To Oz or not to Oz

Image

Illustration 1: Australia has one of the highest foreign ownership at ~80% of its government bonds.  By comparison, the figure is ~50% for U.S.A. and ~9% for Japan. 

Asianmacro is using the lull of the Chinese Lunar New Year to ponder … over what are the potential crowded trades carried over from 2012 & years past that may present an opportunity for our stealthy snake to slither under and create havoc.  One of the standouts is definitely the long AUD trade via plain FX (leverage to the hilt of course in OTC FX or those Dual Currency Deposits or Accumulators), or simply the Australian Government Bonds that Sovereign Wealth Funds, Insurance Companies, Asset Managers and retail cannot buy enough of in the last 5 years!  Notice from Illustration 1 above on how the percentage of foreign ownership has grown from ~50% in 2007 to ~80% presently.

Ever wonder why AUD/USD has been stuck in the range of 1.03-1.05 tenaciously for the last 6 months … while we are currently at the lower end of the range, do make your preparations to sell at the next rally to the higher bound.  When 80% of the people outside of Australian love their Oz … it is gonna be tough to find another 20% to continue luvin’ the Oz & at 100% foreign owned (*if it ever gets there!) … makes you wonder what will the folks down under do with all the foreign money and Vegemite sandwiches are definitely not to everybody’s liking!

*Asianmacro is a beach bum managing his own wealth.  Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself.  While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or  implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith.  Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication.  This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.