Shareswatch Australia

One of the world’s largest countries, sparsely populated, with extensive minerals in its remote hinterland deserts. Sound like Australia? This is Mongolia. On the cusp of an investment boom, fuelled by Chinese demand for resources and driven by Mongolia’s position just to the north of China’s industrial heartlands. Mongolia’s economy, like Australia’s, has defied the global gloom.

The interest rate cut yesterday by the Reserve Bank of Australia suggests that finally the RBA understands that the Chinese economy will not keep expanding at a rapid rate while its major trading partners are struggling. But even if the Chinese economy slows more than most economists expect this is unlikely to send the global economy back into a GFC-like slump.

Over the last few weeks I have found it difficult to write much about the Australian economy or stock market simply because events have pretty much unfolded as I guessed they would some months ago. Despite the hype from the Reserve Bank of Australia (RBA) and some sections of the business media the fact is that the Australian stock market is still trading around 30% below the highs of 2007.