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Wednesday, 18 May 2011

LNG market growth to double value of Australia's resources sector to $70bn in 3 years


Crispin Murray, head of equities with BT Investment Management, said the nation's $35 billion investment will skyrocket to $70 billion as liquefied natural gas exports ramp up to China and to other emerging markets. He described it as "a unique period"."It's a huge uplift," Mr Murray said following an investor breakfast in Brisbane.
Pluto LNG project, liquefied natural gas, Woodside"You want to strike while the opportunity is there. The world needs new sources of energy."
Queensland would be a "big beneficiary" of the boom as work continued to remove export bottlenecks, such as the port expansion in Gladstone.
The flow-on effects will cascade through numerous industries contracting for parts of the work, including engineering firms, service and maintenance companies and logistics operators, he said.
For investors, key opportunities will be found in companies surfing the wave propelling China, India, Brazil and other emerging economies.
New energies such as LNG will also offer huge upside potential.
"We're comfortable that China can keep growing," Mr Murray said.
He pointed to China's social housing program which has envisaged construction of a staggering 35 million new apartments over the next five years. Even if that target is unattainable, he said the nation's insatiable hunger for coking coal and iron ore will remain unchanged.
India also offered investors vast possibilities and was "an important source of growth", Mr Murray said. He likened the country to where China was 10 years ago, although not as resource intensive and held back by infrastructure limitations.
While India benefited from being the world's largest democracy, he said protracted tendering made it harder to carry out projects than in a one-party state such as China.
Much like the "two speed economy" at play in Australia, Mr Murray said there was a similar dynamic in the world economy pitting emerging nations against the more developed old guard.
Events such as Europe's debt woes, the US housing market slump and Japan's devastation from earthquakes and tsunami are having a greater impact on equities because of globalisation, he said.
These calamities have created uncertainty and "extra volatility", deterring more people from investing. But at the same time, they have created opportunities since some equities are undervalued, Mr Murray said.

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