The ASX presents investors with opportunities to gain exposure to Australia’s strong economy and its solid domestic resources industry.
Australia has earned its place as one of the world’s largest and most diversified economies, with nearly 30 years of economic growth without a recession prior to the COVID-19 pandemic.
Clocking in at number 13 globally, Australia’s economy is larger than that of Spain — which has twice the population — and World Bank data estimates that the country’s economy is worth US$1.33 trillion.
A huge part of Australia’s economy is locked up in mineral resources, which explains why the nation is home to the world’s largest mining company, BHP (ASX:BHP,LSE:BHP,NYSE:BHP), as well many of the biggest names in the sector globally.
In fact, mining contributed 10.4 percent to Australia’s economy from 2010 to 2020, which comes out to a gross domestic product of AU$202 billion. According to the Australian Bureau of Statistics, that makes the industry one of the nation’s largest economic contributors.
To get there, more than 350 mines operate across the continent, targeting 19 different mineral commodities. Australia’s most common operations are gold mines, which help it to rank second globally when it comes to gold production, according to the US Geological Survey.
This is good news for investors, as gold remains the most popular commodity of choice around the world, while companies with gold in their portfolios attract plenty of attention.
What is the ASX?
Of the more than 2,035 companies on trading on the Sydney-based Australian Securities Exchange (ASX) — the primary stock exchange in Australia — nearly half are listed in the basic materials and energy sectors, so investors looking to get into resources in the Australian market have plenty to choose from.
There are over 140 foreign companies trading on the ASX as well, including 11 Canadian companies, 10 of which are in the resources sector. Those include Benz Mining (ASX:BNZ,TSXV:BZ,OTC Pink:BENZF), Kirkland Lake Gold (ASX:KLA,TSX:KL,NYSE:KL) and Oceanagold (ASX:OGC,TSX:OGC,OTC Pink:OCANF).
Another 17 foreign companies offering ASX shares are from the US, though only one of them is in the resources industry. The majority of the remainder are technology and healthcare companies.
How to invest on the ASX
The ASX provides a handy explanation for getting started on its website, and the first step for investors who want to jump in is to get set up with a stockbroker.
The Australian exchange deals with two sorts of stockbrokers: those that will provide advice on where to invest and how to achieve set investor goals, like a full-service organization, and those that give no advice, and simply do what the investor asks of them, like an online broker.
Tools to find authorized stockbrokers are also available on the ASX website.
To put money into ASX stocks, investors from outside of Australia can either go through dual-listed companies in their country of origin, or if they are interested in buying or selling shares or securities on the ASX, they will need to use a stockbroker authorized to trade on the exchange.
For investor research, public companies operating in Australia are bound by rigid legal frameworks that require high levels of transparency, so statistics on operational performance and information on company finances are easily accessible through individual company websites.
To get you started, the Investing News Network keeps an eye on the top stocks on the ASX. For a peek at some of the largest stocks in the land down under, take a look at some (or all) of our top Australian stocks articles, which cover copper, rare earths, nickel, gold, lithium and graphite.
This is an updated version of an article first published by the Investing News Network in 2019.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.