Deloitte: WA Index remains flat

By Rob Starr, Content Manager, Big4.com

The market capitalisation of WA listed companies which comprise the Deloitte WA Index increased 0.2% during August to AU$140.0bn. Economic data released during August suggests that although firms have downgraded their capital spending plans for 2012/13, spending could still be up to 90% higher than it was five years ago. Reduced capital spending frees up large amounts of resources (including financial and skilled labour) which may be better applied in cost reduction and efficiency improving processes.

In terms of the global markets, the US S&P 500 was up 1.1% during August with further quantitative easing likely. Focus will increasingly be on the Presidential Race and its potential impact on the market. The Nikkei was up 3.3%, although industrial production indicators were below analysts’ expectations.

Allaying speculation that the Western Australian “mining boom” is over, many stocks performed well during the month of August. The movers and shakers for the month were Sirius Resources NL, Integra Mining Ltd and Base Resources Ltd, who increased their market capitalisation by 207.1%, 49.2% and 40.7% respectively.

“The continued uncertainty over the long term growth of China and significant reduction in iron ore prices over the past 12 months has resulted in the shelving of large scale capital expansions and the slowing of planned expansion programs,” said Deloitte’s National Mining Leader, Tim Richards.” There is a new sense of caution that is likely to remain for the rest of the calendar year.”