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Why Do Aussie Investors Still Hate Resource Stocks?
For all the talk in the mainstream you’d think the Australian resource sectorwas dead.
It’s a mighty struggle for any resource firm to raise capital.
And to look at the performance of Australian resource stocks, well, it’s hard to find any sector that investors hate more.
We won’t say investors are giving their shares away, but on some days, it sure as heck seems like it.
And yet despite the negativity, resources are still by far Australia’s biggest export. So what gives?
You can see the breakdown of Aussie exports for yourself in this chart:
Source: Department of Foreign Affairs and Trade
Click to enlarge
Raw materials (such as gold, iron ore and oil) make up 55.7% of Aussie exports. Add in rural exports such as cattle and grains, and that’s another 10.8%. In other words, two-thirds of Australian exports come from the land or what’s under the land.
You’d think that would be something to cheer about. You’d think investors would use this resource dominance to their advantage. But right now it seems most Aussie investors would rather poke a finger in their own eye than buy resource stocks.
Read the rest of this article at Money Morning
