Watch Out! These Are the 10 Riskiest Industries for Australian Investors in 2015
Car manufacturing’s exit, the end of the mining boom and an impasse in the government with—well—everything has left the economy an uncertain place in Australia. It will be incredibly important for investors and creditors to understand the market over the next year and a half to make sure sound financial decisions are being made.
IBISWorld has recently published data and analysis based on the business researcher’s industry risk rating, which measures the likelihood that investors will receive a negative return on investment. The industry risk rating is based on analysis of an industry’s structural, growth and sensitivity risks and is on a scale of 1 to 9: 9 being the highest risk. See below for the industry’s that will experience the greatest risk to investors over 2015.
- Petroleum refining and petroleum fuel manufacturing (7.09 risk rating)
- Fossil fuel electricity generation (6.87 risk rating)
- Heavy industry and other non-building construction (6.65 risk rating)
- Machinery and scaffolding rental (6.62 risk rating)
- Structural steel erection services (6.55 risk rating)
- Mineral exploration (6.53 risk rating)
- Cigarette and tobacco product manufacturing (6.51 risk rating)
- Fertiliser manufacturing (6.51 risk rating)
- Electricity distribution (6.45 risk rating)
- Black coal mining (6.44 risk rating)
Electricity generation and distribution, construction services, mining and mineral exploration and manufacturing appear to be the industries that we can expect to encounter some financial barriers this year.
Demand for electricity has fallen over the last five years in part due to the demand of energy efficient appliances and solar panel installation: win for the Earth, loss for the industry. Mining companies’ demand for construction services has tapered off with the completion of several mines throughout Australia—leaving the construction market a little high and dry. For mining and mineral exploration, there’s an aggressive level of competition that hasn’t been meshing with other factors like lack of industry assistance and a high level of volatility because of currency fluctuations. Competition, specifically within the fertiliser manufacturing industry, has contributed to the risk in manufacturing.
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