Back in June Warren Buffett told the world that he was making his first investments in Australia. The Oracle of Omaha has already announced plans to build up an equity stake in Insurance Australia Group, and has also revealed 'there is a good chance that five years from now, we will have bought one or more positions in Australian banks.' Buffett admitted that he was making these investments at the age of 84, but 'it’s been worth waiting for. Better late than never and better the best than never. So here we are in Australia and I'm delighted to be there.'
Buffett is not the only one getting excited about Australia. A growing number of subscribers have been asking us to introduce Australasian data, so many readers will be glad to know that we will be covering Australia and New Zealand in the very near future. We've put this article together to provide an overview of the investment scene down under and explain how subscribers can get involved…
Many academics have tried to explain different growth rates across countries by looking at differences in institutions (eg. legal structures) on the one hand and endowments (eg. natural resources) on the other. Australia is fortunate in that it is rich in natural resources and it also has political and legal frameworks that are conducive to economic growth. Natural resources including coal, iron and natural gas have attracted a steady stream of foreign investment since the middle of the 19th century. Between 1992 and 2007 demand for natural resources, particularly from emerging economies, helped Australia’s economy grow at around 3.6% per year, well above the OECD average rate of 2.5%.
These trends were also supported by Australia’s political and legal systems. The Australian Securities & Investments Commission regulates the securities industry, while the Reserve Bank of Australia helps coordinate the country's monetary policies. These institutions have worked to promote an environment where businesses can thrive and investors can feel safe. According to the World Bank, Australia ranks 10th in the world when it comes to ease of doing business - just two places behind the UK. The World Bank also ranks Australia as the fastest place in the world to start a business, with regulatory procedures taking just two days compared to OECD average of 15 days.
There are other reasons UK…