MARKETS, REAL ESTATE & SME

Hello dear readers and welcome back to another edition of Markets, Real Estate & SME.
This week it is all happening in Sydney with regards to the Technology world and Tech Startups alike with +SydStart and +CeBIT currently underway.

For those of you who are able to go to either of these events... I envy you! For those of you who are still unsure... Give someone else your ticket! These are not to be missed.

MARKETS

Who's right? Who knows! As far as I'm concerned, stay cashed up to exploit buying opportunities rather than jumping into investments to avoid missing out on a deal...

Why Australian Stocks are in Dangerous Territory - Original article here...

By Dan Denning • May 27th, 2013 +Daily Reckoning Australia 

The Australian stock market has opened down. But our friend Phil Anderson is not worried. We’ve been working with Phil on a new project that you’ll hear about later this week. He reckons the all-time highs on the S&P 500 and the Dow Jones Industrials are confirmation that markets are heading much higher rather than crashing.

Phil looks at short-, medium-, and long-term cycles. The core of his work is the contention that an 18-year property cycle is at work in Australia, derived from a similar cycle in US land values. His basic claim now is that the US stock market is a signal that the Australian property market is on the verge of…well, we’ll let him tell you later this week.

But it was his forecast for commodities that caught us most off-guard when we last spoke with him. Phil has studied the work of 20th century Soviet cycle theorist Nickolai Kondratiev. Kondratiev argued that commodity prices moved in long cycles, or waves, of 60 years, with 30 years up and 30 years down.

Do a bit of googling and you’ll find many an analyst who tells you we’re in the middle of a Kondratiev winter. That is, folks will argue the commodity market peaked in 2007 and we’re in the early stages of a long-term downtrend. This is a version of Vern Gowdie’s secular bear market, but applied to commodities.

Vern’s position on Australian stocks will be correct if we’re in a 30-year bear market for commodities. But in the meantime, in his recorded remarks, Phil has told us that the commodity cycle isn’t even halfway over in Australia! You can imagine our surprise hearing that. But he made his case in detail.

You’ll hear more about that case in the coming days. But for now, have a look at the chart below from Australia’s official resource forecaster, the Bureau of Resource and Energy Economics (BREE). Last week, BREE reported that investment in the resources sector has reached a cyclical peak at around $256 billion.

BREE also reported that over $150 billion worth of projects have been cancelled or delayed in the last twelve months. It concluded that, 'The stock of committed investment has peaked and is projected to decline over the next five years as a result of fewer high value projects progressing through the investment pipeline.' Uh oh.

Source: BREE

This is a dangerous moment for Australian stocks, maybe as dangerous as any since 2007. Foreign capital seems to be leaving these shores. The Australian dollar's fall makes the country’s assets riskier than they have been in the last three years. This is through no fault of the Australian dollar. It’s simply the weak Japanese Yen making US-dollar denominated assets more desirable.

But there ARE signs of domestic unhappiness in Australia. The terms of trade are one such sign. The coming blow to national income through a falling terms of trade could be much bigger and burlier than is commonly expected, at least according to chart published last week by the Australian Parliamentary Budget Office. Have a look below.

Source: Parliamentary Budget Office

When we showed the chart to our colleague Greg Canavan at Sound Money Sound Investments — who’s been following a version of it for over a year now — he sent back the following reply, ‘Thank goodness for iron ore and coal huh? Now for the aftermath…national pay cut, which will manifest in higher unemployment, and a renewed downturn in property prices.’

There you have it! On one side of the argument you have forecasts for a stock market crash, a secular bear market, and falling property prices. And on the other, an argument for higher stock prices and an 18-year property boom. Who’s right? Stay tuned for more tomorrow.

Regards,
+Dan Denning
for The Daily Reckoning Australia

REAL ESTATE

PIPA upholds anti-spruiker campaign

Property Investment Professionals of Australia (PIPA) has continued the call for caution in light of recent spruiker concerns, urging investors to ensure full due diligence is carried out before signing the dotted line.

