Four key areas where Aussie investors must tread carefully

Andrew Starke quotes Guy Bruten, AllianceBernstein’s Senior Economist for Asia:

“In its latest statement on monetary policy, the Reserve Bank of Australia highlighted that we’re only about halfway through the adjustment in capital spending in mining,” said Bruten. “It’s gone from 8 per cent of GDP to around 5 per cent, and the central bank thinks it could fall to below 3 per cent.”

This suggests that more job losses will flow from the sector. There are concerns, too, about the tax revenue benefits of some resource projects as they move from the investment and construction phases to become fully operational……

“Against this background, we need to ask ourselves whether housing in 2016 will come to the economy’s rescue in the way it did in 2015,” said Bruten. “I am not among those who see a possible housing crash, but I don’t think we can afford to be complacent. “The last time it looked as though we might be heading for a housing crash was in 2003, when the background was very different – there was a very strong boost to the economy coming from commodities and from tax cuts, too.”

“…..The only certain thing about 2016 at this point is that it’s going to be another year of uncertainty.”

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