market performance tends to focus on the negative and the
sensational. The punters become reticent to enter the fray again
as market wins are long forgotten and investment losses very
fresh in the memory. Does this spell the end of punter paradise
for West Australians and their beloved resources sector?
History would suggest not. Booms and busts are the norm for
the sector. The upward movement in recent weeks of the Small
Resources Index does not necessarily indicate another boom is
on the way, but it does again show how quickly the market can
change. Economic predictions of slowing Chinese GDP growth has
seen long-term commodity price forecasts reviewed downwards.
However, consolidation and some strength in the current iron
ore price due to Chinese restocking and, a recovery in the
gold price back above USD$1,400, has given punters some short-
term confidence.
Investors are now more cognisant of costs, margins and profits
during this stage of the cycle and so outright speculating is not
currently as popular as investing in producers of the current
favoured commodities.
Western Australia will continue to be a resource rich state.
The population has lived with market booms and busts for over
100
years. In more recent years they have endured the ups, downs,
dominance and rebuilding of their political parties and AFL teams,
and so understand and appreciate the cyclical nature of affairs
in their state. The risk appetite of West Australians has generally
reflected the preparedness of investors to commit capital to the
resources sector and so many are ready for that next opportunity
to participate in and experience WA’s punter paradise.
This article was written by Bevan Sturgess-Smith, a representative of
Macquarie Equities Limited. The article contains factual information
and general advice and does not take into account your personal
circumstances.
WA’s punter paradise has
disappeared over the past
12
to 24 months as the
difficulties of shorter term
speculative investing in
a resources bear market
become evident.
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