The lucky country’s economy is on a record-breaking 14 year roll and the ETF (EWA) that tracks its market is not doing badly either. The question is: will it continue? Just imagine, from a few convicts dropped ashore in 1788, Australia has developed into a first class global economy. The reforms enacted by former Prime Minister Bob Hawke and Treasurer Paul Keating during the 1980’s set the stage for a remarkable run of prosperity. Specifically, they slashed import tariffs, floated the currency and reduced the power of big labor. The current Prime Minister, John Howard who has been elected for times, has continued and expanded these reforms riding a wave of economic growth – 14 years of uninterrupted 4-5% growth. The national debt has virtually been eliminated, the currency strong, the government recently signed a free–trade pact with America and is starting to negotiate a pact with China. Australia received $52 billion in foreign direct investment in 2006.
This is all great news and our portfolio allocation to the Australia iShare (EWA) has done very well with a 105% gain over the past two years. The Australian iShare was up over 20% last year and provides investors with exposure to about 60% of the total stock market.
BHP Billiton is this ETFs largest holding and is earning record profits.
BHP also has substantial interests in diamonds, silver and titanium minerals.
