At last Friday’s AGM, Mike Smith told the ANZ shareholders he was optimistic about the Australian economy … due to its proximity to fast-growing Asia.
In China, the economy grew at 9% over the year. And while many commentators talk about the risks to growth in China, I have been there regularly this year and I am confident about the ability of the Chinese government to manage inflationary pressures and managed the shift from export-led growth, to growth based on more internal demand.
By the way, isn’t that exactly what you’ve been reading right here, in some of the recent articles?
Focus on the Big Picture
You will find that most commentators are focused on the short-term issues in the north Atlantic; and have tended to overlook the bigger picture.
During every generation, there is generally a structural change in global economic activity. And right now, you are simply witnessing a shift the world’s economic centre of gravity.
The influence of the British Empire was surpassed by American economic dominance after the Second World War. And now, that dominance seems to be shifting from the advanced Western economies as a whole … across to a growing group of emerging economies.
China’s current growth rate of 9% per annum is closely followed by India, at around 7% per annum. But you cannot ignore other emerging economies like Brazil, Indonesia and Vietnam.
With a population of around 240 million, Indonesia has the world’s forth largest population. And in terms of overall net worth, it surpassed Australia’s economy about 5 years ago.
Bottom Line: You only need to look at the number (19% 0f the $9.8 billion) of purchases of Commercial property made by Asian buyers over the past year … to realise the Australian property market is seen by them as a safe haven.
The sheer volume of Asian funds poised for investment means those investors need to look outside their own countries — simply to balance their portfolios, and spread their risk.
Therefore in 2012, you will hopefully recognise this tidal wave of activity for what it is. And more importantly, realise the positive impact it will have upon Commercial property values in Australia.
Now is the time to position yourself to be able to ride that wave, over the next 5 to 6 years.