I've seen into the crystal ball; we're all going to ChinaEmail...

I've seen into the crystal ball; we're all going to China
Email Print Normal font Large font Marcus Padley
April 21, 2007


DID you see that photo the other day, the one of 156 huge bulk carrier ships sitting off the port of Newcastle waiting to be filled with coal and shipped off to China? It's a disgrace of course. All that demand bottlenecked by Australian bureaucratic incompetence.

But that's not the point. I have done some in-depth research. Every time one of those ships sails, a large chunk of Australia gets delivered to the Chinese. They are big ships.

I have discovered the specific gravity of iron ore, nickel, zinc, copper, aluminium and uranium. I related that to density, and, calculating volume, estimating available bulk carriers and export tonnages, and extrapolating growth and allowing for bottlenecks, weather disruption and exploration success, one thing has become very clear: on March 14, 2023, the last bulk carrier will set sail from our shores and all that will be left of Australia will be Tasmania.

China is trying to acquire Australia by stealth and the Australian Government is stalling for time with its port management incompetence.

Its obvious. And Johnny is on to it. The defence is working, for now. But it is not enough. The Chinese are smart. They have agents infiltrating Australian share registers and, in some cases, the management of some of our most prospective resources projects.

They are coming and there's nothing we can do about it.

I remember one very experienced trader once telling me that inside information had cost him more money over the long term than it had ever made him. Probably true. So I am cautious as I tell you what I have to tell you. I have had the tip and it's big. Huge.

There is a takeover being planned and it affects us all (I didn't tell you this).

The Chinese Government has worked it out. Although they will own Australia by 2023, they are impatient and they have come up with a plan, modelled on a draft plan put together by Margaret Thatcher after Argentina invaded the Falklands. She never implemented it, but the Chinese will. There are only 20 million of us and they are going to buy us out. An offer we can't refuse.

It'll be cheaper for them and good for us. This is it. They are going to offer us $1 million, per person, to bog off back to our native countries.

It's not as if Australia is really an Asian country after all. It will be a big opportunity. The "sell and go" agreement. There will be a bit of small print. Did I mention that geologists and Andrew Forrest have to stay?

OK, the fantasy is over. It'll never happen of course. Macquarie already owns over 90 per cent of Australia and is unlikely to accept (unless it is offered the management contract; maybe that's the plan).

But the point is made. China needs Australia and if China is going to continue to grow annually at 8 to 9 per cent for the next 10 years, then everyone else is going to want an investment in Australia as well.

Forget private equity, that's the froth. Think about every international investment fund, every global resources company. In this scenario, BHP and Rio will have to take over or be taken over.

My grandmother could borrow the money and bid for BHP or Rio. The free cash flow from either company would cover her interest payments twice over. For some other resource stocks, it's many more times. It has to happen.

Then there's the Aussie dollar. It's going nuts. Why? It's a commodity-driven currency. In 2010, when it achieves parity with the US dollar, we'll look back and realise how obvious it was. The Australian economy, dollar and sharemarket, courtesy of China, are breaking from the pack.

Invest in that. Don't doubt it.

And a word to BHP's predator and any other US private equity firm: whatever you're thinking of buying in Australia, get on with it. With the currency on the move, it won't be long before you can't afford it. We'll be raiding you lot.