Economy, Shares & Trams

The fact that the Bank of Japan (BOJ), that’s their central bank, the equivalent of our Reserve Bank, is quietly buying stocks in Japanese companies should sound alarm bells for those touting a stimulus led recovery. In fact it’s estimated the (BOJ) are a top (10) owner
in 90% of the leading stocks in Japan.

So what! You say when we have more important issues like our misguided light rail, an election campaign, struggling manufacturing, youth unemployment and dozens of other issues we face as individuals every day. Well the story of the Japanese economy is a bit of
a litmus test for the rest of the world. These guys went into recession and started stimulus measures (20) plus years ahead of everyone else and it has failed. They have pumped trillions of Yen into their economy buying bonds but this has failed to turn the tide. In the last (12) months they have started down the path of negative interest rates and spending (3) trillion Yen annually buying stocks in their top companies. As Shingo Ide equity strategist in Tokyo put it “this is clearly distorting the sanity of the market”. This comment is on top of a share market, worldwide, that is insanely drunk on stimulus.

So what! You’re still saying when we have a light rail about to stuff the city, divide it again with a lazy approach to solving a simple problem. Well, the stimulus pumped in to the financial markets around the world in the main has settled in the share markets, needs
to wash out, and the longer it goes the more desperate governments become to avoid the inevitable melt down. Thus the (BOJ) could be a sign of things to come, Governments trading in shares in public companies and at some point as their share ownership accumulates Capitalism gives way to Nationalism.

This affects us through our own countries compulsory superannuation scheme. Where are the billions of dollars in our retirement funds sitting? In an insane propped up artificially stimulated share market? Property investments are at least a bricks and mortar  alternative.

Talking of insane things, the light rail proposal for the Newcastle CBD! Apart from motherhood statements by the Minister for Transport and his anointed spokesperson Anna Zycki, they have failed to deliver any documentation supporting their decision to move the supposed rail barrier from the rail corridor to the centre of Hunter Street.

Their proposal is for an 8m to 12m wide concrete platform sitting 100mm above
Hunter Street from Worth Place to Scott Street, taking out all the parking, stopping bays and forcing cars using Hunter Street to just one lane either way at 40km/h against the kerb. (See image below with proposed light grey rail platform)

In the rush to be seen to be doing something the project has been hijacked by bureaucrats who obviously don’t visit Melbourne and have no concept of mixed running. This is not about boohooing this exciting project, it is about getting something so fundamentally
flawed on every level, right, so the CBD of Newcastle has a chance.

The choices are logical;

1. Embed the rails in Hunter Street and have mixed running, or

2. To get it up and running quickly saving hundreds of millions of dollars,
put the concrete platform down the existing rail corridor.

Newcastle City Council, an organisation I rarely support, has got this one right. Their planners, civil, structural and traffic engineers have invested thousands of hours into an alternative plan that embraces the city’s future.

It’s now only the Premier who can prevent a monumental mistake by listening to the independent advice of those who are working for a truly better Newcastle transport solution.

The current property market is a mixed bag;

• Investment properties – are still moving quickly pushed by strong demand from those looking to shift money away from shares and fixed interest rates.

• Commercial properties – the owner occupier space is moving well through the use of self-managed superannuation funds. Along with this the leasing of smaller space especially anything aligned with retail is also moving well.  Everyone wants to be a barista. However the larger office moves around town are just shuffling the decks with few new
tenants coming to town.

• Industrial properties – again reflect their commercial counterparts with owner occupiers leveraging the low interest rates and self-managed superfunds to acquire places of
business. There have been a couple of larger industrial enquiries flowing into town from interstate as companies look for alternative market places to ply their wares.

All in all the town and region are ticking along but external forces can still have a dramatic impact on our future whether they be from overseas or in the form of our own governments.

STEVEN DICK
DIRECTOR RAINE & HORNE COMMERCIAL NEWCASTLE

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