Rate rises in the US not the main concern for Australia

It seems that all Australian investors are focused on the US Fed and see them as the key risk this year. While the US Fed is a key risk for all regional markets, they are clearly going to tread very carefully and one or two US rate hikes in the next 12 months is not going to tip over the apple cart, although regional sharemarket volatility is likely to pick up. Consequently, Australia’s main handicap is much closer to home and that is the economic trends in China, who represents one quarter of our total exports. The world’s second largest economy is clearly slowing, its debt is quite high, its economy is less competitive than what it once was, it has chronic deflation across the entire supply chain and a property bubble which has much further to deflate. A key consideration for Australia is how this plays out. Full report (VIEW LINK)