My view is that over the next 5-10 years we'll see a shifting of power from the west to the east. By that I mean economic powerhouses will soon be those that are producers/manufactures and not consumer countries - i.e., America.
Which country is well run and has a vast amount of natural resources to supply these emerging marketing countries? Australia.
Even if the US goes into a recession Australia does far more business already with countries closer afield, especially China. As the likes of China and other South East Asia countries increase their infrastructure they'll need resources to do so. When the boom in emerging market countries happens, some would argue it already is, Australia is in a prime position to benefit.
How do I plan on benefiting? Simple, owning companies within the supply chain - especially mining and transportation, that do not transact in US Dollars.
In the above scenario I would also expect the Aussie Dollar to perform well against other currencies. Especially those where the printing presses will be on 24/7...
I would assess their property bubble and the likely impact on the large financial sector before going overweight on Australia.
Also there are plenty of other overseas markets which offer diversification away ftom the big western debt fuelled economies. Participating in a number of them is my preferred way.
