Australia: Farewell

I returned to Australia after a long absence with great anticipation and enthusiasm.  As I climb on a plane to continue the Investment Trek through Southeast Asia, I leave Australia with a new host of experiences, friends, and insights.  I’d like to again thank those people who shared their time and perspectives with me in Sydney and Brisbane.  I learned a great deal about the economy, monetary policy, the investment climate, and current issues impacting Australia.

Sydney Harbour Bridge

One important issue that permeates many things in Australia is immigration.  You can’t walk the streets of an Australian city without recognizing the great diversity of peoples, languages, and cultures.  Like the United States, Australia is a melting pot and a country of immigrants.  People are drawn to Australia for many reasons, not least of which are the freedoms and opportunities available to those who choose to dream of a better life and start anew.  In my brief time in Australia, I spoke with people from dozens of different countries – many countries which we have visited or will visit on our Investment Trek.  They came to Australia to start a new life and give it a go.

A secondary observation (but one that I just can’t seem to escape, no matter how banal it may be) is the weather.  I left the hottest June on record in Salt Lake City to find the coldest July in 35 years in Sydney.  Many people apologized to me for the poor weather, and folks were bundled up in coats and winter gear.  The apologies were unnecessary – winter in Australia is delightful… but you should recognize my Northern European roots give me a strong bias for the cooler temperatures.  Prior to returning to Australia, one of the strong memories I had was just how hot it was all the time.  I’m glad this visit has moderated my impression of “always hot” to just “sometimes hot.”  If you’re going to make the journey, I recommend you do it sometime in May through September.

St. Mary's Cathedral

St. Mary's Cathedral

Another observation I had first-hand was the amount of growth in Australia – both in population and in infrastructure.  The population of Australia has grown over 35% in the two decades since I was last here.  To put that in perspective, the equivalent population growth in the United States would mean an additional 100 million people would call the US home over a 20 year period.  Australia is roughly the same size as the contiguous U.S., so it would seem the country has more than enough space for more people.  The challenge, as I’ve noted in earlier blogs, is that the population growth is largely concentrated in the major cities like Sydney, Melbourne, and Brisbane… and the cities are running out of space.  Cities like Sydney have geographic constraints which simply don’t allow the urban sprawl we see in other places.  This means the finite usable land within the Sydney basin is getting more valuable with every additional person who comes to Sydney looking for a place to call home.

The growth in infrastructure is also impressive to witness first-hand.   While traveling around Brisbane, I was struck by the sight of dozens of construction cranes in every direction.  From one vantage point of the city called Kangaroo Point, I counted 17 building cranes, busily raising the already impressive skyline.  In some ways, it reminded me of the ballet of building cranes I observed in Shanghai when I first visited China nearly a decade ago.  Given the relative sizes of the two countries and their impact on the global economy, globally-minded investors must pay close attention to China.

The Strand Arcade

One of the key concepts we’re interested in on this trek, however, is what tactical opportunities exist at the country level.  There are times when investors may want exposure to Australia, and there are times when those investment resources should be deployed elsewhere.

In many investors' view it seems to be a great time to invest internationally.  When doing so it is important to have a disciplined process to identify opportunities and risks.  Picking a single country, region, or categorization (i.e. developed, emerging, frontier, etc.) to buy and hold indefinitely may not be the most optimal way to navigate the international investment space.  This has led to the emergence of tactical, international strategies.  More to come as we move to Indonesia!