PIPA chair, Ben Kingsley, says the opportunity for investment in property is ...continue reading

Why investors should consider alternatives to residential property

As interest rates fall, making cash and term deposits less attractive to investors, there’s an increased level of interest in property. However, a stampede back into the old stomping grounds of residential property might not be in their best interests, as Mark Pratt reports.

Investing in ‘bricks and mortar’ property has long been an attractive option for ...continue reading

How to invest in property without getting burnt

If you want to invest in property, you’re in good company.

Of the 200 richest Australians in 2012, 55 made their fortune in real estate – by far the biggest single millionaire-factory in Australia.

And it’s not just the top end who are getting rich off land. The financial security of millions of middle-class Australians, perhaps yours among them, is maintained into retirement chiefly by the value of their homes.

Property is Australia’s largest asset class. But most Australians don’t use property for investment purposes. Which is exactly why you should continue reading...

SME

Budget changes are sting in the tail for Australian companies expanding overseas

The government this month announced a number of changes to the corporate tax regime intended to limit the ability of multinational corporations to avoid paying tax in Australia.

But the changes make it more expensive for Australian companies to raise ...continue reading

City of Sydney seeks to boost start-ups

The Sydney government wants to boost startups as it's a key part of the city’s economy, according to Deputy Lord Mayor Robyn Kemmis.

“The city will continue to identify opportunities for creative enterprises, and in particular technology startups,” Kemmis said in a keynote at the SydStart conference.

“We do recognise their signal presence in the new economy and recognize they play a critical role in ...continue reading

Start Your Pitches: It’s A Huge Week For Start-Ups In Australia

It’s a big week for the Australian startup scene with hundreds of investors due to attend two major conferences in Sydney.

About 400 startups and 200 investors have registered to attend the sold-out SydStart event at the Federation Conference Centre in Surry Hills on Tuesday.

The twice-yearly event launched in 2009. It features a conference, expo, presentations by startups and investors and a ‘pitchfest’ that determines who wins the SydStart startup trophy.

Meanwhile, German-born technology conference CeBIT will host 100 startups on its exhibition floor at the ...continue reading 

Well there you have it folks. There is a lot to see this week, especially in Sydney...  As a matter of fact, here is a list of events thanks to +Albert Mai on behalf of Startup Digest you may find interesting. Until the next time dear readers...

What's Going on in the Sydney Startup Community

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CeBIT Australia ($44-$99)
Tuesday, May 28 - May 30 | Sydney Convention & Exhibition Centre, Darling Harbour, Sydney | View in Calendar

Australia largest event for Cloud, Big Data, Public Sector ICT and Security.

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SydStart 2013
Tuesday, May 28 @9AM - 5PM | Federation Conference Centre @ 37 Reservoir St, Surry Hills, 2010 | View in Calendar

SydStart is Australia's largest professional tech startup event focused on disruptive innovation startups enabled by technology, investors, talent and our industry ecosystem. SydStart is the home of the tech startup community in Australia. Last year we had 1,100 tech entrepreneurs and investors and aspiring entrepreneurs. This time we have international and national keynotes, 20+ speakers lined up and more to come.

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NSW Girl Geek Coffee Meetup
Tuesday, May 28 @12PM - 3PM | Max Brenner Ultimo @ 179 Broadway, Ultimo, 2007 | View in Calendar

This is a casual meet up and does not include presentations or activities. However, this is a great opportunity to meet other women in STEM (Science, Technology, Engineering and Mathematics) like yourself in a friendly environment.

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The Startup Kids
Tuesday, May 28 @6PM - 9PM | Hub Sydney @ 2/ 101 William St, Darling Hurst, 2010 | View in Calendar

Hub Sydney will be doing a special screening of The Startup Kids, a documentary about young web entrepreneurs across the U.S. and Europe. There are interviews with the founders of Vimeo,Soundcloud, Kiip, Dropbox, Foodspotting and many others who talk about how they started their company and their lives as an entrepreneur. Learn more about The Startup Kids and check out the trailer.

