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Australasian Investment Review - ArticlesAustralasian Investment Review (AIR) is a free daily news service covering global financial markets with a focus on Australia, New Zealand and Asia. Each day our team of experienced journalists presents you with a concise digest of expert opinions and analysis on trends and backgrounds that matter in these markets. Subscriptions are free at aireview.com.au
It Will Get Worse Before it Gets BetterThe depth and length of the global recession now underway will be the key determinant of how shares and other financial assets perform this year.
Compared to the 1930s, the global policy response this time around has been far more positive and far quicker, so a re-run of the Great Depression is very unlikely. Job Losses Tell Us It’s Going to Get WorseThere is one overriding message from the jobs bloodbath of this week.
That is: this slowdown is going to be long, hard and tough and things are going to worsen.
Indeed US brokers Merrill Lynch now says it thinks estimates for 2009 profits for US companies are still too generous, that earnings are going to be lower.
Brokers already believe that December 2008 quarter earnings will be down 28%, so Merrill Lynch's warning should be seen as a pointer to the future. Australian Banks/property UpdatesIt was a big week last week for the Australian banking, property and infrastructure groups and commodity sectors.
Major banks and property groups updated the market, from the Commonwealth, to Macquarie, the ANZ, Mirvac, Suncorp and Westfield. Lend Lease joined Westfield in raising fresh capital and confirming big write-downs. Good Bank, Bad Bank DayShareholders in struggling Brisbane-based financial services group, Suncorp Metway, face a further loss of value of up to $2 billion or more after the most eventful day in the group's history yesterday
The future independence of Brisbane-based Suncorp Metway has been left in doubt after it revealed a sharp drop in profit, more than halved its dividend, revealed ambitions to raise about $900 million by selling new shares and the departure of chief executive, John Mulcahy. Gold to Rise?So with the credit crunch and economic slump still with us, oil still sliding (and giving confusing pricing signals) what will gold do this year?
The inflation bears look at all the government debt and say, it's good news for us, even though price deflation is more likely than an upturn in price inflation. The Aussie Economy: Tough Times are ComingAnd there were echoes of that US economists' survey in some of the new forecasts and commentary from the National Australia Bank about the coming year.
In its first report of 2009 the National Australia Bank downgraded Australia's economic outlook, forecasting a shallow recession, a sharper rise in unemployment, official interest rates cut to 2.5% in the September quarter and a budget deficit hitting $40 billion next year. Asset Values to be CutThe Australian Financial Review had a front page story yesterday headlined "Dividends hit as asset values plunge",
It started "Shareholder dividends will come under increased pressure this reporting season as large companies are forced to write-off billions of dollars in goodwill built up over a decade-long merger acquisitions boom". Asia’s Quickening Slump Heading for UsWhile what passes for economic debate in this country ranges from whether there will be a recession, to whether we will have a budget deficit (both a big yes), the freight train that is running down the tunnel towards us in the shape of an Asian economic slum, is moving closer at faster speed. Markets Sniff a BounceDespite the continuing bad news about earnings, the global economy and rising levels of jobless, markets here and in most major economies are likely to start a major rally this week, providing a couple of conditions are met.
They are, firstly that the Obama stimulus package makes fairly rapid progress through the US Congress now there seems to be some sort of Senate agreement and secondly, that revamp of the banking bailout package, is seen to be credible. Australian Foundation: Watchful OutlookThe country's biggest listed investment company, Australian Foundation Investment Company (AFI), has taken a different approach to the market than some of its associates, such as Djerriwarrh Investments (DJW) which basically stayed out of the market in the December quarter.
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