Make money betting against the UK market

25 Jun

A recent financial PR release advocates the use of a City Index CFD trading account, via which you use pairs of Australian banks, as those institutions most removed from European economic chaos, to hedge against market risk.

Of the four major Australian banks, the most successful currently is the Commonwealth Bank of Australia (CBA). Going long on CFDs (contracts for differences) from this institution, and short on, say, the National Australia Bank (NAB), could be a lucrative strategy. City Index, which is heavily promoting its derivatives package based on the Australian market, claims the NAB has been weakened by its “long-standing exposure in the UK financial sector.” The CBA, however, is holding strong.

Visiting the Australian Securities Exchange online, however, it is difficult to escape from the sensation that they, as a continent, have not developed a trading profile autonomous from the US and from Europe. Most of their indices are measured as a ratio against that of Standard and Poor (S&P). However, their own total value of trades ordered stands at a respectable -21.8, compared to -48.39 for the NYSE and -26.87 for NADAQ.

Could this be Australia’s moment in the sun? City Index certainly wants you to think so. And, well, why not? Having waited this long for the emergence of ’emerging markets’ as a financial force in the world, why not head down under?

Of course, unless you actually plan to repatriate, now might be the time to invest in Britain’s banks, which have recently been granted a new credit line to lend to emerging SMEs (small to medium enterprises), under very low interest rates and without providing extensive collateral of their own. I suppose it depends where your loyalties lie.



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