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Sydney ALT.NET: Practical DDD and Code Perspective
Tuesday, May 28 @6PM - 9PM | Thoughtworks @ 8/51 Pitt St, 2000 | View in Calendar

This month topics are Practical Domain Driven Design - Mohammed Abed and CodePerspective - Brendan Forster

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Failcon Sydney ($99)
Thursday, May 30 @9AM - 5PM | Museum of Contemporary Art Australia @ 6/ 140 George St, 2000 | View in Calendar

It’s time to stop being afraid of failure, and start embracing it .FailCon will benefit anyone wanting to bring about change in their professional life, but who are hesitant to do so. Or, those people who have failed and are uninspired to try again.

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Product Camp Sydney
Saturday, June 01 @9AM - 5PM | Atlassian @ 6/ 341 George St, Sydney, NSW | View in Calendar

ProductCamp is Sydney's premiere event for Product Management, Product Marketing, and Marketing professionals to teach to, learn from, and network with each other. ProductCamp is an un-conference, meaning that it is FREE to you! Your only cost is your participation – bring your ideas, lead a session in your area of expertise, facilitate a roundtable discussion, network, or volunteer.

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Random Hack of Kindness (RHoK) - Global Hackathon for Humanity
Saturday, June 01 @9AM - June 02 @5PM | DiUS Office @ 8/ 220 George St, 2000 | View in Calendar

Random Hacks of Kindness is a global initiative that was started by Google, Microsoft, Yahoo, NASA and the World Bank. It brings hackers together with experts in things like bushfire response, climate change and other natural disasters. The aim is to spend the weekend building practical, open source solutions to real world problems. For more details, please go here: http://rhoksydney.org/.

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Sydney Testers: Agile Testing
Monday, June 03 @6:15PM - 9:30PM | Atlassian @ 6/ 341 George St, 2000 | View in Calendar

Brad Futter will share some of my thoughts and experiences on how you can build quality into software while using agile practices, before inviting you to join me in an open forum. This will be a chance for you to nominate topics for discussion around agile delivery and building quality in. The topics will then be voted on with the top topics being discussed.

MARKETS, REAL ESTATE & SME

Hello dear readers and welcome to another edition of Markets, Real Estate & SME. 
We have been rather quiet the past few weeks and hope to provide you with what you have been craving!
Lets get to business...

MARKETS

Once again Mr Canavan hits the nail on the head...

The Warning Signs for Australia’s Economy - View the original article here...

By Greg Cananvan • May 21st, 2013 +Daily Reckoning Australia 

Now’s not the time to buy, but it’s certainly a time to do your research and work out who will continue to perform well in a more subdued spending environment. The question is though, just how subdued will the spending environment become as the China rebalancing story plays out over the next few years?

Well, Ross Garnaut, Australia’s well-known China watcher, is vying with your editor to be the biggest China bear. He reckons mining investment as a percentage of GDP in Australia's economy will fall from the current 8% all the way back to 2%. And if that happens without consumption or housing or business investment taking up the slack, come 2014 Australia could be looking at its first recession in 23 years…

We’ve been making the same argument. We’ve been saying this recent rally in shares and house prices is a trap…a trap to make you think everything is as it’s always been.

But the point of our (and Garnaut’s) warnings is that Australia's economic future will be very much unlike its past. Our largest trading partner is undergoing a dangerous economic rebalancing which will mean much less demand for our raw materials.

The profit warnings from all the mining services companies are simply a warning for Australia's economy. Times are changing!

But if the action from the mining services sector portends a different, more austere future for Australia's economy, no one is telling Commonwealth Bank investors. Yesterday, the stock hit an all-time high. On a price-to-book value basis, it’s the most expensive bank stock in the world, according to analysis from UBS. 

