Tuesday, August 24, 2010

The Era of 'Hung Parliament' : Now its the Aussie's Turn so Who Will be Next?

Not so long ago we witnessed similar events in Great Britain. It was tense and we could even feel it down this side of the world. What I really meant, it was so talked about on most news channels, news media, radio talk shows, television and even bloggers like us gave our tuppence worth. Well its now next door, right within Australasia/Pacific basin.

What would this mean for those little island nations within Australasia that depends on Aussie cheque books? What impact would this historical political twist has on the financial markets internationally ? Lisa Twaronite at Market watch, Tokyo was noted to have written, quote;
“ Experts said Australia was set for a period of instability with the first hung parliament since World War II, the result which had been most dreaded by the financial markets.” unquote.
In view that this ‘hung-parliament’ thingy which has never happened in Australia since WW2, this latest Aussie rule of 'hung parliament' must indeed be a dreaded outcome. Considering that Australia is one that may boast the bigger cheque-book diplomacy down this side of the world, with some of the island nations being big recipients of the Aussie $$$, these island nations must be watching the clock for any winds of latest news. I hate to think what those that are dependent on this thinking right now.

The first question that came to my mind when I heard about the ‘hung parliament’ issue in Aussie, I wonder what Kevin Rudd will say now? I quickly searched the web using key words i.e Kevin Rudd, hung parliament etc. Bingo, this is what I found in the Sydney Morning Herald a conversation between Mr Rudd and Mr Oakes a day before Mr Rudd got shafted by his very own Party, quote,

KEVIN RUDD discussed the possibility of a hung parliament with the key NSW independent Rob Oakeshott just one day before he was toppled as prime minister, the popular independent MP has revealed.” unquote.

Did Mr Rudd had premonition of this ‘hung parliament’ well before it happened? Was Mr Rudd the ‘Man of Honour’ that got dishonoured by the very people he had as his inner circle, his own Party Caucus. Was this event giving a silent message to all those within his party who gave a sigh of relief when Mr Rudd lost his battle as the top Government leader in Aussie?

It makes one wonder as some experts have always been noted to say, ‘what goes around comes around’ or perhaps its a little too early to say, as courting by the big two are still in the process .
Anyway, below is an interesting article that appeared on Wall Street Journal which may very well shake the Fiji dictator’s confidence seeing that China is still very much a big interest to Australia’s mining sector including supply and demand.
Read more;
China more key to Australian outlook than election

By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch)

If investors in Australian equities look past Saturday's election, analysts say they will find that developments in China are more significant than which party wins at the polls.

"While Saturday's election result is too close to call, its economic implications are limited. Almost unnoticed, recovery in Australian house prices alongside a sharp increase in China property construction has provided a wealth effect and an export boom," said Sean Darby, chief Asian equity strategist at Nomura Holdings in Hong Kong.

"However, Australian equities may be more sensitive to China housing policy than investors are discounting, particularly given over-extension in some resource prices," Darby said in a note to clients Friday. "A closer scrutiny of fixed-asset investment in China will be more important than local fiscal stimulus."

The Reserve Bank of Australia has also indicated it's closely watching economic developments in China -- particularly the property market there -- as the minutes of its Aug. 3 policy meeting released Tuesday showed.

"Members discussed developments in the Chinese property market, where the earlier policy measures were contributing to a cooling, with turnover lower and housing prices declining in a number of markets," according to a summary of the minutes posted on the central bank's Web site.

"There had also been a slowing in the construction sector and the production of inputs, such as cement and steel, after very strong growth in 2009," the minutes said.

"Overall, while the extent of slowing in the Chinese economy remained uncertain, the recent indicators did not suggest a more marked slowing than the staff had been expecting," the RBA's statement said. See full story on Reserve Bank of Australia minutes.

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