China, the land of the floating company
Thursday, October 4, 2007/
A record $64 billion was raised by Chinese companies on the nation’s stock exchanges in the first nine months of 2007, more than in the previous four years combined.
The report by China’s state-run media follows the recent announcement by the nation’s reserve bank, the People’s Bank of China, that economic growth will reach 11.6%, up from 10.8% forecast earlier in the year.
Things are not looking so rosy on the other side of the Pacific, however. In the US, a report by the National Association of Realtors has revealed that the number of people buying existing homes fell 6.5% in August to the lowest levels on record.
A big 10% of existing home sales reportedly fell through in August because of cancelled loan commitments, according to the report.
Australia’s housing market is itself looking far from robust, with new figures from the Australian Bureau of Statistics revealing that total new dwelling approvals fell by 1.7% in August.
The result means new dwelling approvals have declined 0.1% over the past 12 months. The data is also a concern for interest rates, with ANZ predicting the housing shortage will continue to drive rents and house prices higher.
The prospect of higher interest rates will not be welcome by the services sector, despite today’s Australian Industry Group/Commonwealth Bank Performance of Services Index rising 4.8 points to 56.4, well above the 50-point level separating expansion from contraction.
Ai Group chief executive Heather Ridout said the return of growth to the services sector in September followed a moderation in the previous month.
The strong result is primarily due to growth in business-related sectors of transport and storage, communication services and finance and insurance.
“Consistent with a strong economy, it appears that Australia’s services sector has been able to weather the initial impacts of August’s interest rate rise,” she said.
“The possibility of another interest rate rise, together with the high dollar and uncertainty in the lead up to the federal election constitute headwinds that will test the robustness of the current growth in the months ahead.”
The S&P/ASX 200 has dropped 74.1 points to 6585.9 points by 12.45 pm, due primarily to weak results overnight in the US. The Australian dollar is also down to US88.43¢, well off yesterday’s US88.91¢ close.