It is time to bet on Australia stocks

For years, Australia was doing very well, primarily due to the benefits she got with the booming economy of China. After all, Australia is a resource-rich country with commodities as her most important economy pillar. If China is doing great, so does Australia. Not sure if you know that all the natural resources such as mines etc belong to the government in Australia, not privately own. So the Australian government is really rich backed up the hard assets. As a side note, I think the Australian dollar will become a very strong currency in the long run due to this reason.

 With the Chinese economy slowing down significantly in the past half a year, people were running away from the Australia stocks as well. As you can see from the chart below, the Australia stock market peaked in May and has plummeted over 20% since then. But now it looks like the Australia market has stabilized and is moving up. Fundamentally it is relatively cheap with a P/E around 18, similar to the US stocks but considering the average dividend yield for the Australian stocks at 4%, twice as high as the US stocks, they are much more attractive. I think this is also a good alternative and indirect way to bet on the recovery of the Chinese economy, which appears to be ongoing. EWA is an ETF for the Australia stocks, which currently pays a 6% dividend. I bought some for my Roth account to enjoy the high dividend with a great capital gain potential. Also, I use the options to set up a combo position in such a way that I don’t pay for anything but actually get paid in the first place. Let’s see how it goes.