The Australian stock exchange is sensitive to mining stocks and commodities, as the top holdings within their exchange traded fund (ETF) focus on this aspect of their economy.

Although markets began last week in positive territory, the mining stocks Rio Tinto and BHP Biliton both took markets lower upon recent news. Local shareholders voiced their concerns over the controversial Chinalco deal at the meeting, just as investors did at last week’s London AGM, reports Terry Mc Cran for Courier Mail.

The speculation that the two major mining companies had been taken over concerning the Chinalco deals has many believing that downside risk is going to outweigh short-term gain. For investors, a commodities investment in an ETF holding one or both of these companies can be worth its weight, as the diversification alone can benefit a portfolio.

A single-country ETF can be a way to access the commodity sector of countries rich in natural resources, such as Chile, Australia and Russia. In Australia, for example, much agricultural production is in the hands of cooperatives or privately held as farms, so an investment in the country fund can give the commodities exposure craved, reports The Australian. Australia is well-endowed with minerals and fossil fuels (excepting oil). It also holds the world’s largest known economic resources of iron ore, lead, zinc, silver and more, reports Digital Reflections.

Today, concerns about swine flu are spilling over to global markets, and Australia is no exception, reports Candice Zachariahs for Bloomberg. Australia’s dollar dropped for the first time in three days on concern that the flu would deepen their recession.

  • iShares MSCI Australia Index (EWA): up 4.1% year-to-date; BHP 16.2% of assets; Rio Tinto 2.4%.

  • iShares S&P GSCI Commodity Indexed Trust (GSG): down 12.2% year-to-date

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.