Life in Australia has left some great videos like that of Elsa Pataky in which she taught how to capture a spider of such size that it could almost have its own mortgage, this other in which we saw a python weighing tons passing by from the roof of a house near a tree or that of this tourist who was attacked by a small lizard (known as a frilled dragon) which could very well be taken from a fiction film or from the Jurassic itself- even. But beyond the exoticism of the country’s wildlife, Australia also represents a real investment opportunity.
The Australian economy entered a technical recession for the first time in 28 years in June 2020.after then recording two consecutive quarters of contraction in GDP (it fell by 7% in the second quarter, the largest quarterly contraction recorded in the historical series, according to national sources). But it was just that, technique, and he returned to growth the following year.
However, like most economies around the world, its economic situation led to high inflation which had to be stopped through the intervention of the country’s central bank. The Reserve Bank of Australia (RBA) has raised interest rates to 4.35% (the highest level since 2012) and goes against the grain of the US Federal Reserve and the European Central Bank. This same week, The organization kept rates unchanged for the seventh consecutive meeting and in effect reaffirmed that it “is not ruling out anything” in terms of monetary policy.. “Monetary policy should be sufficiently restrictive until the board is satisfied that inflation is moving sustainably towards the target range,” the agency said. Monetary flexibility would not take long to arrive and, according to market estimates, the first cut would arrive in December.
This tightening of monetary policy benefits the local currency. The Australian dollar is at a February 2023 high against its main cross, the US dollar. Over the year, the Australian currency has gained 1% and Candriam expects the currency to continue to rise against the Australian currency. dollar An additional 2.5%. Compared to the euro, it remains practically stable in 2024.
Despite this situation, generally beneficial for fixed incomes and less for variable incomes, the main Australian stock index, the S&P/ASX 300 is trading in the area of all-time highs, with up to a dozen companies doubling their market value in 2024 (two of them even quadruple it and two others triple it). And, even if for all experts, this selective is trading at the fixed target price and without potential, more than 50% of analysts continue to recommend buying the Australian stock market.
But although the index is trading without potential, some of the companies that have progressed the most during the year do not and which, moreover, all show a buy recommendation on the stock market. Indeed, the Australian firm which grew the most over the year, the pharmaceutical company Clarity (+359%), still showed a slight increase of 2%. Mesoblast, a company dedicated to regenerative medicine, is growing by more than 230% annually on the stock market and its potential for the months to come is greater than 50%. For its part, Droneshield, which develops hardware and software to counter drones, is also growing by more than 230% in 2024 and its additional growth is 8%.
But why invest in the ocean country? From Candriam, they emphasize the strength of the Australian economy, whose GDP is expected to grow by 2.5% in 2025driven by a strong labor market and China’s recovery measures. They also highlight that the Australian market is “ideal” for investors looking for stable income, as it also stands out with higher dividends than other developed markets. Based on expected profits for 2024, The ASX 300 dividend is 3.5% (and 3.6% in 2025). Even with the index at historic highs (the stronger the rise, the weaker the performance), this profitability exceeds that of the main indices of the Old Continent, courtesy of the Italian Stock Exchange and the Ibex 35, which present dividends of more than 4%.
Investment in Australia can be made through the three investment funds available in our country and purchased in euros. These are : Fidelity Australian Divers Eq Y-Acc-EUR, Barings Australia A EUR Inc And Candriam Eqs L Australia C EUR Cap. These three vehicles accumulate returns in the year of more than 5%, highlighting the product offered by Fidelity whose return in 2024 exceeds 11.5%. In terms of medium-term profitability, all offer returns above 5% and, in this sense, the Barings investment fund stands out, which accumulates an annualized return over 3 years of 6.60%.
Both this fund and Candriam’s have three Morningstar stars. In the case of the Candriam product, Its largest exposure is focused on the banking sector and metals and mining, which represent almost 18% and 13% of its portfolio, respectively.. Both sectors have a more than significant weight within the Australian stock market itself. In the case of banks, they hold a weight of almost 33% of the ASX 300 and among all commodities (19.6%), metals and mining represent 14.2%.
