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Leading Asian market strategist says sell Australian bank shares

Discussion in 'The Economy' started by RobertHolmes, 20th Mar, 2009.

  1. RobertHolmes

    RobertHolmes Member

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    Did anyone hear this interview? Any comments? Christopher Wood is recommending his clients sell their AU bank shares (and buy gold). I find his logic is compelling.



    Cheers,

    Robert
     
    Last edited by a moderator: 17th Sep, 2016
  2. Chris C

    Chris C Well-Known Member

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    I very much agree with him, and it's what I've been doing for the last 4 or so months.

    The recent move by the FED on gives further support to the argument to holding gold and other commodity related assets, because it looks like when it comes to the situation of letting the system collapse or printing our way out of the problem central banks have made it very clear which route they are going to take...

    I have also been very wary of Australian banks over the last couple of months. I think they are a lot worse off than anyone in a position of power wants to let on.

    I also agree that in many of the BRIC economies (and Asia) will probably start to see some good growth return to their share markets later in 2009 and in 2010 (you can problem include Japan as well). These countries didn't enter this global recession with loads of debt and leverage so they will obviously recover a lot quicker in my opinion, not to mention they were a lot more oversold than developed countries markets.

    Plus they have the right attitude for recovery as well - they have spent the last few decades fueling growth through production and good investment, where as most developed countries have spent the last few decades fueling growth through consumption and loose credit...
     
  3. try anything once

    try anything once Well-Known Member

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    Unfortunately for them the productive capacity they've been adding has been to feed the unsustainable loose credit fueled consumption in the west..

    Ironically, it would seem a consumer spending stimulus is what Asia needs not the west!
     
  4. AsxBroker

    AsxBroker Well-Known Member

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    Hi TAO,

    I agree with your thinking.

    Cheers,

    Dan
     
  5. Chris C

    Chris C Well-Known Member

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    I know which side of the equation I would rather be on... the side that over produces.

    It is very easy to increase consumption when you are over producing. It is not as easy to increase production when you have been over consuming...

    So whilst the developing countries of the world have fallen into this recession with the rest of the world, they, unlike us, have the ability to grow out of their problems, by boosting domestic consumption alone.

    The reality is with the globalised world that we have all these cash handouts and stimulus packages being offered by western governments are also boosting Asian economies via western economies continuing to import from countries that actually produce products.
     
  6. dmesh87

    dmesh87 Member

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    What are you basing this on?
     
  7. Chris C

    Chris C Well-Known Member

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    M1 to M3 money supply ratio, and the simple fact that both the government and the banks have a vested interest to lie to save their fractional reserve banking system.

    Let's not forget that all the banks (it think with the exception of ANZ) have already engaged in equity raising, and have still yet to have to be forced to realise any "major" losses in the residential mortgage market (some of the banks have suffered a bit from commercial property declines).

    Of course I'm not implying the Australian banking system is insolvent or even close to it, I'm just saying that we are running straight into what will be the worst recession Australia has seen in a long time and we as a nation are leveraged up to the eyeballs... the banks are going to HURT, but no one in the mainstream media or government wants to talk about it. All they want to do is brag about how our bank are so awesome!

    :rolleyes:

    It sounds stupid, but even the government guarantee in my mind is a vote of no confidence in either the banking system or the general populations trust of the banking system. The irony is that the guarantee doesn't save the system from failing in the event of bank insolvency or a bank run... but I bet it will convince 99% of the population to turn the other way for the time being.

    :p

    This is of course just my two aussie cents...