Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investing in Australia, The Brighter Future Down Under

Stock-Markets / Austrailia Aug 20, 2010 - 10:53 AM GMT

By: Sean_Brodrick

Stock-Markets

Best Financial Markets Analysis ArticleIs Australia the world’s best stock market? Credit Suisse thinks so, and makes its case in its Global Investment Returns Yearbook 2010. Credit Suisse calls Australia “the lucky country,” pointing out that Australia’s market has outperformed the rest of the world’s major markets over the last 110 years. But what about this year, and on into 2011? I think there are plenty of good reasons to place your bets down under. And I’ll give you some specific picks in a bit.


Why is Australia so lucky? For starters, Australia is the feeding trough of raw materials for a hungry and growing China. Australia is rich in natural resources — not only the basics like coal and iron and nickel, but also agricultural exports like wheat and the metal that could be the fuel of the future, uranium.

Also, Australia has gold. Lots and lots of gold. In 2009, Australia produced 227 metric tonnes of gold, up about 3% from the previous year. All indicators are that Australia’s gold output will keep climbing.

As you know, China is hungry for gold … and coal, iron, wheat and more. So, half of Australia’s exports now go to Asia (including India), and China is its No. 1 customer.

What else does Australia have going for it? Here are some fascinating economic facts …

  • The global recession has hammered the U.S., Great Britain and the rest of Europe — but not Australia. Along with big demand for its natural resources from Asia, Australia was saved by a government that spent aggressively to jump-start the economy.
  • Australia is running a large trade surplus. It hit a record US$3.2 billion in June, spurred by Chinese demand for coal and iron ore.
  • Australia’s economy is growing at 3.75%, and is expected to rise to 4% by the end of 2012, according to the Reserve Bank of Australia.
    Rich in natural resources, Australia has weathered the global recession well.
    Rich in natural resources, Australia has weathered the global recession well.
  • Unemployment now stands at 5.8%, and 300,000 jobs have been created in the past 12 months. In population equivalent — Australia only has 21.4 million people — that would be like creating 4.2 million jobs in the U.S.
  • Australia’s home prices went down in the global crash — but they’ve since bottomed and started to go back up again. To help cool off the market and the economy in general, Australia’s central bank has raised its benchmark interest rate six times (150 basis points).

Add it all up, and Australia’s central bank sees a golden decade ahead for Australia, with rising investment, profits, jobs, wages and tax receipts.

Now, there are caution flags — like declining home-building approvals in the most recent month. Also, house-price gains decelerated in the second quarter. And retail sales missed economists’ forecasts in June. And remember that a country like Australia which is so focused on one industry (mining) is particularly vulnerable if that industry slumps. I’d say if China catches a cold, Australia may catch pneumonia.

Australia has a large trade surplus, thanks to huge demand for its exports from China.
Australia has a large trade surplus, thanks to huge demand for its exports from China.

Also, Australia has a private-debt-to-GDP ratio of 150%. Still, that’s a lot better than the U.S., where private debt is more than 260% of GDP. Also, government debt in the U.S. is about 93% of GDP. In Australia, the ratio of public debt to GDP is only about 5.5%.

So, Australia may have some warning flags, but they are nothing like the parade of pain in the U.S.

5 Ways to Play It

Here are some Australian stocks you should be aware of. The good news is they all trade on U.S. exchanges.

  1. Rio Tinto (RTP) is a massive mining conglomerate, digging up everything from bauxite to alumina, to copper, iron, coal, gold and silver, and much more.
  2. BHP Billiton (BHP), the world’s largest miner, is headquartered in Australia. BHP is in the news recently, because it launched an unsolicited US$38.6 billion takeover bid for Potash Corp. Potash, the world’s largest fertilizer maker, called the bid “grossly inadequate,” so we’ll see if it goes through. In any case, BHP is a fine choice.
  3. Alumina (AWC). This company engages in bauxite mining, alumina refining, and aluminum smelting businesses.
  4. Sims Metal Management Limited (SMS) operates in the secondary metal recycling industry. The company engages in ferrous secondary recycling, non-ferrous secondary recycling, and recycling solutions businesses. If metal prices are going higher, Sims should strike gold.
  5. There are also some exchange-traded funds that track the Australian market. The iShares MSCI Australia Index (EWA) is plenty liquid enough, and a good choice.

How Not to Play It

Be careful when investing in stocks or funds. For example, the WisdomTree Pacific ex-Japan Equity (DNH) — which has 90% of its assets in Australian stocks — has traded less than 18,000 shares a day over the past three months. That’s not liquid enough for my taste — you might get dinged both getting in and getting out.

Is this all you need to know about investing in Australia? Heck, no! It’s just a taste. Subscribers to my Red-Hot Global Small-Caps get more than a taste, and they’ve racked up some big gains down under, with potentially more to come. However you invest, remember, you are in charge of your own investment destiny.

Yours for trading profits,

Sean

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in