The credit crisis laid bare several longstanding tenets of the investment business, including that market prices are largely efficient, established markets are better regulated, and the biggest economies offer less risk. While elements of these issues remain true, we still face disjointed financial markets, generating incoherent answers to routine questions. One of the latest manifestations of this trend may have been the Dubai fiasco. Uncertainty and confusion abound.
There are few unified stories across the world today; Australia stands among them. Certainly the dimensions of its investment substance may surprise those distant to the story. Consider these points of uncommon knowledge:
- The four largest Australian banks are all rated AA (stable) by S&P, placing them within the top 3% of banks globally on a credit-quality basis.
- Australia’s largest trading partner is China, with the rest of Asia, including India, Korea, and Japan, amounting to some 50% of exports.
- Australians have the largest pool of investment fund assets in Asia, more than 45% greater than Japan.
From an investor’s standpoint, we identify themes that suggest the relevance of Australia to a prudent, risk-adjusted portfolio strategy.
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