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The Importance Of Global Diversification:Australian Case Study
Which Is The Most Resilient Economy On The Planet?
Proof Of Australia’s World Record Resilience
*The highest amongst major advanced economies
My Aims For This Presentation
Our clients use LM as their trusted partner
to access this Australian story
Our clients use LM as their trusted partner
to access this Australian story
To provide an example of the type of geographical
diversification ALL investors should have
in their portfolios
To provide an example of the type of geographical
diversification ALL investors should have
in their portfolios
To present a compelling case study on the
economic credentials of an investment destination
you probably don’t know much about
To present a compelling case study on the
economic credentials of an investment destination
you probably don’t know much about
As you will have gathered the
country in focus is Australia.
As you will have gathered the
country in focus is Australia.
Plotting The Shifting GDP Centre Of The World
On The Doorstep Of This Century’s Global Economic Powerhouse
• But it will be a bumpy economic ride in the developing nations!
Australia Is A Critical Partner for Growth in Asia – Export Values
Of Australia’s top 12 export of goods and services markets in 2011, ten were from Asia.
Australia’s Merchandise Exports by Country
“The tyranny of
distance, so long
Australia’s enduring
curse, has been
turned on its head. It
is now the Antipodean
advantage of
adjacency”
Source: The Economist & Australian
Survey 26 May 2011
Providing Commodities To Asia Is Just One Part Of The Story > Asia is rapidly becoming home to the majority of the world’s middle
class:
> Middle class demand a diverse range of goods and services from:• Health and aged care • Education• Household goods• Tourism
> Australia as the most sophisticated economy in the region fulfils these needs
• Banking and financial services• Agriculture and high-quality food products• Manufacturing/services: high-value &
innovative• Green Technology
Australia’s GDP >US$1.5 trillion – 4th Largest Economy In Asia
• Australia’s population is less than half a per cent of the global total
Real Average GDP Growth by Economic Grouping
GDP Per Capita (USD)
GD
P P
er C
apit
a (U
SD
)
> Highest median wealth USD 222k (USA 53k)
> 2nd highest average wealth USD 397k after SwitzerlandSource: Credit Suisse Global Wealth Report, October 2011
Global Government Net Debt 2012
Active Monetary Policy Room With Room To Manoeuvre
Australian Economy Myth 1 China slow down a grave risk to Australian economy
The impact of a worst case Chinese ‘hard landing’ (a 4.00% slowdown) on the Australia economy would be to shave off 0.50% of GDP which would only reduce the current IMF annual forecast to 3.00% growth. This is still the trend rate.
The Economist, 25 August 2012.
Australian Economy Myth 2 World‘s 12th largest 1.5 Trillion USD economy dependant on mining?
• Australia’s services sectors account for over 80 per cent of real Gross Value Added (GVA).
Australian Economy Myth 2 World 12th largest 1.5 Trillion USD economy dependant on mining?
Index of Economic Freedom World Ranking – 2012
Key Indicators of Doing Business – 2012
Australia’s Labour Force by Birthplace
Population Growth 1.5% p.a.
>Natural increase 50%
>Migration Policy 50%
The Economist’s Liveability Index Ranking – 2012
4th largest fund management AUM globally at >1.5 trillion AUD
3rd largest banking sector by market cap behind US & China (bigger than combined
Eurozone)
Compulsory Superannuation – 9% from employer
4 of the 9 top rated global banks (AA-) with no bail
outs
AAA Sovereign
Rating
Australian Solidity
Largest Stock Market in Ex-Japan Asia By Market Cap
Best Stock Market Performance Over The Last 112 Years Averaging 7.20%pa after inflation
Asset Class Return Since 1 January 1990
Australian Shares 8.80%pa
International Shares 4.00%pa
US Shares 7.10%pa
Best Stock Market Performance Over The Last 112 Years Averaging 7.20%pa after inflation
Asset Class Return Since 1 January 2000
Australian Shares 7.00%pa
International Shares -3.20%pa
US Shares -2.80%pa
Best Stock Market Performance Over The Last 112 Years Averaging 7.20%pa after inflation
Asset Class Return Since 1 January 2006
Australian Shares 3.10%pa
International Shares -3.80%pa
US Shares -2.70%pa
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In Summary
Australia is in the right place at the right time. Skilful economic
management has maximised the nation’s opportunities and in doing so
has created the world’s most resilient economy which has been the
most consistent performer on the planet for over 20 years. Australia’s
growth is forecast to be number 1 for developed economies over the
foreseeable future. As an investment destination there are arguably
none better.
Australia is in the right place at the right time. Skilful economic
management has maximised the nation’s opportunities and in doing so
has created the world’s most resilient economy which has been the
most consistent performer on the planet for over 20 years. Australia’s
growth is forecast to be number 1 for developed economies over the
foreseeable future. As an investment destination there are arguably
none better.
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