Financial Markets and Property | Mid-Week Report | 20 February 2019

By Gerry Brady | Blog

Feb 19

Global economic growth is slowing over the last 6 months but it is still positive at above 3% annual growth. There are signs of weakening in China’s growth but the central bank there has recently adopted significant stimulation policies to the banking sector.

We can now see clear evidence for a sudden huge surge in money supply and credit creation inside China in January. China’s new bank loan creation has surged by 3.23 Trillion Yuan (almost $ 0.5 Trillion) in the month of January. That is the biggest monthly surge since 1992 . Total Aggregate Finance increased 4.64 Trillion Yuan in January — almost US$ 700 Billion (in US Dollars) value already for 2019. China is well on its way towards a possible US $ 1 Trillion stimulation of its economy since Mid January and we are only in Mid February.

Iron ore prices have surged in response to those measures, presumably as China increases iron ore imports. The share prices of Australia’s iron ore exporting companies have surged as a result over the last 6 weeks.

Economic growth in Europe is slowing with German industrial production falling sharply since November 2018 and Italy in recession.

Australian economic growth also seems to be slowing to lower levels over the last 6 months with Sydney and Melbourne house prices falling. Private residential house building approvals have been falling but are still well above the average levels seen in the years 2000 – 2013.

In Queensland, economic growth is underwritten by the arrival of 80,000 people per year seeking jobs and homes. That number is equivalent to the population of Rockhampton.

Global Economic Growth – Slowing but still above 3% p.a.

China Economic Growth – Slowing but still 6.4% p.a.

China New Bank Loans

China Total Aggregate Finance

Iron Ore Futures Prices – Surging on China Economic Stimulus

RIO Share Price in NY Surges along with Iron Ore Prices (6-Month Chart)

Germany Industrial Production – Slowing

Australia Private Housing Building Approvals – Some Weakness but still much stronger than 2000 -2013

Australian Housing Loan Approvals — Some Weakness but still much stronger than 2000 -2010

The Queensland economy is underwritten by a population growth of 80,000 per year and net interstate migration of 24,000.


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