It’s not all bad news

September 15, 2015

From a big picture perspective, it is important to look beyond all the negative headlines in relation to the stock market, China, coal exports and the like.

The press, and most of the public, get too easily consumed by negative sentiment, but take a closer look and you will find it is not all bad news.

While the growing public perception of China and its economic outlook is gloomy, it is still producing growth rates the envy of the rest of the world. Yes, its economy is transitioning but its growth is still very fast by global standards. This means there is continued demand for Australian resources to fuel China’s economy and its burgeoning middle and upper class. Significantly, this group is also playing a leading role in Australia’s improving tourism sector.

Likewise, the news on Australian resources exports is also not all bad, despite what you may read in the press. Our coal exports have increased every year for the past decade. Prices may be down, but we are still digging it out of the ground in huge volumes and there is no forecast that this will stop anytime soon. The bottom line is global coal consumption is increasing and will continue to do so for the foreseeable future. Clean Australian coal also has a big role to play in cutting global emissions and pollution levels.

Sentinel’s own investments in the Queensland regional city of Mackay, the key commercial and export hub for the surrounding Bowen Basin, highlights the ongoing positive economic impact of the coal industry. We are the largest private owner of commercial property in Mackay, with six assets with a combined value of more than $170 million, and we continue to target new investments in the region. Significantly, we have zero tenant arrears. In fact, many of our retail tenants in Mackay have never been busier.

The bigger global story that continues to gather pace, beyond the negative headlines, is the long solid recovery of the world’s biggest economy in the US. All of the key data out of the US is heading upwards, from payroll and labour market participation to rising exports, a stabilising housing market and improving consumer confidence. While the US Federal Reserve should have gone ahead with its long-flagged interest rate rise well before now (it is now too late to do it, at least for September), the steady long-term recovery of the US economy will have positive flow-on benefits throughout the world for many years to come.