Unless you’ve been on a remote Island holiday with no Internet access, you will now be aware that the World Stock markets are going through yet another period of ‘drama’.
Drama is perhaps a good word, and one which The Sydney Morning Herald used in an article today entitled ASX drama: Savings take a hit, but super is about the long term, so we’ll stick with it, rather than crash, melt down and all the others.
This drama is of concern to Gold Coast residents for perhaps two main reasons:
- The level of the Australian dollar verses the other major currencies, since a weaker A$ generally means more foreign tourists coming to the Gold Coast on holiday.
- The flip side to these overseas tourists being attracted by the weaker Aussie Dollar, is that many of them are from China.
So let’s talk about China.
According to a majority of financial market commentators, this stock market ‘drama’ can be blamed to a large degree on what is happening in China, be it caused by the Shanghai Stock market or the rather more mysterious ‘slowing Chinese economy’.
So for The Gold Coast will the attraction for the Chinese of the weaker, or cheaper Australian dollar holiday, be dampened by losses in the their home stock markets? The so-called ‘wealth effect’, that we all know and love so well from the Global Financial Crisis (GFT).
And more importantly, will all of the above have an effect on Chinese investment in all these Gold Coast towers that are being planned?
We think not.
Turmoil in China, be financial, political or economic has tended to result in yet more money heading overseas for safer havens. And Australia is perceived to be one of the safest of those havens, with good prospects for solid and long lasting investment returns. The investors into the Gold Coast towers and the like are of the institutional type, such as Chinese life insurance companies, banks and corporates, rather than the individual buyers of houses.
And the wheel keeps on turning….