Concerns about pollution during the Beijing Olympics in 2008 may be a mixed blessing for the Australian equities market.
According to Advance senior investment strategist Felix Stephen, it continues to look good for resources stocks in the wake of a big push by the Chinese government for early completion of large infrastructure projects ahead of the Olympics.
"The resultant demand for resources could see another surge in the Australian resource sector, the catalyst for so much of the Australian equity markets recent gains," Stephen said.
But the news isn't all good as the Chinese government is then likely to slow the demand for resources it looks to contain pollution levels for the millions of international visitors during the Games, Stephen said.
"To lower pollution levels for when the games take place the Chinese government is likely to ramp up production levels in the second half of 2007 and keep it low in 2008," Stephen said.
However, once inventories are run down during the Olympics demand will start up again in the second half of 2008, he said.
