Australian Stocks and ETFs are a Safe Backdoor

Way to Play Asian Growth.

Are you getting a bit tired of the on again, off again “deal” between China and
America?

Well, here’s a deal that’s actually on: the formerly named Trans-Pacific Partnership
trade and investment pact is ready to be inked by its 11 members—without the U.S.
or China onboard.

And here’s another one: Asia-Pacific’s Regional Comprehensive Economic

Partnership looks set to move forward in 2020. The 15 members have a combined
gross domestic product of about $25 trillion with some of the fastest-growing
countries in the world involved. It looks like India is taking a pass on this one due to
their fear of intense competition.

One enthusiastic member of both pacts is Australia, which is for all practical
purposes an Asian country. And there are myriad reasons to invest in Australia.

Why You Should Invest in Australia Now

Australia represents a safe backdoor Pacific growth play supported by rock-solid

fundamentals. China, Japan, South Korea, India and Hong Kong are its leading
export destinations.

China buys 35% of Australia’s exports (America buys only 6%) and boatloads of its
oil, gas, coal and iron ore. Millions of Chinese tourists each year visit Australia and
more than 150,000 Chinese students head to Australian universities.

Australia offers many advantages over the competition: a low national debt, the
safest banks with the highest dividends in the world, and a location near the world’s
fastest-growing continent, Asia, with consumers eager to snap up its resources and
products.

China buys more than $50 billion of Aussie coal each year, Japan buys trillions of
yen of LNG, and South Korea buys huge amounts of its beef, wine, and wheat.

Australia is not only engaged with China and Asia – it is becoming year by year

more integrated into the Asian economic machine. Trade ties between Australia and
Asia have been on a dramatic rise since 2000 and a new report from HSBC
forecasts that Asian markets will absorb roughly 80% of Australia’s exports by 2020.

But even with Australia’s already strong penetration into Asia’s largest export
markets, HSBC says the Pacific region’s rising middle class will boost sales in the
areas of high-quality food, as well as education and leisure opportunities.

The number of Chinese tourists visiting Australia has doubled since 2010 and the
emerging Asian middle class is consuming more protein-rich diets as incomes rise.
The resource sector will likely lead the way. HSBC projects iron ore exports will rise
more than 50% by 2020, while liquefied natural gas (LNG) exports will more than
quadruple as new projects come on line.

No wonder Australia is signing trade deals with regional partners like hotcakes.

No question about it: Australia represents a great proxy on China and Pacific
economic growth, with the world’s eighth-largest stock market and the second-
largest in Asia.

So the top Australian stocks present some great opportunities for international
investors. There are several ways to boost your portfolio’s exposure to the “lucky
country.”

3 Ways to Invest in Australia

Two broad-based plays would be the actively-managed Aberdeen Australia Fund

(IAF), which has $128 million in assets and is up 19% so far in 2019. Another is
the iShares Australia ETF (EWA), which is larger, with more than $1.5 billion in
assets. About half of the assets in both funds are in the financial, healthcare and
materials sectors.

A solid Australian stock is BHP Group (BHP), which was founded in Melbourne in

1885 and is engaged in natural resources such as petroleum, copper, and iron ore
as well as silver, gold, zinc and nickel worldwide. BHP’s business is widely
diversified and it offers a nice 5.2% dividend yield as a bonus.

With copper and iron ore prices on the rebound, my Cabot Global Stocks
Explorer advisory is taking a close look at two other resource giants with significant
exposure to Australia. To learn what international and emerging market stocks I’m
currently recommending to my subscribers, click here.

Meanwhile, now is the time to invest in Australia. And the above ways to play it are a
good place to get started.