Profile | Roger Nusbaum
Firm | Your Source Financial
Website | Random Roger's Big Picture
Follow Me on Twitter
RSS
The Investment Virtues of Australia
By Roger Nusbaum | September 21, 2009 | 12:06 PM | 0 Comments
The FT has a nice write up on the Australian banks this morning. I’ve owned an Australian bank for as long as I have been managing money. The simple story here is that Australia is a commodity based economy as opposed to a service based economy like the US which makes Australia a good candidate for proper international diversification. Being commodity based and being much simpler than the US has allowed the Australian economy to avoid recession (the last recession was in 1991), although it had come close, and grow without the same sort of leverage and risk taken in the US and Western European financial sectors.
Australia’s good fortune here has been along the lines of Canada and Norway which are also developed, commodity based economies.
Australia has four big banks; National Australia Bank (OTCPK: NABZY), Westpac Bank (WBK), Commonwealth Bank (CMWAY) and Australian New Zealand Bank (OTCPK: ANZBY) which is the one I own for clients. WBK is the only NYSE traded stock of the bunch. Investment bank Macquarie also has a pink sheet traded ADR with ticker (OTCPK: MQBKY).
The popular ETF is the iShares MSCI Australia Index Fund (NYSE: EWA) and there is also the WisdomTree Asia Ex-Japan High Yield Equity ETF (NYSE: DNH). Some clients own the ETFs (no client owns both) instead of the common stock.
For the attributes above and those cited in more depth in the FT piece at some point I will increase my exposure to the country beyond one bank stock. An obvious place to look would be the big materials companies like BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RTP). There are also other sectors like utilities, toll road operator Transurban (OTCPK: TRAUF) is one I follow here, healthcare (medical supply company Ansell (ANSLY) is one I just found a couple of weeks ago) and there are plenty of smaller companies in all the sectors that are worth learning about.
Australia has been and I believe will continue to be an important investment destination for US based investors seeking foreign diversification.
| 
|
