A year ago Dion Hershan, the head of Australian equities at Goldman Sachs Asset Management, was bearish on the economic outlook for China.
The firm, which manages around $2 billion, had been underweight Australian resources for two years, based on this assumption.
But according to The Australian, after analysing “granular” data the GSAM team has changed its mind, deciding underlying levels of demand are strong in the sectors that buy Australian commodities.
“The resources sector was our greatest concern 12-18 months ago about the Australian economy,” Hershan said in the article.
“We are now more relaxed . . . That is not to say we are overweight resources stocks or doing cartwheels about the outlook but I think one of the biggest risks . . . is starting to neutralise.
“The country isn’t without its concerns and its issues, but the underlying levels of demand remain very strong for a lot of commodity intensive industries.
“For those industries, we are more optimistic than we were 12 months ago. It is not uniformly strong but it appears to us that inventory levels are at more manageable holding levels and underlying demand for things is strong.”
There is more here.