Aussie dollar still high while investors continue to make good overseas
The good performance of the Australian dollar in the market has enabled their investors to purchase assets overseas practically at a one-for-one currency basis. However, a risk in this currency is still looming. In the event that the Australian dollar appreciates to $1.10-$1.15, the purchase might be worth 15 per cent less right away. Investors are still willing to face the risk so they can branch out outside Australia in a much cheaper price.
Jim Stening of the fixed-interest broker FIIG Securities stated that it is the very first time in Australian history that the rest of the world is on sale and that Australians are able to buy that much asset for their buck.
In the past decade, there has been an observed increase in the interest of investors in Australia to directly buy foreign shares, this according to Fabiola Gibson. Gibson, the first vice-president of Morgan Smith Stanley Barney added that the high exchange rate has greatly contributed in fueling further the said interest. She also added that compelling arguments regarding the importance of being diversified overseas are crucial in obtaining global exposure and popularity in the emerging markets as well.
Big companies such as Nestle, Procter & Gamble, Apple, and Google, to name a few, are taking advantage of Aussie’s strength as compared to the euro and sterling. Gibson stated that buying stock which is amounted close to US dollar parity provides a possibility for them to earn double. However, in the long run, they are not ruling out the likelihood that the US dollar will also be regaining its strength and that the Aussie dollar will return to its lower trading range.
Investors are expecting that though these are likely to happen, there will still be a currency gain on top. However, Australian investors are advised to focus more on having strong equity gains on some of the very high-quality stocks that they can buy at favorable rates.
