Two Types of Aussie Companies Investors Should Be Looking At
What a day it is today!
Today I will wake up, bounce out of bed, sing a little song. I’ll bound down the stairs, give my dog and cat breakfast, and then start to prepare something truly special…
While in the kitchen, I’ll probably chuck on the Best Xmas Hits playlist on Spotify, while fixing up my magic.
It’s probably going to be artic cold and stormy out today. That’s what the MET reckons anyway. But I don’t care today, I’m going to bring a little slice of Australia to the UK.
The magic I’ll be conjuring up in my household is the world-renowned ‘democracy sausage’!
That’s right. Here today in the UK, it’s ELECTION DAY. Well actually due to the time difference, by the time you read this, it’ll likely be the early hours of Thursday, UK time. But we won’t all be off to the polls just yet, they don’t open until 7am.
However, there’s still time to change the course of history!
Is there anything else in the world as exciting as a general election?
I think not.
It’s a kakistocracy
Actually I lie. I’m being facetious. Elections suck. Politicians suck. They will spit any old nonsense at us to get our vote. Then once in power just do whatever the hell they like, regardless of what they ‘promise’.
They are on the bulk of things, liars and spin doctors. Sadly due to the defunct system that we find ourselves in, in both Australia and the UK, we have to choose the best of a bad bunch.
I’ve said it before, both countries run a kakistocracy.
According to the Merriam-Webster Dictionary:
‘Definition of kakistocracy: government by the worst people.’
Tell me I’m wrong…
But it is what it is. Aside from sweeping electoral reform, this is what we’re left with. In the UK it’s not compulsory to vote. And I’m still in two minds if I will. But I will…I think.
Only for the sheer fact that a socialist government in the UK would be as bad as a socialist government in Australia. Hence I’m voting for the party that I think will try and shape the UK in a better way than the others. Simple.
Doesn’t mean I necessarily like them. But at least I don’t think they’ll suck as bad as the rest of them. Hence that wins my vote.
Democracy sausage trade
But there is also the obvious upside to an election day, as I noted earlier. And it really is the most important thing of an election day.
The democracy sausage. I can’t wait.
I would volunteer to put on a BBQ and give a ‘democracy sausage’ to all who decide to turn up and vote. But it’s not really a ‘thing’ here in the UK. And there’s every chance if I do start a BBQ in public…
- It won’t light in the freeze
- I’ll get lambasted for being an idiot
Hence it’s a democracy sausage day in the Volkering household, and anyone else who’s there for brekkie.
But sausage anticipation aside, there is an upside to this UK general election. Well, it’s an upside if the result ends up being a Conservative majority.
That clears the UK government to actually get some things done. And front and centre on their list is Brexit.
It’s been over three long years since the referendum that decided to leave the EU. Three years of absolutely nothing. I said it a long time ago, but it’s like the kid that puts off doing his homework to the last minute and is then surprised when he gets a D.
If come Friday morning, UK time, there’s a Conservative majority government in the UK, then I’m saying: get ready for boom times.
There’s three and a half years of pent-up uncertainty, pent-up frustration, and pent-up opportunity ready to explode and release. I believe that with a complete Brexit outcome the UK could end up being the biggest market investment opportunity since the US markets at the bottom of the GFC in March 2009.
Good news for Aussie companies
That’s ripping good news for loads of Aussie companies.
The UK will want to get deals done, quickly, with existing trade friends. And you bet Australia is one of those. They will want our goods and services. They will want our human and financial capital. They will open their doors to Australian companies in priority of European ones.
And while the UK has a population size of 66.5 million, GDP per capita it’s still up there in the world’s top 20, so there’s plenty of money to throw about. And in terms of the size of the economy, the UK is still the fifth biggest in the world.
That’s why I think that in 2020 there are two kinds of Aussie, ASX-listed, small-cap companies investors should be looking at.
Those that are doing deals with and expanding in China. That’s pretty obvious in my book, as they will continue to become the world’s economic powerhouse over the US.
But then also companies that are focusing on the UK specifically for deals and expansion. It’s a market that’s been crippled with uncertainty that’s about to be unleashed. And I see that as a huge opportunity for companies with a foot in this market.
Of course, a Conservative majority might not be the outcome at the end of this week. There might be a Labour win, or just another hung parliament.
In that outcome, probably scratch everything I just said. That outcome means more delays, more uncertainty, and more market mayhem — which isn’t good for companies looking to expand here.
But we’ll see. I think I’ll be right. And if I am, then the UK might fast become Australia’s best trade friend in the world, at least for 2020.
Editor, Money Morning
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