In my job, I follow the results of a lot of international companies. Trust me it is very ugly out there. In fact, I have not seen anything as bad in my time in the financial market and I have seen a number of bear markets. Late last year, it felt as if the world just stopped. Take the semiconductor industry for example, a lot of companies saw 30% qoq sales decline in Q4 08. The US car makers saw 40-50% sales decline in Q4 08. Even businesses in China are starting to feel the impact. Lots of stories about factories shutting down in Southern China, the export/manufacturing centre. Retailers in China are seeing weaker demand as well. Property prices in HK have declined 20-30% vs. a year ago.
Do you think if Australia can stay above the fray ? In case, we think we are "better" than the rest of the world. Check out the link below:
PM Capital is an international equities fund. I am especially interested in slide 15. When I first saw it, I was astounded. The bottom line is Australia has had the benefit of more than the commodity tailwind. We have been borrowing and borrowing to fund our little indulgences in life as well.
Let's hope we don't have to pay the piper anytime soon.
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Australia is not immune, corporate debt may not be high as the last bust, however personal debt from property and credit cards are unsustainable and much higher than the US and UK which are currently experiencing extreme falls in property prices.
ReplyDeleteIt is only a matter of time the deflation tsunami that pop their bubbles will bust Australia's in a spectacular fashion.
Properties that will hurt the most will be in the be in the 750k-2000k range. If you are able to keep your job, there will be some good bargains to be had.