Comprised of insurance companies, investment banks, trading banks, REITs and asset managers, the financial sector is the largest industry sector by market capitalization. Combined with the size of the Australian financial sector, the assets pool managed and the skilled talent bank, Australia has become a major center of capital markets activity in the Asia Pacific region. Australia has the seventh largest liquid stock market in the world, four of the world’s nine banks rated AA or above by Standard and Poor’s, and the fourth largest pension fund pool globally.
• ASX Market Capitalization: $468 billion
• Trends: The Australian financial industry is moving towards a new landscape and leaving behind many of the practices and products that existed before the global financial crisis. This includes rearranging business models, restructuring workforces and rebuilding the customer relationships that have been disconnected. Global trade in financial services is the fastest growing area of the international services sector with the US, China and India being viewed as key international markets to pursue.
• Major players: Commonwealth Bank, Westpac, ANZ, National Australia Bank, Westfield Group
Biotechnology, pharmaceuticals, medical practice and pathology operators, as well as junior life sciences and medical device companies make up Australia’s diverse healthcare industry. With almost 450 biotechnology companies, Australia is the leading location of biotechnology companies in the Asia Pacific region.
• ASX Market Capitalization: $48 billion
• Trends: Like many developed nations, Australia is looking to cut healthcare expenditure, particularly medicine spending. In October 2010, the National Health Amendment Pharmaceutical Benefits Scheme Bill was passed, which will result in lower-cost medicines through increased pricing transparency by pharmaceutical suppliers. As a result of the patent cliff, the forecast for Australia’s pharmaceutical market looks difficult because combined sales of prescription and over-the-counter drugs are expected to decrease from $10 billion to $9.3 billion in 2014.
• Major players: CSL, Resmed Inc., Sonic Healthcare, Cochlear, Ramsay Health Care
Industrials and Materials Industry
Despite the global economic downturn, the Industrials side of this sector has been busy building, constructing and engineering—everything from infrastructure to transport and commercial buildings. However, due to a slowdown in national construction, major industry players have expanded into Asia, US, Europe and the Middle East.
• ASX Market Capitalization: $142 billion
• Trends: Despite a strong first half of 2010, this sector is still showing signs of instability. However, state transport investment plans, such as Queensland’s $18 billion infrastructure plan and New South Wales’ $50.2 billion transport plan are key factors for growth. Expansion into global markets, particularly Asia, has kept the industry afloat.
• Major players: Leighton Holdings, Orica, Brambles, Amcor, Transurban Group
Metals and Mining Industry
With over 600 publicly traded companies on the ASX, Australia’s metals and mining sector is capitalizing on a plentiful array of natural resources that helped carry the nation through the global financial crisis. The sector is comprised of some of the largest global diversified resource companies but numerous junior miners and mid-tier producers round out the sector. In fact, over 400 new junior resource floats in the last five years were funded by Australian investors.
• ASX Market Capitalization: $320 billion
• Trends: Indicators show that the Federal Government plans to enforce greater regulatory activity on the industry, but it shows no signs of slowing down. The mining industry is on the lookout to add more people to its workforce, signaling signs of growth. Demand for commodities like gold and silver will continue, driving the price up.
• Major players: BHP Billiton, Rio Tinto, Newcrest Mining, Fortescue Metals Group, OZ Minerals
Energy and Utilities Industry
Like the metals and mining sector, Australia’s massive energy industry has been fortuned by outstanding energy assets and a bevy of natural resources. This sector is made up of businesses capitalizing on the exploration and development of coal, uranium, oil and gas and renewable energy assets. As a result, Australia has become the world’s chief coal exporter and a major supplier of LNG and Uranium to Asia. Water, electricity, and gas distribution, generation and infrastructure make up the utilities side of the industry.
• ASX Market Capitalization: $155 billion
• Trends: Watch for the energy and utilities sector to begin operating with more renewable energy techniques, alternative fuels, recycling measures and energy efficiency.
• Major players: Woodside Petroleum, Origin Energy, Santos, Coal & Allied Industries, Oil Search