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3 May 2024

Friday Tidbit

Much has been said about the importance of China to Australia but how long can the China growth story continue for our resource sector?

All industrialising nations eventually reach peak steel intensity which is when a nations steel consumption per capita begins to fall because the majority of the infrastructure has been built.

For the United States it was reached in the 1970’s when steel consumption averaged 637kg per capita.

For Australia, China appears to have reached peak steel intensity in the last few years as fixed asset investment (FAI) in property materially reduces. This will negatively impact commodity prices, our terms of trade and the Australian dollar.

Click for two speed economy in China.

It is not all bad news.

The Emerging Markets (which include Brazil, Russia, China, India, Mexico, South Africa, Indonesia, Philippines, Poland, South Korea, Thailand, Malaysia, Chile, Colombia, Argentina, Czech Republic, Hungry, Morocco, Peru, Taiwan, Vietnam and others) are at 35 year lows against the United States dollar which signals buying opportunities in emerging markets.

Click for Emerging Markets low.

What does all this mean?

Be smart, follow Benjamin Graham’s value investing principles, remain invested according to your appetite for volatility and let the professionals help you take advantage of these opportunities.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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