ongoing extensions will stoke further inflation with a large portion of the industrial supply chain originating from China
Equity Trustees Asset Management analysts recently visited China and discovered that the economy there is not as bad as some people are suggesting – and identified developments that will have an impact on some Australian stocks.
Overall, Equity Trustees Asset Management noted there is a lot of political will to improve the domestic Chinese economy.
This includes moves to improve residential construction in China, such as improving the ability to owning a second property.
This should ultimately lead to some increase in Chinese demand for Australian iron ore, which will benefit local iron ore stocks here.
It will not be a massive increase in demand – and are therefore we are unlikely to see iron ore back at $200 a tonne – but it also means that prices should stay steady, possibly rise.
China is also very focused on electric cars, BYD is selling more electric cars than Tesla. And that demand for their vehicles has been stronger than expected (estimated to be around 9 million electric cars a year) and they want to penetrate the market which has seen some discounting.
This is leading to increased demand for battery materials, such as lithium. But, while demand is increasing for lithium, supply will take longer to come on than many people expect.