Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

Continue Reading

Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

Continue Reading

Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

Continue Reading

Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

Continue Reading

Banks

RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

Continue Reading

Categorized | Currencies

Australia: I should be so lucky


Posted on September 30, 2014

The lucky country. The 1964 book that provided the nickname for Australia was, in fact, a critique of the nation. In the past decade of Chinese growth, it has made sense to interpret the moniker unironically.

    But that luck is changing. China’s growth is slowing. The demand for commodities that has sucked money into Australia is not as strong as it was. The halo effect on the rest of the economy is dimming. Interest rates have slipped and with them the Australian dollar.

    Although attached to the 10th largest global economy, the Aussie is the fifth most actively traded currency, according to the Bank for International Settlements. It has been punching above its weight as a proxy for Chinese growth.

    In many countries, a weaker currency might be good for exports. But aside from commodities, Australia has few listed exporters. A National Australia Bank survey released last week showed that two-way trade in goods and services accounted for two-fifths of GDP in 2013. This trade is dominated by imports.

    And despite the years of favourable exchange rates, the country’s oligopolistic, cosseted industries did not take the opportunity to build their defences. Department stores such as Myer and David Jones indulged in fat margins, attracting new entrants. Meanwhile, Australia’s four big banks, led by expensive favourite Commonwealth Bank of Australia, rode the house price boom. They now face risks from the mortgage market, according to the central bank – which has hinted at cooling measures.

    Yet despite the poor backdrop, the Aussie is the best-performing currency in the G10 this year against the US dollar. The benchmark Australian index, the S&P/ASX 200, has posted a flat total return this year in US dollar terms against up to 5 per cent for the MSCI World index.

    Given the fickleness of fortune, the reaction seems mild. Australia is pushing its luck.

    Tweet the Lex team at @FTLex