ClearBridge American Energy MLP Fund, Inc.

BHP Billiton

Carlisle Companies

WABCO Hlds

Western Gas Partners

Rio Tinto plc Sponsored

Woodside Energy Group Ltd

Allstate

WideOpenWest

Rockwell Collins

iShares MSCI Australia ETF

EWA tracks a market-cap-weighted index of Australian stocks.

Australian stocks have done well in 2024, although they have not kept pace with the S&P 500. I see some positives "down under", including a rising labor force participation rate and growing wages. However, there are headwinds that concern me more. These include richly priced valuations and an earnings season for banks that is likely to disappoint.

EWA: Downshifting Australia To Neutral Heading Into 2025 (Rating Downgrade)

Australian shares are poised to rise on Wednesday, with futures showing a nearly 0.2% gain.

Australian Futures Gain After Rise in U.S. Markets

Franklin FTSE Australia ETF

While California and Scandinavia tend to get top billing in tech, the Land Down Under now boasts one of the fastest-growing software and fintech hubs in the world. Australia's tech industry, which expanded 80% between 2016 and 2021, is projected to reach $167 billion AUD by 2030 ($112 billion USD) as global software and fintech firms continue to spring up across the continent.

Australia, A Tech Hub? Crikey!

iShares MSCI Norway ETF

iShares MSCI Canada ETF

iShares MSCI Sweden ETF

iShares MSCI Germany ETF

iShares MSCI Hong Kong ETF

iShares MSCI Italy ETF

iShares MSCI Japan ETF

iShares MSCI Switzerland ETF

iShares MSCI Malaysia ETF

iShares MSCI Spain ETF

iShares MSCI France ETF

iShares MSCI Singapore ETF

iShares MSCI Taiwan ETF

iShares MSCI United Kingdom ETF

iShares MSCI Mexico ETF

iShares MSCI South Korea ETF

iShares MSCI Brazil ETF

iShares MSCI South Africa ETF

Industrea Acquisition

iShares MSCI China ETF

SPDR S&P 500 ETF Trust

Shanghai CSI 300 has gone from a 52-week low to a 52-week high in only a couple of weeks. Other than China and Hong Kong, Australia is the only other international market starting the week at a 52-week high.

China Outperforms The Rest Of The World

Australia has long been recognised for having the highest average dividend yield among global markets. However, this yield has been on a downward trend since 2022.

Australia Equity - What Is A Lower Dividend Yield Telling Us?

Global X MSCI Argentina ETF

SPDR MSCI ACWI ex-US ETF

iShares MSCI Chile ETF

iShares MSCI Denmark ETF

iShares MSCI Finland ETF

iShares MSCI Indonesia ETF

iShares MSCI Ireland ETF

iShares MSCI Israel ETF

iShares MSCI New Zealand ETF

iShares MSCI Philippines ETF

iShares MSCI Poland ETF

iShares MSCI Peru ETF

iShares MSCI Belgium ETF

iShares MSCI Austria ETF

Global X MSCI Greece ETF

iShares MSCI India ETF

iShares MSCI Saudi Arabia ETF

iShares MSCI Thailand ETF

iShares MSCI Turkey ETF

Global X MSCI Vietnam ETF

US equities have outperformed the rest of the world for a long time now. While the US is up 58% on a total return basis during the current bull market, the rest of the world is up 13.5 percentage points less at +44.5%. Looking at the international dividend ETF over a longer time frame, over the last five years, it's up 20.6% in price and more than double that on a total return basis.

Highest And Lowest Country ETF Dividend Yields

iShares MSCI Australia ETF has underperformed, with a 0% price return over the past 3 years and a total return of only 15.7%. EWA's high exposure to the materials sector and low exposure to technology result in low-single digit earnings growth forecasts for the coming years. The fund's current forward P/E ratio of 17.5x is on the high end, making it expensive relative to its historical valuation range.

EWA: Growth Outlook Not Bright In Australia

iShares MSCI Australia ETF provides targeted exposure to the Australian equities market, with a focus on large- and mid-cap companies. The EWA fund's top holdings include BHP Group, Commonwealth Bank of Australia, CSL Ltd., National Australia Bank, and Westpac Banking Corporation. EWA offers a straightforward and low-cost way for investors to access the Australian equity market, but it has a significant concentration in the financial sector and may lack diversification benefits for those already exposed to the Asia-Pacific region.

EWA: The Case For Australia Grows

EWA offers exposure to Australian large- and mid-caps, with a tilt toward financials and materials, resulting in a more comfortable P/E than that of the S&P 500. The issue is that Australia's economic growth is anemic, while inflation might require more action from the RBA. All these do not look bullish for stocks. EWA's past performance leaves a lot to be desired, with the 2010s and 2020s being especially challenging as it trailed SPY, delivering higher volatility.

EWA: Anemic Growth And Inflation Challenges Warrant Caution

First quarter 2024 GDP growth slowed to just 0.1% QoQ. This brings the annual growth rate down from 1.5% to 1.1%.

Australia: GDP Growth Slows Further

Equities here in the US have gotten off to a weak start this month, with the S&P 500 down modestly over the past couple of sessions. The US-traded ETF that tracks Mexican stocks is down 8.3% month-to-date and 12.3% year-to-date.

