Much seems to have changed since our last economic commentary in early January. Greece dropped some of its debt burden and most major central banks in the world loosened the monetary strings further. In the US the macroeconomic data for December, January, and February was surprisingly positive which has had a flow on effect to global equity markets.

Yet, under the surface, things are not so different. <<Read more>>

Through the second half of 2011 markets one again focused on the possibility of a ‘GFC Mark II’ due to the sovereign debt issues faced by many of the members of the European Union

Fears not only focused on the potential default of a debtor nation (such as Greece or Ireland) but the potential for serious ‘contagion’ by other nations including Italy, Spain, Portugal and to a lesser extent France.  <<Read more>>

While there has been much commentary on the debt crisis within Europe (especially Greece) and to a lesser degree the financial and economic outlook for the US economy, we at Banksia Partners have not (rightly or wrongly) seen reason to significantly change our underlying investment asset allocation strategies.

In our role as investment advisers we are by nature ‘domestically focused’, that is, our investment recommendations are biased towards Australia and the Australian economy. Accordingly, we tend to continuously assess our investment assets allocation strategies from the perspective of ‘how is the Australian economy positioned and will this (particular issue) affect us’. << Read More >>

With near full employment, the continuing commodities boom, the prospect of an improving agricultural/rural outlook after the passing of the floods and the impetus of housing re-construction after flood damage, the outlook for the Australian economy remains positive.

Australia’s economic recovery can really only be negatively affected by a softening in the economies of its major trading partners – principally China. Australia is now firmly tied into economic growth in Asia, with the US now representing only 4% of our export markets. For us it matters less and less what happens in Europe and the US, as Asia transforms into its own consumption led growth story.

Australia’s major listed companies are in a very sound financial state with low debt and improving profits as evidenced by the current profit reporting ‘season’ for the 2010-2011 financial year. Australia’s share market could now be judged as being on the ‘very low side of fair value’ provided we can maintain positive economic growth going forward. << Read More >>