Australia presents the savvy investor with a superb way to broaden their portfolio and add investment opportunities from an extremely stable economic environment which is somewhat cordoned-off logistically from US/EU markets. Australian stocks present a perfect way to branch out, adding more, truly choice companies to the portfolio and from a region nearly identical in terms of the business conditions/culture. The advantage of being somewhat shielded from external/prevailing market conditions, as some Australian stocks may not react to the same forces which impact shares of companies in the United States or European markets, is a distinct play and one that is today garnering considerable attention.
The ASX for instance is a great place for investors to tap into the growth of this relatively low-inflation economy, which is also somewhat insular and firewalled off from other western markets. From sectors like alternative fuel and minerals, to architecture, engineering, and next-gen tech companies, Australia is host to an entire panoply of real innovators. The major cities and outlying suburbs are rich in real estate able to yield serious returns, there is plenty of rich farm land, and, in general, the underlying market forces are quite robust.
Since the late 80′s the Australian government has helped transform the nation into one of the planet’s most resilient economies, with an emphasis on exports, commodities, and high tech, resulting in an average of 3.6% GDP growth rate (1992 to 2007) over the OEDC average of around two and a half percent. When you add in the obvious ability to weather much of the post 2008 downturn, as employment and economic activity actually grew despite the worst bits of the crisis, it becomes easy to see how Australian companies are attracting more and more investment dollars. Especially since positive consumer confidence at the street level and the ability of business confidence to stage a quick rebound make the economy look spry and lively; Australia really feels like a young economy on many levels despite its years and stability.
Of course the same tried and true logic applies in this market as elsewhere, a clear strategic approach to investing is paramount and mutual fund basket approaches make a good deal of sense for the novice. But whatever the strategy employed is, from hedging and pulse trading the short-term metrics to going long-term with a young mineral developer or tech startup, a fundamental key is to start out with risk tolerance bedrock to build your foundation on. Lean on your broker too, go sign up with a new firm if you have to, squeeze that end of the equation for all the actionable intelligence you can get and don’t overlook banks, independent brokers, and the investment houses either as potentially viable channels. Employ low risk sector spread approaches like listed-management investments, which function just like common shares from a trading and transactive standpoint, yet represent many companies across a given industry, giving the investor a stable platform.
Another thing you can do (and again it is a good idea to really get to know and talk with your broker about your investment ideas) is to look for unconventional or alternative venues to trade. Due diligence is key and often overlooked, with many investors simply getting on a bandwagon somewhere, not thinking about the true potential or underlying factors. Go and do the research, look up market information on the company, and dig through the investor relations material that has been provided. Roadmap the company’s progression arc, look at the recent news items, and get a sense of where the firm has been and where it is going.
Firm corporate governance laws and IP protection, coupled with unbeatable geostrategic access to emerging markets make Australia a real hot spot for developing and innovating along the cutting-edge of today’s complex global economy. Aspects of the fundamentals here, like Chinese dependence on natural resources, offer powerful long-term growth motivators which, while they may appear as risk-side factors, to the intelligent investor hint at a much larger future market vector for Australia as a kind of western logistical base in emerging regional markets. It is a stable place to leap-off into the entire, largely still underdeveloped pan-asian market space really and more investors are taking note of this as time progresses.
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