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Australia Caught in the Headlights
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Author Australia Caught in the Headlights
rffrydr
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PostPosted: Fri Aug 10, 2007 6:13 am    Post subject: Australia Caught in the Headlights Reply with quote
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Aussie punters are as ignorant of bear markets as the first explorers were of monotremes. All local equities do is go up. This has created an investment environment as unique as the platypus, the country's famous egg-laying mammal. But the All Ordinaries index is now suffering the same panic selling that has gripped markets round the world, and is 7 per cent off its July high. Last week's news that two Macquarie Bank funds faced significant subprime-related losses has not helped. How might Australia's bullish investors cope with a more prolonged slump?

Things could turn ugly. Much of the market's recent strength is due to an expansion of valuation multiples - earnings growth has lagged annual index gains by about 10 percentage points over the past four years. Some of the demand has been created by Australia's compulsory pension scheme that pours an additional ADollars 20bn-ADollars 30bn into domestic equities every year. These assets now account for two-thirds of the market's ADollars 1,590bn capitalisation. But new and existing funds could quickly shift to bonds or even cash. And a global downturn would hit financial and resource stocks hard. These two sectors account for 60 per cent of the index.

Falling share prices might eventually lead to a wider range of popular investment products. Unlike continental Europe, few structured funds are offered in Australia. Most investors would laugh at the idea of paying for capital protection. The same goes for hedge funds. Why pay expensive management fees when cheap index trackers return more than 20 per cent per year? The demand for diversification will also increase if the domestic market continues to struggle. Institutional fund managers are already building up their international teams in anticipation of higher overseas weightings.

But it is Australia's real economy that could be hit hardest. With the broadest equity ownership in the world, consumption is as linked to shares as it is to house prices.



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rffrydr
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PostPosted: Fri Jun 20, 2008 12:21 pm    Post subject: Reply with quote
Westpac ACCI Q2 Survey of Industrial Trends: Index stays near lowest level in three years on higher borrowing costs
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rffrydr
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PostPosted: Mon May 26, 2008 5:00 pm    Post subject: Reply with quote
GE is loosing the bloom:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVloNHjB63l0&refer=home
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PostPosted: Mon May 26, 2008 9:37 am    Post subject: Reply with quote
Marginal new high after distribution and failed comeback. Divergences. We'll have to see if crude can bring down the iron giant:

http://stockcharts.com/h-sc/ui?s=BHP&p=W&b=5&g=0&id=p92934424868
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PostPosted: Wed May 21, 2008 9:55 pm    Post subject: Reply with quote
I'll be waiting:

http://www.dailyfx.com/story/topheadline/Will_the_Australian_Dollar_Hit_1211396993077.html
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PostPosted: Thu Apr 24, 2008 6:22 am    Post subject: Reply with quote
Is parity the "contrarian play" on the aussie--or does everyone just know that it doesn't belong where its at:

http://www.businessday.com.au/aussies-greenback-parity-paradox/20080424-28c9.html
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PostPosted: Wed Apr 23, 2008 8:13 am    Post subject: Reply with quote
Shows that costs are outrunning profits which should dampen FDI in context of ramping current account deficit (also outrunning profits). Use XOM as loose role-model. Cannuck buck will haunt this rally. And dramatic move in Yen will cull japanese risk appetite. Watch the media for burst of "parity" stories.

I goofed on the LTD crude. Was last night. Euro getting talked down. Now if crude can come off we can get something going.
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PostPosted: Wed Apr 23, 2008 12:27 am    Post subject: Reply with quote
Yep, got me glued to the edge of my seat. Maybe it should be oil & ore?

Im currently 1/2 cent in the red on my euro, aussie and nzd shorts. Embarassed
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PostPosted: Tue Apr 22, 2008 11:10 pm    Post subject: Reply with quote
Oil vs. Ore: will be interesting.
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PostPosted: Tue Apr 22, 2008 9:22 pm    Post subject: Reply with quote
AUD/USD just made a new high above 0.95 on the latest inflation report. Shocked

http://www.bloomberg.com/apps/news?pid=20601087&sid=au9jKis.H_N0&refer=home
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PostPosted: Tue Apr 01, 2008 10:00 am    Post subject: Reply with quote
Manufacturing down...how is that possible?

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-24158828.htm
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PostPosted: Sun Mar 30, 2008 7:46 am    Post subject: Reply with quote
Mortgages pushing 10%

http://www.news.com.au/business/story/0,23636,23450218-462,00.html
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PostPosted: Mon Mar 10, 2008 6:17 am    Post subject: Reply with quote
Here's the inflation case-study:

http://www.economist.com/finance/displaystory.cfm?story_id=10809492

Looks like Gross is hedging his bets.
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PostPosted: Mon Mar 10, 2008 1:51 am    Post subject: Reply with quote
http://www.theaustralian.news.com.au/story/0,25197,23348414-643,00.html

Things dont look so flash down under anymore. Housing and stocks are tanking. AUD$ to follow? The RBA should be looking to ease here not stay tight with monetary policy.
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PostPosted: Thu Mar 06, 2008 6:45 am    Post subject: Reply with quote
Crikey's List:

http://ftalphaville.ft.com/blog/2008/03/06/11399/credit-crunch-victims-down-under-crikeys-list/
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PostPosted: Tue Mar 04, 2008 1:51 am    Post subject: Reply with quote
Australian dollar actually dropped after the latest rate hike:

http://business.theage.com.au/reserve-bank-lifts-interest-rates/20080304-1wrk.html

You know have: retail sales growth at 0%, a severely overvalued housing market, and an economy that is overly dependent on the commodity boom. My guess is that it is all downhill from here for the AUD.
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