion and distribution.

Individuals who produce investment recommendations are not permitted to undertake any transactions in any financial instruments or derivatives
in relation to the issuers covered by the investment recommendations they produce.

Westpac has implemented policies and procedures, which are designed to ensure conflicts of interests are managed consistently and appropriately,
and to treat clients fairly.

The following arrangements have been adopted for the avoidance and prevention of conflicts in interests associated with the provision of investment
recommendations.

i. Chinese Wall/Cell arrangements;


ii. physical separation of various Business/Support Units;
iii. Strict and well defined wall/cell crossing procedures;
iv. a “need to know” policy;
v. documented and well defined procedures for dealing with conflicts of interest;
vi. reasonable steps by Compliance to ensure that the Chinese Wall/Cell arrangements remain effective and that such arrangements are
adequately monitored.

U.S.: Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency.
Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated
with, a Futures Commission Merchant registered with the US CFTC. Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac,
is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory
Authority (‘FINRA’). This communication is provided for distribution to U.S. institutional investors in reliance on the exemption from registration
provided by Rule 15a-6 under the Exchange Act and is not subject to all of the independence and disclosure standards applicable to debt research
reports prepared for retail investors in the United States. WCM is the U.S. distributor of this communication and accepts responsibility for the
contents of this communication. All disclaimers set out with respect to Westpac apply equally to WCM. If you would like to speak to someone
regarding any security mentioned herein, please contact WCM on +1 212 389 1269. All disclaimers set out with respect to Westpac apply equally to
WCM.

Investing in any non-U.S. securities or related financial instruments mentioned in this communication may present certain risks. The securities of
non-U.S. issuers may not be registered with, or be subject to the regulations of, the SEC in the United States. Information on such non-U.S. securities
or related financial instruments may be limited. Non-U.S. companies may not subject to audit and reporting standards and regulatory requirements
comparable to those in effect in the United States. The value of any investment or income from any securities or related derivative instruments
denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value
of or income from such securities or related derivative instruments.

The author of this communication is employed by Westpac and is not registered or qualified as a research analyst, representative, or associated
person under the rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules or regulations of any State. Unless otherwise
specifically stated, the views expressed herein are solely those of the author and may differ from the information, views or analysis expressed by
Westpac and/or its affiliates.
Westpac weekly

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been
taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or
by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
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