The value of Western Australia’s listed companies was largely flat in August, despite growing concerns regarding the health of the energy and resources sector, new research says.
Deloitte’s WA Index, released today, showed the market capitalisation of WA companies increased 0.2 per cent in August, to $140 billion.
Deloitte national mining leader Tim Richards said continued uncertainty over the long-term growth of China and the falling iron ore price had resulted in the shelving of large scale capital expansions.
“There is a new sense of caution that is likely to remain for the rest of the calendar year,” Mr Richards said.
Mr Richard says economic data released in August suggested that despite recent downgrades, capital expenditure could be up to 90 per cent higher than five years ago.
He said reduced capital spending should free up resources to apply towards cost reduction and improvements in efficiency, pushing supply and demand pressures to a more balanced level.
“Whilst this will hurt the bottom line significantly, this will force Australian miners and businesses to improve productivity,” Mr Richards said.
The best performed WA stocks in August were Sirius Resources, Integra Mining and Base Resources, which increased market cap by 207.1 per cent, 49.2 per cent and 40.7 per cent respectively.