Down Under, things seem far from down under. Australia’s central bank said in its policy statement that consumer spending and business investment are expanding, putting the spotlight on four exchange traded funds (ETFs) with heavy weightings in the continent.
The Aussie dollar advanced on the news today. Yoshiaki Nohara and Catarina Saraiva for BusinessWeek report that the currency gained versus almost all 16 of its major counterparts as stocks rallied, boosting demand for higher- yielding assets. [Australia Has the OECD’s Stamp of Approval.]
One point of contention, however, has been the country’s vastly derided mining tax. A watered-down version was approved and the final tax rate is now a whopping 22.5% (though that’s down from the initial 40%, and the tax doesn’t get triggered until a company earns at least $50 million, though that may be bumped up to $100 million. [Asia ETFs: On Track for Dominance?]
But is this an imminent problem? Not exactly. The tax will not go into effect until July 1, 2012, and legislation won’t be finalized until the middle of next year.
For more stories about Australia, visit our Australia category.
- iShares MSCI Australia (NYSEArca: EWA)
- iShares MSCI Pacific ex-Japan (NYSEArca: EPP): Australia, 67%
- Vanguard Pacific (NYSEArca: VPL): Australia, 20%
- WisdomTree Pacific ex-Japan High-Yielding Equity (NYSEArca: DNH): Australia, 84.7%
- CurrencyShares Australian Dollar (NYSEArca: FXA)
- IQ Australia Small Cap (NYSEArca: KROO): The mining tax seems to favor the smaller companies as it’s currently written.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.