‘Price-to-book’ simply tells you how much of a premium a company’s share price has to its equity, or ‘book’ value. According to UBS, Comm Bank trades at 3.6x its tangible equity value. That’s high, and reflects the banks’ very strong competitive positioning and high return on equity.

But you would have to question how long Comm Bank, and Australian banks in general, can maintain world-beating levels of return on equity as the economy faces a mining induced slowdown. Don’t forget, banks are highly leveraged entities. They do very well in good times due to this leverage. But as the Australian economy slows and unemployment picks up, the leverage works the other way.

The recent reporting period for the banks showed profit growth on the back of cost cutting and lower bad debt levels. Top line growth was flat at best. And as the Australian economy slows, you would expect to see bad debt levels pick up again. This is not an environment that appears to justify record high share prices for the sector.

If Australia’s outlook is changing, then the banks are yet to admit it…

  

Regards,

+Greg Canavan
for The Daily Reckoning Australia

REAL ESTATE

South Korea shows rising interest in Aust property sector

The sale of GPT Group Ltd's half-stake in the $800 million Erina Fair shopping centre in NSW to South Korea's National Pension Service (NPS) is expected to set off a flurry of activity as South Korean groups eye Australian real estate, according to The Australian.

Up to $1 billion worth of Australian real estate could ...continue reading

No plans for Labor or Coalition governments to abolish negative gearing

The Coalition currently has no plans to remove negative gearing tax breaks used by a third of Australian property investors if it wins power in September.

Even if removing negative gearing were recommended as part of a broader White Paper tax review, it would only seek a mandate to change tax rules as part of a second term election campaign.

A story on thewest.com.au claiming shadow treasurer Joe Hockey would review negative gearing tax breaks for property investors as part of an incoming Coalition government tax review, has been rubbished by ...continue reading

Lend Lease receives industry acclaim at prestigious Property Council of Australia Awards

Lend Lease has been recognised as one of Australia's leading property companies, receiving seven awards at the 2013 Property Council of Australia (PCA)/Rider Levett Bucknall (RLB) Innovation and Excellence Awards.

The Awards, presented at a gala dinner in Sydney on Saturday 18 May, celebrate innovation and leading practice within Australia's property development and investment industries.

Competing against the country's premier development projects, the $500m Darling Quarter and Commonwealth Bank Place precinct in Sydney received ...continue reading

SME

Small business warns unemployment will rise if the ACTU's wage claim succeed

Unions and the small business lobby are at loggerheads over a pay rise for the country's lowest paid workers.

The Australian Council of Unions (ACTU) says a $30.00 per week increase in the minimum wage is necessary to prevent the country's lowest paid workers from falling further behind.

The ACTU's Ged Kearney says those most at risk work in ...continue reading

Number of businesses in Australia continues to stagnate: ABS

The number of businesses in Australia remains static and has failed to increase according to data released today by the Australian Bureau of Statistics.

The ABS figures show less new businesses are starting up in Australia, but the number of businesses shutting up shop has also decreased slightly.

For the 2011–12 financial year, the entry rate of businesses at 13.5% was higher than the exit rate at 13.1%, resulting in an incremental increase in the number of overall businesses.

This means the number of actively trading businesses in Australia has ...continue reading

Angel investors at the table

Imagine ten of Australia's hottest technology start-ups champing at the bit to demonstrate their wiles in front of four wealthy, "angel" investors. At stake isn't the usual $50,000 to $100,000 "seed" money, but a chance to take the business pitch to Singapore and meet an array of cash-rich south-east-Asian investors.

At e27's Echelon Ignite conference in Sydney on 8 May, ten pitched but only one ...continue reading

Try not to do this when you pitch for capital...

That's it for today dear readers, thank you for the messages we have received, your feedback is of immense importance! Have a fantastic week! Until the next time...