Evaluating the world risk factors for Australian financial markets for 2013

Finally, global political dynamics has its hot spots too which may have far reaching implications for Australia in terms of relations with major trading partners such as China, Asia and the Middle-East. These include tension throughout the Middle-East between themselves and with the West and the perceived shift in the balance of economic power between China and Japan uncovering latent tensions. China has already stopped extraction of rare earth materials which will affect the semi-conductor industry in both US and Japan. A trade war could be on the cards. Who knows?

In summary, global risk factors emanating from Europe, the United States coupled with a softening of China’s economy and political tension in the Middle-East and the Far East, Australia will need to continue to navigate even more carefully through the treacherous economic oceans that lurk beyond the horizon.

Despite the overvalued currency, Australia is fortunate to be politically stable with many policy levers the captain can pull to limit the impact of the oncoming swell.

It has been a long bear market and major events will unfold in 2013 in the US, Europe, the Middle-East and the Far East. It’s a financial jungle out there. Australia needs to continue to prepare for the unexpected. We may only be half way through this present crisis.

It’s not over till the fat lady sings.