Australia Focus : Still Asians’ Best Friend

This week has been about the mystery of the AUDUSD low in Monday’s flash crash that was so sharp that charts cannot even agree on a low-point when it “dived US2c in the space of 10 minutes, before rebounding back near levels seen at the end of local trade on Monday.” http://www.businessspectator.com.au/news/2015/8/25/australian-dollar/aust-dollar-sees-us70c-wild-trade

Bloomberg gave the low on Monday as 0.7050, occuring sometime between 9-915 pm (SG time) but I guess we will never know where the 6 year low is and we will have to go back to Mar 2009 to recall what life was like when the AUDUSD was between 0.6-0.7 cts.

It was all good that the money changers at the Arcade stopped selling MYR on Thursday on (on those dratted capital control rumours again) which meant my friend managed to get me AUDSGD at 1.008 (spot was 0.998 then) for my short trip next week.

Even better was it for those Asians who snapped up $170 mio worth of apartments in 2 hours at Crown Group’s Sydney apartment launch where $350 mio was sold by 3pm in the afternoon to queues of buyers that formed as early as 7 am in the morning. And it cannot be more obviously Asian when every single photo of buyers is filled with Asian faces.

“We released our first 185 units and we have had to release the second stage well in advance due to the unprecedented demand,” http://www.dailytelegraph.com.au/realestate/news/cashed-up-buyers-snap-up-170-million-worth-of-apartments-in-two-hours-at-crown-groups-green-square-sales-launch/story-fni0cly6-1227503937712

Australia is still Asia’s best friend and playground as Asians park their hard-earned or unhard-earned cash there, buying up their place in Australian society as we note that China and India become their top 5 sources of new migrants like we said months back, ” Indians and Chinese should be finding Australia cheap these days which is good for the economy, migration and investments. It is simply just a nice place to live in.” https://tradehaven.net/market/fx/australia-focus-the-real-estate-romance/

 

So important is China that Prime Minister Abbott had to reassure markets.

*ABBOTT: TURBULENCE IN MARKETS DUE TO OVER-EXUBERANCE IN CHINA
*ABBOTT: AUSTRALIANS SHOULDN’T `HYPERVENTILATE’ OVER STOCKS

Trade Minister Andrew Robb also had something to say in the turbulent week.

“Australia’s Trade Minister Andrew Robb comments in interview with Bloomberg Television.

  • Correction in China’s stock market had been predicted by commentators; Shanghai stock exchange only a small part of the real economy: Robb
  • “This is a road bump,” Robb says. “What it will do for Australia, ironically, is encourage more and more Chinese investment into safe havens like Australia””

But the harsh reality is echoed by RBA chief Stevens who asked the “Key Question Is How to Get More Growth”. http://www.rba.gov.au/speeches/2015/sp-gov-2015-08-26.html

For market observer Wolf Richter, the 3 pillars of the current Australian Economy would be banking, mining and real estate and all are hanging on precarious grounds with mining threatening to free fall into an abyss and housing looking poised for correction. http://wolfstreet.com/2015/08/25/first-the-miners-now-the-banks-then-property-going-to-be-a-hard-landing-for-australia/

  • BHP BILLITON FY UNDERLYING PROFIT $6.4 BLN; EST. $7.5 BLN
  • Fortescue Full-Year Earnings Plunge 88% on Iron Ore Collapse

 

Australia Focus : Still Asians' Best Friend 1

I would think Australia could be buffered in the days ahead as I spend some tourist dollars in the following week on a bottle of wine or two.

“Australia’s high-value services exports, led by tourism and education, have overtaken iron ore to become our biggest foreign exchange earners. Services exports now are worth more than coal and LNG combined.”

Next Tuesday, 1 Sep, we shall have the RBA Cash Target Rate announced at 1230 pm (SG time) where 25 out of 25 economists surveyed expect rates to be kept unchanged at 2%.

And we shall see their yield curve hold steady into the Sept FOMC, I expect as the country increases bond issuance to up to 3 auctions a week.

There is little to go by for the currency which is at 6 year lows against the USD and seeing a high level of market shorts.

Australia Focus : Still Asians' Best Friend 2

Where I think we shall see some interesting price action would be in the EURAUD and GBPAUD with nice weekly gravestone doji set-ups.

 

Australia Focus : Still Asians' Best Friend 3

Credit news :

Woolworths Ltd. Credit Rating Cut to Baa1 by Moody’s and S&P
EMECO HOLDINGS CUT TO B- FROM B AT S&P; OUTLOOK NEGATIVE
S&P AFFIRMS TREASURY OF VICTORIA RATING AT ‘AAA/A-1+’; OUTLOOK STABLE

Yes, the hard landing reports are streaming in at an alarming speed and it does not look all too bright for them in the medium term although next week would be a nice break with oil prices back at US$45. But those happy faces queuing to put their cash into the country makes me think that it will not be a total write-off at the moment as Australia remains Asians’ best friend.

Leaving with the indicative prices.

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