INVESTORS nervous about Europe and the slowing global economy have wiped $27 billion from the value of Australian shares - as the chairman of BHP Billiton warned that the nation's mining boom was winding down.
Sharemarkets around the world quaked amid growing speculation that Greece would be forced out of the euro bloc, triggering a new bout of global financial instability. In Australia, investors pulled their money out of shares, sending the market on its biggest fall of the year.
By the end of yesterday, the benchmark ASX/S&P200 index had plunged by 101 points to 4165.50. The Australian dollar sank below 99 US cents for the first time this year.
More than $75 billion has now been stripped from the value of Australian shares this month - mostly over Europe concerns, but also because growth in China and India has slowed, easing demand for our mineral exports.
Trade figures released last week imply that imports of capital equipment shrank in the March quarter, and have barely grown in the past six months. This suggests growth in business (mostly mining) investment is slowing sharply.
Yesterday's fall began as soon as markets opened in the wake of more bad news from Greece. Negotiations to form a new government failed again, forcing a second national election.
New data showed Greece's GDP shrank by 6.2 per cent in the year to March, amid reports that European and German leaders want Greece out of the eurozone, and are ready to risk a market meltdown.
There was a brief rally when new data showed Australian wages growth remains subdued - except in Western Australia, and in mining - but the market started falling again after BHP chairman Jac Nasser said the resources cycle had turned, and that BHP would shelve some of its planned projects.
''The tailwind of high commodity prices has contributed to record growth in the sector and the country,'' Mr Nasser said in Sydney. ''Now we have a period where those tailwinds are moderating, and we expect further easing over time.
''The resources business has always been, and will always be, a cyclical business.''
Asked if BHP still planned to invest $80 billion over the next five years, he responded: ''No.''
In a politically charged speech, Mr Nasser, the Melbourne engineer who became Ford's global chief, called for a new wave of industrial relations reform, saying that in 2011 BHP faced 3200 cases of industrial action in its Queensland coal business alone.
He warned that Australia had become ''one of the higher cost countries of the world''. Its industrial relations environment was deteriorating, governments had hiked mining taxes and royalties, and investors had lost confidence in the future of the global economy.
''Those decisions have repercussions,'' Mr Nasser said. ''At BHP, our choices include in which product ? and in which country we choose to invest.
''Stable tax and appropriate industrial relations frameworks ? we will make progress if we focus on getting these two issues right.''
He censured Treasurer Wayne Swan for his attacks on mining billionaires, and urged him to create ''a stable, predictable and competitive tax framework''.
''I cannot overstate how the level of uncertainty about Australia's tax system is generating negative investor reaction,'' Mr Nasser said. ''I don't think it is good for Australia when global investors question openly whether Australia really wants a globally competitive resources industry.''
But the slide in the dollar is giving relief to thousands of Australian businesses, as it was mostly the dollar's rise that made them (and BHP) high-cost.
