Australian Market Beckons Savvy Investors

Wise investors diversify their investment portfolio to not only gain from the potential of different asset classes but also to minimise their risks. Thus, investing overseas could be a good option for Singapore investors. There are many ways of doing so and many different asset classes that can be considered.

In this article, PhillipCapital Australia’s Head of Derivatives, John Miles, highlights why investors should be trading the Australian market.

Why, in your view should Singapore-based investors trade the Australian market?

Trading the Australian index offers Singapore traders a strong opportunity in their time zone to trade an active market which is largely correlated and highly influenced by the US markets and commodity prices.

Our political environment is stable and the market is regulated by the Australian Securities & Investment Commission. Trading ranges and volatility provide opportunities without being prone to frequent market shocks when compared with other smaller developing markets in the region.

Looking ahead, what is the outlook for the Australian market for the next 6 to 12 months?

Australia is now at a historical low in the interest rate cycle and this is driving growth in property prices, which are also supported by an increase in foreign investment from China. Traditionally, this provides a boost to consumer spending. As a large producer of raw materials for export to China, our outlook is tied to economic activity in the region and demand from our largest trading partner.

Thus, assuming that the US and global economy continue to improve and stabilise, the Australian market is well positioned for a rebound having lagged far behind other major stock markets.

Please tell us about the upcoming launch of the Aust200 Index AUD5 CFD.

Contracts For Difference (CFD) is a derivative where there is an agreement between the client and the CFD provider to pay the difference between the buy and sell price of the CFD. In the case of the new Aust200 Index AUD5 CFD, the price is derived from the price of the underlying Australian index.

The key feature for clients is that it enables traders to speculate on the price movements of the underlying without having to take ownership of the underlying. IT also employs additional features such as flexibility to trade long and short with inbuilt leverage.

We are delighted that our colleagues are able to bring the Aust200 Index AUD5 CFD to investors in Singapore, further expanding their product list.

How can savvy investors use the Australian index to trade?

Savvy investors can utilise the Aust200 Index AUD5 CFD to take a view on the Australian stock market direction as well as on the performance of the Chinese economic activity and impact on demand for materials.

This CFD can also be used as a hedge against Australian based investments and commodities in general with low capital output due to the ability to leverage.

Are there any pitfalls that investors should take note of when considering the Australian market?

Generally speaking, the Australian economic outlook is closely tied to demand from China for materials and commodity prices. Thus, investors looking to diversify into the Australian markets need to be aware of any changes in those two areas.

For more information about the Aust200 Index AUD5 CFD and its promotional rates, visit www.phillipcfd.com/worldindices.