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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (7836)	8/27/2001 11:06:00 PM
From: Moominoid	Read Replies (2) \| Respond to of 74559

Australia FAQ One good source is: www.afr.com.au That is our financial newspaper. Also: www.abc.net.au If it is not too much to ask for, in the best of CNBC news-clip style, That is a long list of things.... monetary Interest rates much higher than US and Euro and Japan. Expectation now is for a slight cut perhaps or flat. fiscal Budget roughly balanced, election coming very soon. More privatization (of Telstra) is unlikely due to political reasons and poor stockmarket for telcos (Aussie market is best performed of developed world markets even in USD terms). Punters lost on the last tranch. Labor likely to win the election. socio-politic Government and opposition pandering to anti-globalization redneck backlash..... e.g. ban on Shell take over of Woodside Petroleum. politic-economic ditto. demographic Population growing mainly due to immigration (Mostly legal). trade With the floating Aussie trade bounces and switches around the world. Japan is biggest trading partner but US, Europe all important. We have a big deficit with the US. Trade moving to balance currently. innovation Not too hot :) consumer demand House prices soaring (partly boosted by a grant for new homebuyers which was meant to be compensation for the GST in 2000), good consumer demand. corporate M&A Ongoing - e.g. Faulding-Mayne (I am Mayne shareholder) merger and BHP-Billiton merger but see above on foreign takeovers. Airline rationalization is the key issue currently. public/corporate/private balance sheet Public debt is tiny, foreign debt big, savings rate low. growth Good at the moment. projected to be highest in developed world in next year. theme ???? Aussie dollar devalued from 80 US cents to 53 (and hit 48) over last 5 years - same extent as gold price though other theories why it is so undervalued are thrown up all the time. Fast-food meal deal costs about $A5.50 = $US2.90 Sydney property in nice places is expensive though. Even by US standards it isn't cheap. valuation See above on currency. Stocks have reasonable valuations - after tax P/E is maybe 17 on average? Aussies can get the company tax component of dividends refunded to them and then pay tax on grossed up dividend. No refunds on capital gains - but new 12 month holding CGT for individuals is half your relevant marginal incoem tax rate. Companies are increasingly engaging in off-market buybacks of stock which have huge tax benefits for Aussies. Say Commonwealth Bank is trading at $30 and they do an off-market buyback. They will say $10 (the original issue price) say is the capital component (and if you bought for more you book a capital loss) and $20 is a special dividend with a huge ($8.57) tax credit attached. This way they get the excess tax credits out without paying all income out as dividends. Dividends are still very high but will fall because of all of this. Also CGT on mergers was abolished if scrip is issued rather than a cash takeover. David