The Australian dollar is the second-worst performing developed market currency in the world this year behind the yen, a fact affirmed by the 13.7% tumble by the CurrencyShares Australian Dollar Trust (NYSEArca: FXA). In theory, the weakening Aussie should have been good news for stocks in the export-heavy country.
That has not been the case. At least not for the major ETFs tracking Australian equities. The iShares MSCI Australia ETF (NYSEArca: EWA) is down 9% while the WisdomTree Australia Dividend ETF (NYSEArca: AUSE) is down 5.23%. [Dark Clouds For Australia ETFs?]
The good news is the weak Aussie may finally be starting to bear fruit for stocks in the world’s 12th-largest economy as the S&P/ASX 200 is up 3.6% in the past month. Over the same time, FXA is off 5.5%, indicating that the stocks that call AUSE and EWA home may be responding to the falling Aussie positive fashion. [ETF Chart of the Day: Australia]
Previously identified beneficiaries of a weak Aussie include Westfield, News Corp, QBE Insurance and Brambles. News Corp. is not a member of EWA’s lineup, but the other stock’s combine for 5.8% of the ETF’s weight. AUSE, home to 65 stocks and a 3.95% 30-day SEC yield, allocates about 4% of its combined weight to Westfield, QBE Insurance and Brambles.
Other stocks that make for more predictable beneficiaries of a slumping Australian include BHP Billiton (NYSE: BHP), the world’s largest mining company, and Woodside Petroleum, Australia’s second-largest oil company.
Woodside Petroleum’s two key products, oil and LNG, are both priced globally in USD, with dividends being converted to Australian dollars. Woodside reported a net profit after tax of US$2.98 billion for the year in 2012 and is likely to benefit strongly from the 11% decline in the Aussie dollar, according to Motley Fool Australia.