IS THE AUTRALIAN STOCK MARKE SLIDE OVER ?
HAS THE MARKET FREE FALL ENDED ?
HAS THE MARKET REACHED THE BOTTOM ?
HAS THE SUBPRIME FALLOUTS ENDED ?
THE Australian share market managed this week its largest gain since last August, despite another poor lead from Wall Street.After the constant rout in the shares from the past few months there has been no letting go in the constant downturn in stock prices.
But now that the GOLD and OIL prices have also risen sharply to dizzying heights and finally crashing down . Is this a sign that the bottom of the market has reached.
Well my personal point of view is that the market has reached the bottom , but there will still be a few minor dips on its climb up to a more stable Market level that is not overpriced like it was before the market crashed with the sub-prime crisis.
Another session of US equity losses and fears about the US banking sector and the news of the Australian financial services group Opes Prime going into receivership did little for local banks, but resource stocks surged.
CMC Markets senior dealer Matt Lewis said the big weight on the local bourse was the finance sector, which followed banks in the US downwards.
Leading US banks fell overnight on speculation that Lehman Brothers faced funding shortages. Lehman said the speculation was unfounded.
National Australian Bank Limited (NAB) said it expects an after-tax gain of approximately $221 million from its shareholding in Visa Inc, following its IPO on the NYSE. The majority of the gain will be offset through the creation of a one-off central bad and doubtful debt provision against the current uncertain global economic environment.
INVESTORS could lose hundreds of million of dollars following the shock collapse of Melbourne finance house Opes Prime.
The corporate watchdog, which has launched a special investigation into the company’s affairs, is believed to have won a court order preventing the company’s chief executive Lirim Emini leaving the country.
It is believed Australian Securities and Investment Commission investigators want to speak to Mr Emini, whose whereabouts were unknown last night.
The company’s biggest creditor, ANZ Bank, yesterday seized shares worth about $1 billion and appointed a receiver who took control of Opes Prime’s offices in Collins Street.
Accountants Deloitte said yesterday there were a number of cash and stock movement "irregularities in relation to a small number of accounts".
"The shortfalls in these accounts led the directors to believe the trading operations could not continue," it said in a statement.
It added that all client accounts had been frozen.
The outlook remains buoyant: we are in for a generation of economic expansion, led by China with India and other developing countries following. This is unstoppable textbook economic growth on a scale not seen before. There are bound to be humps and bumps along the way – and we may be going through one right now. But the sands of time will inevitably wash over this temporary correction.
However we are not completely immune of course to volatile credit and securities markets – you have to ensure you have the right short term strategies – ‘double-taking’ on investment decisions, shoring up credit lines, communicating with customers, suppliers and all stakeholders, and particularly employees. Equally you also have to be on the front foot, looking for opportunities out there – acquisition, joint venture, farm-ins – where other companies may be under pressure from the markets and need support.
Australia’s housing affordability crisis is expected to dramatically worsen during the next five years, with property prices forecast to rise by as much as 40 per cent.
Economic forecaster BIS Shrapnel says housing affordability, already at record lows, will decline even further in the years ahead as demand continues to outstrip supply.
BIS Shrapnel director and chief economist Frank Gelber said an annual construction shortfall of 30,000 dwellings was set to double to 60,000 by June this year and rise to 129,000 by June 2009.
The shortfall in supply will put further upward pressure on rents and house prices, further exacerbating the affordability problem caused by the house price boom of 2002-03.
At that time, official interest rates were at 4.25 per cent but have since risen to a 12-year high of 7.25 per cent.Mr Gelber says the current environment of rising interest rates has compounded the problem, with people choosing to wait before buying or building property.
This also meant that when interest rates stopped rising or eventually started to fall, there would likely be a surge in demand for housing which could result in another price explosion.
"We’ve got rising interest rates suppressing any upswing in demand for housing … and we need to wait now before that demand comes through,"
"But when it does, it will be very strong."
Calculations, based on the ABS established house price index, show that during the 10 years to December 2007, house prices rose an average of 9.9 per cent a year. The index rose 12.3 per cent in 2007.
In the 10 years before that, house prices rose an average six per cent a year.
In the past 20 years they have risen an average 7.9 per cent a year.
In the short term, higher interest rates meant the housing shortage was probably going to become more acute before starts to turn around.
"But if you’re looking at it from a medium-term perspective where there are national housing policies on the table that in time will boost the supply of housing, then we would hope that by the end of this decade … we would be reducing some of the upward pressure on established house prices."