Investment Article
Australian Bank Stocks
Enclosed are three Morningstar reports on Australian Bank stocks. I believe that there are substantial investment opportunities in this country and this industry. Please allow me to explain why.
In the past five years, the Australian Dollar has gained 29.74% vs. the American Dollar. Over the past ten years, the iShares MSCI Australia Index returned 135.49%, compared to the S&P 500 Index which rose 10.99 %[i]. This country ranks just fifty-third in the world in terms of population country, but its GDP ranks fifteenth[ii]. This impressive performance is driven by an abundance of natural resources, business-conscious governance, and proximity to vibrant emerging Asian markets including Indonesia, India, China, Japan, and South Korea.
The Australian Banking industry has performed very well in the past decade. The average ten-year total return of the top three banks is 117.18%i. There are indications that these corporations are still undervalued. The average price/earnings ratio of these three banks is 10.0, less than Australia’s stock market average,14.31[iii]. My research indicates that when the ratio is less than 17, stocks are cheap. Also, these stocks pay an attractive dividend in the six to seven percent range.
Australian banks are well positioned to withstand the current turmoil in world financial markets. Malcolm Edey, Assistant Governor of the Reserve Bank of Australia, recently stated that the country’s banks have minimal exposure to sovereign debt in at-risk countries, and said the potential effects on Australian banks’ overall asset quality were “not an issue”[iv]. Australian banks will be, for the most part, immune to the effects of Greece’s plummeting debt rating and potential default.
At Armstrong Advisory Group, we manage wealth for affluent and educated families. You will find three Morningstar research reports enclosed with this material, and please understand that we are not recommending all of these stocks today. We would like to extend to you the opportunity to have your current investment portfolio reviewed. During this process we will help you determine if any of these three Australian Bank stocks would be appropriate. Our minimum household account size is $250,000. Please call (800) 393-4001 if you would like to have your current investment portfolio reviewed. For our complete database of articles please go to www.armstrongadvisorygroup.com.
[iv] Mclennan, By David. "Australian Banks Face Steady, but Slow Growth - National News - National - General - The Canberra Times." Canberra News, Sport and Weather | The Canberra Times. Web. 27 July 2011.
Securities offered through Securities America Inc., Member FINRA/SIPC and advisory services offered through Securities America Advisors, Inc. Armstrong Advisory Group and the Securities America companies are unaffiliated. Representatives of Securities America, Inc. do not provide legal or tax advice. Please consult with a local attorney or tax advisor who is familiar with the particular laws of your state. 10/11
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