Geographically far out, economically far ahead

Australia has come through the Corona crisis comparatively well. This is also reflected in the continent’s current economic condition.

“Down under” has always been synonymous with what is called a place of longing for many Germans. A continent at the other end of the world, spectacular nature with unique fauna and, last but not least, a population that brings with it a nonchalance that we Germans often lack.

For some months now, however, something else has been making us look to Australia with a certain amount of envy: the extent to which the country is being hit by Corona. Or not hit, as the case may be: Australia has so far reported a total of “only” 30,000 corona cases, which is one hundredth of the figure that Germany has in this statistic. While we have to deal with a change from lockdown to relaxation and back again every other day, everyday life in Sydney, Brisbane and the like is different.

Strictest entry regulations, immediate lockdowns even in the case of individual covid cases and consistent quarantine measures – all this has meant that Australia has so far kept the pandemic largely in check. The fifth continent is still a long way from carefree normality. But stores and restaurants can let visitors in if they register via QR code and official app. In February, the Australian Open, the annual tennis tournament in Melbourne, could even be held – in front of thousands of spectators.

So the Australian Corona strategy has obviously proved its worth so far – and the way the country’s economy has coped with the crisis can almost be called sensational: Compared with the previous quarter, gross domestic product (GDP) rose by 3.1 percent in the fourth quarter of the year, and compared with the previous year, GDP was down by only 1.1 percent. The latter in particular is remarkable, as Corona had not yet played any role at all at the time of comparison.

What makes the Australian stock market even more interesting, in addition to this recent economic stability, is the fact that Australia, as a country rich in raw materials, is benefiting particularly strongly from the current global economic recovery – and should continue to do so. This is true in all economic sectors, restaurant as well as hotels or industrial and scaffolding hire companies. In addition, the central bank RBA in Sydney wants to keep the key interest rate at the record low of 0.1 percent, according to its own statement for at least the next two years.

The Australian stock market in the form of the S&P/ASX 200 index does not yet adequately reflect this – the stock market barometer is still below the pre-crisis level, while the Dow Jones, Dax and other indices have long been higher than before the crisis.

But there is an understandable reason for this: For around two years, there has been considerable tension between Australia and its largest export partner China – Australia has criticized, among other things, China’s dealings with Hong Kong and the Uyghurs in the Middle Kingdom; China, in turn, accuses its Oceanic partner of precisely this interference in supposedly internal affairs and, for example, the exclusion of the Chinese Huawei Group in the construction of an Australian 5G network.

Should this currently tense relationship between the two trading partners, which are so important for each other, calm down again – perhaps also because Donald Trump is no longer in power in the USA – the S&P/ASX could play out its potential. Investors could profit from this, for example, with an ETF on the index.

Australia may be a place of longing for German globetrotters – perhaps it could soon be one for German stock market investors, too.