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RBA's third 2026 rate hike amid stagflation puts Australian ETFs like EWA in focus as investors seek resilient, diversified exposure.
Australian ETFs like EWA draw focus as energy shocks and RBA rate hikes fuel inflation fears.
Australia's monthly inflation indicator jumped to its highest level in a year in July, affirming the Reserve Bank of Australia's cautious approach to cutting interest rates over recent months.
Australia's key investment markets—stocks, bonds, and real estate—present lucrative opportunities driven by market cycles and liquidity sources. Stocks are poised for an upward breakout, likely within two years, fueled by the explosive phase of the real estate cycle. Bonds offer opportunities in both new high-yield bonds and older low-yield bonds, with potential gains when interest rates decrease.
The Franklin FTSE Australia ETF has outperformed other developed markets and Asia Pacific stocks over the past year. We highlight why FLAU, which only has around $60m of AUM, is a better product than EWA, a larger peer with an AUM of over $1.4bn. Australian macros look dicey, and FLAU's heavy exposure to banking stocks is not too ideal at this juncture.
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.
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%.
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.