ANZ CEO Shayne Elliott is just back from a marketing trip in the UK and has a message which might help explain why the Australian dollar found miraculous support in the 71 cent region after yesterday’s weaker than expected CapEx numbers.
In a new video posted on the bank’s BlueNotes site, Elliott said the investment community “mostly agreed” that “Australia still looks very good on a relative basis, although it is pretty clearly slowing down.”
That’s important because in the same way that investors preference for the outlook of BHP over Rio, the ANZ over NAB, or JB Hi-Fi over Harvey Norman, drive demand for that company’s stock so the relativities of country growth expectations matter too.
They matter because these relative outlooks of Australia, against the rest of the world, drives the demand for local assets – currency, bonds, stock, real estate and so on.
“So the questions there [on the tour] were really about the speed of the slow down and what would the indicators that these investors would look at to see if that was accelerating or not,” Elliott said.
The story he was telling investors is a pretty positive one:
We spoke a lot [on the tour] about the slowdown in the mining states and what impact that was having on certain sections of the economy. The story we told was about the remarkable transformation happening in Australia.
Given the amount of transition that’s happened in the economy, the fact that the pace of the economy is doing so well is really a credit to the diversity and strength of Australia.
What interesting about Elliott’s message, and the view he says investors share, is that it is supportive overall of Australia, local assets, and the dollar.
Maybe that helps explain why the Aussie dollar hasn’t completely fallen out of bed and found some buying support yesterday.
Here’s the video.