Australia may be a low-growth market, but there are still opportunities for international investors, according to Credit Suisse.
Among the most interesting of those are mining companies, firms involved in building local infrastructure and the tourism sector, said Hasan Tevfik, Australia equity strategist at Credit Suisse.
According to Tevfik, Australia is regarded as a slowly growing equity market largely due to its banks, which are currently going through a period of consolidation and low loan growth. But outside of that sector, growth opportunities remain, he told CNBC at the Credit Suisse Asian Investment Conference in Hong Kong.
One of those areas was in the mining sector, which Tevfik said was “probably the highest-quality area” in the Australian market. Mining companies are “exceptionally” well-managed and have balance sheets verging on net cash, Tevfik said, adding that the reason for that was due to China’s relatively strong growth rate.
China is Australia’s largest export destination, with close to 30 percent of Australian exports sold to China in financial year 2017, according to data from the Australian Trade and Investment Commission.
Given China’s role as a key trading partner and the growing numbers of inbound tourists from the mainland, Tevfik also tapped tourism as an area set for growth.
“Last year, 1.3 million Chinese tourists came to Australia and that rate has been growing at 15 percent per year for the last five years. So that’s a great benefit for our airlines, it’s a great benefit for our airports as well,” he said.
Meanwhile, plans to boost infrastructure in the country are expected to be advantageous to companies in sectors involved in that development.
“Australia is in the middle of a multi-year infrastructure build. There’s been underspend over the last few years and now we’re seeing a bit of a catch-up there,” Tevfik said, adding that companies involved in the country’s infrastructure build were among those that reported the strongest results in the last quarter.