BRICs – on the backburner but hotting up

September 30, 2011

Australian Equities, FOREX, Global Macro

The HSBC China Manufacturing PMI was released earlier today and mercifully, in terms of no more bad news, it was unchanged from last month at 49.9. But it is weakening as is the PMI’s of Brazil, India and Russia.

Here is a great chart from the Pragmatic Capitalism Blog which highlights the issue I raised in this mornings piece.

There is no mistaking the trends here and this is why I highlighted the impact on the Australian Dollar and other growth assets in this mornings piece. This is the slow burn story people are not watching while they focus all their attention on the Punch and Judy show that is Europe.

Indeed check out the Shanghai stock exchange price action in the chart below.

You’ll notice how similar that looks to the ASX 200 chart in the piece I wrote the other day identifying the 3848 level as key. The big difference is the Shanghai market is currently sitting right on this key level and at risk of breaking down and having a weekly close below 2357. This would be bad news for that market and would open up the chance of a move, technically at least to 1664.

That is a possible fall of almost 700 points and a move, if it gets going would suggest that the world’s focus is shifting back to growth. We can feel that happening now in the AUD and Copper price action but there hasn’t yet been an outbreak of BRIC and thus total growth pessimism.

Please remember these are not recommendations for you to trade these are my views and I have my risk management tools and risk parameters that you do not have access to. Thus, this blog is for information only and does not constitute advice. Neither Greg McKenna nor Lighthouse Securities has taken your personal circumstances, objectives or financial situation into account. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.

If you do need economic, investment or financial advice we are happy to help.

Please Email the team at Lighthouse at info@lighthousesecurities.com.au or Greg directly on greg@lighthousesecurities.com.au

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