EM Election Madness

The iShares MSCI Australia ETF offers exposure to the Australian equities market across 73 holdings, concentrated in the financials and basic materials sectors. Australia's growing strategic significance in the shifting geopolitical landscape, coupled with a solid macro foundation make it a potential investment opportunity. EWA offers diversification benefits and an attractive dividend profile, but current valuations and macro headwinds suggest a hold rating for now.

EWA: Not Ready To Hop Down Under Just Yet

February's employment showed a large rise, driven by a hefty increase in full-time jobs and a sharp fall in the unemployment rate to 3.7%.

Australian Employment Surges In February

iShares MSCI All Country Asia ex Japan ETF

SmartETFs Asia Pacific Dividend Builder ETF

iShares Asia 50 ETF

Global X FTSE Southeast Asia ETF

JPMorgan BetaBuilders Developed Asia EX-Japan ETF

JPMorgan BetaBuilders Japan ETF

Xtrackers MSCI Japan Hedged Equity ETF

WisdomTree Japan SmallCap Dividend Fund

iShares Asia/Pacific Dividend ETF

WisdomTree Japan Hedged Equity Fund

WisdomTree Japan Hedged SmallCap Equity Fund

iShares MSCI Emerging Markets Asia ETF

iShares MSCI Pacific ex-Japan ETF

iShares MSCI Japan Value ETF

First Trust Japan AlphaDEX Fund

Franklin FTSE Asia ex Japan ETF

Franklin FTSE Japan Hedged ETF

Franklin FTSE Japan ETF

Franklin FTSE South Korea ETF

Franklin FTSE Taiwan ETF

First Trust Asia Pacific ex-Japan AlphaDEX Fund

SPDR S&P Emerging Asia Pacific ETF

Goldman Sachs ActiveBeta Japan Equity ETF

Xtrackers International Real Estate ETF

iShares Currency Hedged MSCI Japan ETF

iShares Core MSCI Pacific ETF

iShares JPX-Nikkei 400 ETF

Direxion MSCI Daily South Korea Bull 3X Shares

iShares MSCI Japan Small-Cap ETF

VanEck Vectors Vietnam ETF

Vanguard FTSE Pacific ETF

While the China macro story of ongoing transition is a headwind to the rest of Asia, there is more to the region's economic health than this.

Asia-Pacific Is Not Just China

I am upgrading my outlook on the iShares MSCI Australia ETF to "buy" for a number of reasons. Gains in US markets are becoming increasingly concentrated in a few stocks, leading me to look for opportunities outside of the US market. The Australian consumer is in decent shape, and Australian banks are poised to collect high amounts of interest this calendar year.

EWA: I See Some Value 'Down Under' In 2024 (Rating Upgrade)

iShares MSCI Australia ETF is rather above average in terms of expense ratios. Moreover, markets seem to broadly apply steep multiples to non-mining exposures in Australia, particularly financials. Since mining is what interests us in this ETF, we forego taking on what we think are too expensive exposures in non-mining sectors in Australia in favor of select picks.

EWA: Don't Want The Banks

Sprott Physical Gold and Silver Trust

iShares Gold Trust

iShares Global Energy ETF

Vanguard Energy ETF

US equities have been dominated by a handful of stocks, highlighting the need for diversification. US stocks and bonds have been positively correlated, making it challenging to hedge equity risks.

What's The Argument For Looking Outside The U.S. In 2024?

Invesco CurrencyShares Australian Dollar Trust

Weaker GDP growth in Australia may indicate that the Reserve Bank of Australia (RBA) is done hiking rates. Trade data suggests that the GDP growth figure for Q3 2023 will not meet expectations.

Australia: 3Q23 GDP Growth Softens

Australian stocks have underperformed this year. Unlike its developed market peers, however, Australia's rate hike cycle is far from over. Ahead of a challenging year ahead, market pricing seems far too optimistic at these levels.

EWA: Extended Monetary Tightening Looms Large In Australia

Australian economic growth momentum has softened during 2023 due to the cumulative impact of monetary policy tightening since May 2022. The Judo Bank Flash Australia Composite PMI Output Index for October 2023 posted below the 50.0 no-change mark for the third time in the past four months.

Australian Economic Growth Moderates Due To Tighter Monetary Policy

Australian Consumer Price Index (CPI) surprises with higher-than-expected inflation, potentially leading to a restart of the Reserve Bank of Australia's hiking cycle. RBA projections for inflation may need to be revised as GDP and labor market data remain strong, putting pressure on the central bank to deliver another rate hike.

Australia Inflation: Too High To Ignore

While this is mostly down to less helpful base effects, international energy prices and excise duty hikes, it is not safe to conclude that the RBA rate cycle has peaked. At 5.2% YoY, the August inflation figures were bang in line with expectations.

Australia: Inflation Back On The Rise

2Q23 GDP was stronger than expected, and revisions to past data also show the economy has slowed less than was previously assumed. The quarter-on-quarter growth was also a bit stronger at 0.4% (ING f 0.2%), but it was revisions to the back data that made most of the difference to the annual growth rate.

Australia: GDP Holding Up Better Than Expected

The Rugby Union World Cup starts in France on September 8. Prepare for several weeks of sweaty scrums, rambunctious rucks and muscular mauls.

The Rugby World Cup starts this week. But who would be the investment winners?

The headline inflation rate has now fallen below 5% which will encourage thoughts that the RBA tightening cycle has peaked. We did see the housing component rise by 1.3% over the previous month, up from 0.3% MoM in June.

Australia: Rate Hike Forecast Is Hanging By A Thread

News for iShares MSCI Australia ETF ETF (EWA)