Michael Kodari shares his latest views on Asia-Pacific and Australia

Australia, which showcases a vast variety of commodities and had an efficient health response to the global pandemic, seemed to have handled its adversities quite well along with the fact that the country’s economic growth, or GDP, in other words, during the first quarter was reduced by only 0.3%. This percentage represents a considerably minor drop in regard to global standards.

The iron ore producers made the most recorded profits during this year, taking advantage of prices of over $US100/t for their produce which as supported by Brazil’s breach in supplies. 

How Have Some Of Australia’s Biggest Commodities Reacted?

Fortescue Metals Group (ASX: FMG) saw nearly a 50% rise in its stock starting from this year to July 16 at $16.15. Mineral Resources (ASX: MIN) has also been observed to be doing just as well in the same period as Fortescue Metals Group; its stocks raised to 44% to $23.83. It is also liable for much smaller names in the iron ore space to make profits after the larger iron ore producers.

Gold prices hit an all time high with IGO (ASX: IGO), which is an owner of Tropicana gold mine, was making trades at $5 per share as of July 16, which was a noticeable rise from a recently-hit low of $3.40 in the middle of March.

Some Suggestions That Early Signs Of Recovery Have Began To Show

According to Deloitte, it is apparent that the early signs of economic recovery are starting to show, as investors are now switching to much riskier forms of currencies. The prices of assets have also increased with the help of government and central bank support. Commodity and equity prices are also starting to see their heyday.

In the early days of the coronavirus pandemic, aluminium and copper rates suffered the most, but now they are recovering from the damages. With reference to the London Metal Exchange Data, copper and aluminium, Spot prices have gone up p 40% and 16% respectively since they hit their record lows in March and April.

What Are The Thoughts Of Expert Michael Kodari?

“Gold and copper prices have surged! Time to perhaps look at some top-performing businesses in this sector…”, remarked CEO of KOSEC-Kodari Securities, Michael Kodari on his Twitter account, with an accompanying video of Newcrest Mining Limited (ASX: NCM), which is a company covered by KOSEC-Kodari Securities.

In regards to trade, Australia saw a record surplus in the twelve months up till June, as a result of the rising number of exports to China, which reached a record A$14.6 billion in June after China launched its resurgence plan after the pandemic lockdown. Due to this, there was an upsurge in the demand for commodities in Australia, namely coal and iron ore. The exports made to China consisted of 48.8% of the entirety of goods exports in the month of June, which went up in February, is worth 8.5% of total local product.

Australians Trade Relationship With China

Australia’s trade with China has kept an economy – that has been adversely affected by the pandemic with a rise in new coronavirus infections in Melbourne – afloat, as most businesses had to be shut down in the city as a result of preventative measures against the novel virus.

The increase in trade with China took place during the rise in tensions between Beijing and Canberra that started from the arguments regarding the origins of the coronavirus after Canberra called for an inquiry to do so. China responded by imposing trade restrictions on beef and barley exporters.

On August 4, the Reserve Bank of Australia issued a warning that because of the pandemic, unemployment may reach 10% this year. The bank also announced the recommencement of its bond-buying programme the following week, with an observation of 3-year government bonds going higher than their target range which is 25 basis points.

Australians Trade Relations With Other Powerhouse Nations

In June, imports in China grew in number, at 2.7% in terms of dollars, compared to the previous year, With the rise in industrial activity, an already existing demand for Australian iron ore also grew, which is used in steelmaking. The imports reached a record high in the month of June.

Importation of the commodity from Ukraine, India and Russia also reached record levels. As a result of the strong demand and supply breaches in Brazil due to the coronavirus, iron ore prices have gone up to $100 per tonne.

Australia’s trade minister, Simon Birmingham noted that the superfluity in record trade shed a light on the resilience of the export sector while tackling global economic upsets. There has also been a discussion in Australia regarding its dependency on China, the trade between the two countries hitting A$235 billion to the end of June 2019.

Australian Strategic Policy Institute director Peter Jennings has requested companies to branch out their trading connections to prevent the country from being less susceptible to pressures from Beijing. He noted that the business community, being used to doing easy business with China, does not give a thought explore their horizons i.e. South-East Asia.

To obtain more analysis from KOSEC by Michael Kodari, visit the official website for Kodari Securities.