Tony Abbott says Australia can sail through global market turmoil

Prime Minister Tony Abbott on Wednesday said the Australians have every reason to face the future “with confidence,” noting the global economy is not a “one-way escalator.”

According to the PM, the continuing woes in the global stock market are corrections of the over exuberant Chinese market earlier in the year.

“Australians have every reason to face the future with confidence notwithstanding the headwinds overseas,” Mr Abbott told the media, as reported by Sky News.

The federal government and the opposition both believe the Chinese economy is still going strong. Treasurer Joe Hockey maintained that China is already showing signs of improvement, with growing activities in the property market and an overnight interest rate cut by the Chinese central bank. For his part, Shadow Treasurer of Australia Chris Bowen told the ABC that China is still experiencing solid economic growth.

According to Australian Financial Review, a quarter of Australia’s top companies are stuck in a market where share prices are falling and the current global market scenario is threatening to come down heavily upon a third of it. ASX has fallen by 16 percent from its high point in April due to the haphazard selling of the ASX 200 companies in the last four months. Australian share markets opened one percent lower on Wednesday morning.

Hockey has however warned that the global markets would continue to remain volatile as the U.S. experiences the sixth day of losses. He added that the investors should still take into consideration the fundamentals of economy.

“There will be volatility in the markets,” he said on Wednesday on the sidelines of a summit in Sydney on economic reform. “There are extraordinary capital flows around the world at the moment, in part linked to speculation about the US Federal Reserve increasing rates.”

The move by the Chinese central bank to slash interest rate may have benefited a number of major markets. There was, however, a 7 percent loss for Shanghai and almost 4 percent for Tokyo, while the U.S closed lower after having traded up almost 3 percent.

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