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rffrydr
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 Posted: Fri Aug 10, 2007 6:13 am Post subject: Australia Caught in the Headlights |
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| Quote: |
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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diesel
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Location: Australia & New Zealand
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| Posted: Fri Aug 10, 2007 6:29 am Post subject: |
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My Aussie friend I have talked about before is hurting. Hurting a lot! 
I guess using full leverage with your life savings does that to you. Cant say I didnt warn him.  |
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lion hunter
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Joined: 27 Mar 2006
Posts: 100
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| Posted: Sat Aug 11, 2007 11:36 pm Post subject: |
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Head in the sand syndrome in Oz.
Cant see how your mate is suffering from his exposure to ZFX. Wasnt he buying around current prices $17.00.
I for one bought ZFX @ 3.00 and took a whopping 10% out of that trade. LOL. |
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diesel
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Location: Australia & New Zealand
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| Posted: Sun Aug 12, 2007 1:47 am Post subject: |
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| He is spread over quite a few of the resource and common stocks at the moment. Hes down 15% at the moment but is still bullish, thinks the correction is over. |
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rffrydr
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| Posted: Wed Aug 15, 2007 7:31 am Post subject: |
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Someone stopped me yesterday to see if I could bring up a quote: "It's on the Australia exchange," he said. "BHP?" I said. "How did you know?"
This is for you Goodfella:
http://futuresource.quote.com/charts/charts.jsp?s=AUDJPY%20A0-FX
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lion hunter
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| Posted: Wed Aug 15, 2007 4:53 pm Post subject: |
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| The speculative end on the Australian exchange has been absolutely decimated this week. Haven't seen anything like it before. |
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diesel
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Location: Australia & New Zealand
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| Posted: Wed Aug 15, 2007 9:50 pm Post subject: |
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| ASX down over 5% so far today. Goodfella you got to be a happy man at the moment! |
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diesel
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Location: Australia & New Zealand
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| Posted: Thu Aug 16, 2007 6:11 pm Post subject: |
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Australian Margin Calls Hit Record
http://www.theaustralian.news.com.au/story/0,25197,22258768-5013404,00.html
| Quote: | The new figures from the Reserve Bank emerged on the same day that the Australian market plummeted and the nation's largest margin lender announced a record number of margin calls.
Commonwealth Securities has made more than 1200 margin calls in the past two days to investors to cover their loans for blue-chip stock that have been sliding backwards on fears over the US housing sector and associated credit crunch. Customers face margin calls when the value of their share portfolio falls below pre-agreed levels, forcing them to pay extra cash or to sell shares.
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rffrydr
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| Posted: Fri Sep 07, 2007 9:12 am Post subject: |
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Nice reversal on the aussie today in the face of gold push/dollar fade. See if it sticks it on the close. Can trade this FXA in equities account.
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rffrydr
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rffrydr
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rffrydr
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| Posted: Tue Dec 04, 2007 8:03 am Post subject: |
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How structural change becomes cyclical change:
| Quote: | Australia’s trade gap
Published: December 3 2007 09:06 | Last updated: December 3 2007 18:29
How does a country at the epicentre of the global resources boom rack up a $2.6bn monthly trade deficit? Australia’s October shortfall was not just almost double analysts’ expectations, but marked the widest deficit since records began in 1959.
Monthly data are notoriously erratic and some weakness was inevitable. Droughts are choking rural exports, while the stronger Australian dollar – on top of robust domestic consumption – propelled imports higher. More worrying is the drop in resources exports. Exports of metal ores and minerals were down 20 per cent in October month on month, while metals tumbled 22 per cent. Infrastructure bottlenecks explain some of this. Seasonally adjusted sales of mining goods decreased 0.5 per cent in the three months to September compared with the previous quarter, according to government figures, while inventories rose 8.6 per cent – suggesting containers piling up on the docks rather than a more sinister evaporation of global demand.
Currency fluctuations also undermine exports. The Australian dollar strengthened against leading currencies in October, by 6 per cent against the US dollar, so US dollar receipts are quite simply worth less. But that is not enough to explain away a deficit that, as Morgan Stanley notes, has been worsening in trend terms all year. Instead it demonstrates the extent to which price rises, rather than volumes, have defined the resources boom. The question for Australia now is how much it can lift volumes to compensate for the falling off in prices. Optimists point to several years of investment in mining production and, more recently, infrastructure, which should start to bear fruit: iron ore exports, for example, are expected to rise 10 per cent next year. The irony, of course, is that Australia’s push to lift volumes looks set to dovetail neatly with a likely US slowdown, which would inevitably blunt Chinese demand for Australian commodities. |
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texfly101
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rffrydr
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rffrydr
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