Take it from a well-known Australian money manager: Any Canadian who thinks he should be investing Down Under should have his head examined.
Australian Prime Minister Tony Abbott instantly gained notoriety on Sunday during his first visit to this country by referring to his host country as "Canadia" – a slip that may have owed something to jet lag, but also reflects the fact that the two countries have so much in common that it's easy to lump them together. With a common language (more or less), a similar dependence on natural resources and shared roots in the British parliamentary tradition, it's easy to slip into the habit of thinking of the two as Austranada or Canadia.
And that's precisely the problem, says John Hempton, chief investment officer of Bronte Capital, an Australian fund manager. The last thing that a Canadian investor needs is more exposure to another resource-driven economy that depends on Chinese buyers to fuel demand for its output.
Not only is the Australian economy essentially an antipodean copy of Canada's, but it's an unusually expensive one, notes Mr. Hempton.
"Every now and again a foreign market can become very cheap … Blind Freddy could make money buying the Korean market at the height of the Asian crisis," he writes on his blog. But "none of these reasons apply to a Canadian investing in Australia. Australia most certainly is not cheap. Sydney makes London and New York seem inexpensive."
All of which leaves Mr. Hempton shaking his head as he contemplates Mr. Abbott's schedule, which saw him meet with leaders of Sun Life Financial, Ontario Teachers' Pension Plan, Barrick Gold, Barclays Canada, Saputo and Cameco during his two-day visit. The purpose: To encourage investment in Australia.
"At the risk of seeming unpatriotic I am going to give you some advice," Mr. Hempton writes. "If you are a Canadian investment leader and Tony Abbott is seeing you … keep it brief. Don't waste his time or yours."
Ian McGugan