Australia flourished as its enormous mining industry supplied the world's booming emerging markets.
But the rapid deceleration in those key export markets lately have been devastating to the Australian economy.
It's "a credit bubble built on a commodity market built on an even bigger Chinese credit bubble," wrote SocGen's Dylan Grice.
In a recent note to clients, Morgan Stanley's Gerard Minack charted the evolution of 2013 earnings expectations for the major global stock market indices (see below).
"Australian consensus earnings forecasts keep falling," writes Minack. "The pattern of earnings revisions in Australia reflects the global pattern. The Materials sector has seen the largest downgrades of any top-level GICS sector. Metals & mining, a component of Materials, has seen even larger downgrades.
"Australia has a mining-heavy/technology-light index. This in part explains why market-wide EPS forecasts for the ASX200 have been cut more than almost every other market in the world, including Europe (Exhibit 5)."
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