2015: start of Australia’s lost decade

Posted: December 7, 2015 in Uncategorized

Australia has entered a phase which, if politicians do not wake up, will be considered our lost decade.

A lost decade is not a crisis per, simply a period in which there is not much gain to be made (say in the index we stay between 4800 and 6000), in general a slow positive number overall (this bar external shock as China, US rates and unforeseen events).

Cost cuts, Capex and increased regulatory environment will reduce growth. Ex top 20 shares will be more interesting specially if exposed to foreign thematic.

Real estate, if we are lucky, will be subdued. Already real estate agent Mcgrath in Sydney admitted that the Chinese demand slowed by 15% year on year…and Sydney house prices dropped the most in 5 years. As China spurs internal consumption it will be more difficult for Chinese to export capital.

Resource boom is now busted. Stop blaming our current PM. The real issue is that very few understand that the issue is John Howard.
In the height of the boom he should have invested in infrastructure and not just bribing the population with tax cuts.

So a lost decade is not a crisis per se, but a period of slow growth and of vulnerability to external issues. 

Lucky enough PM Turnbull at least seems to understand the problem. If it can be solved, that is a different proposition.


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