Introduction of Frank: Senior Australian stock investor in Tiger Community, former CFO of a famous Australian dairy brand company
Summary of Tiger Live
- Leading Mining Stocks of Australian Stock Market
- What is the difference between Australian stocks & Hong Kong stocks & US stocks?
- How to Select High-quality Mining Stocks？
Compare to US and Hong Kong stocks, what are the unique charms of Australian stocks?
Australia's capital market is very different from many countries. Although the overall scale is not large, it has a large number of mining resources, making it an existence that cannot be ignored in the world. Especially in recent years, Australian mining stocks have been trending very strongly, and many gains have been born. Some stocks were up as high as thirty or forty times.
1. Leading Mining Stocks
Mining stocks account for almost half of the entire Australian stock market. Most of the well-known mining companies are basically listed in Australia. Many small early-stage mining exploration companies can also achieve very high gains in a short period of time, which has given investors a lot good investment opportunity
For example, $Dundas Minerals Limited(DUN.AU)$ went public in November 2021 at only 0.2 Australian dollars per share. It started to take off in September this year, and its share price once soared to 0.77 Australian dollars, an increase of nearly three times.
*Past performance is no guarantee of future results. Graphics and charts are for illustrative purposes only.
There are many similar cases in Australia, while in the US stock market and Hong Kong stock market, it is difficult to see such large fluctuations in mining stocks.
2. What is the difference between Australian stocks & Hong Kong stocks & US stocks?
Australia's iron ore accounts for 37% of global production.
Lithium is what we all care about the most, it accounts for nearly 49% of the global production volume.
Gold accounts for 10%, zinc accounts for 11%, nickel accounts for 6%, and cobalt accounts for 4%.
Therefore, we can see that on the production side, Australia is in a very important position in the entire industry, especially the upstream resource industry.
a: Therefore, the core difference between the Australian stock market and the markets in the United States, China, and China Hong Kong is that of industry differences.
Australian stocks have almost half mining companies. U.S. stocks and Hong Kong stocks are dominated by high-tech, high-end manufacturing, and consumer industries.But most companies in Australia belong to old money, mainly in oil, natural gas, coal, materials, mining, and other industries. This is also the core difference between Australian stocks and the US and Hong Kong stocks markets.
b: Second, most listed companies in Australia are a small market value compared to Hong Kong and the United States.
Mainly Australia's requirements for listing should be the lowest among these countries, so because it has low requirements and it has a lot of mining companies and industries that seeks to list.The Listing regime and rules in Australia - almost made for the mining industry.
Australia's largest and more critical index is called XJO 200, which is a separate industry index for mining companies in the XJO 200. We can see that basically the entire mining index is now at a contrarian high, in a bull market with a strong cycle.
c: Another difference is that there are more institutions investors in Australia, and then there will be relatively fewer individual traders in Australia.
3. How to Select High-quality Mining Stocks？
There are thousands of mining companies in Australia, and hundreds of new mining companies are listed every year. I would like to share my personal experience below which includes to four points, however, not as investment advice directly.
a: First of all, it is necessary to find high-quality mining resources with large mining volumes, high quality, and hot or strong market demand in the world.
For example, new energy is attracting more attention, we can prioritize the search for lithium, nickel, and cobalt mines companies. Mines on the production side, and then find out the actual controllers of these companies, preferably listed companies, such as $Rio Tinto Ltd(RIO.AU)$ , $Pilbara Minerals Ltd(PLS.AU)$ , $IGO Ltd(IGO.AU)$, etc.
b: Then, track the asset information of these listed companies, especially finding out the information on the land to be developed that they own or cooperate with.
This information can be found in the company's annual report, and they are basically disclosed. After they are found, they will then look for small and medium-sized exploration companies that cooperate with these plots. These targets may appear to be small and medium-sized at first glance, but in fact, they are all cooperating with large companies, and their assets are relatively high-quality.
c: In addition, it is necessary to pay attention to the dynamic information.
They include the main mines issued by the government in a timely manner, and focus on the industry research reports, especially the upstream and downstream demand for new energy, the impact of battery technology innovation on raw materials, etc.
Then investors should continue to study and research, and finally sort out a complete database of related companies. So that we can know the disposal, development, and financing of relevant assets. The above is the basic logic of my mining investment transactions.
Finally, industry research is very complicated, which requires a deep understanding of the upstream, midstream, and downstream situations. Most industry research reports are for professional institutions, which are not easy for ordinary investors to understand. So you need to work hard to find a set of trading logic that suits yourself.
Bottom Line
In general, if you want to invest in the mining industry, you must pay more attention to the investment trends of the "big players". After all, they have larger funds and professional teams. With reference to their investment direction, the probability of making investment mistakes is relatively smaller than when we find some companies ourselves.
The above content is excerpted from the live stream by Frank, a senior investor in the tiger community.
Welcome to communicate and discuss together.
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