Risk Australia Rankings 2009: The debt dividend

Following a major sell-off in the second half of last year, the antipodean financial markets are seeing significant inflows of foreign capital in 2009 due to the resilience of the Australian economy. Dealers are also profiting from derivatives activity linked to high levels of debt issuance by banks and the Australian government. Georgina Lee reports, with research by Xiao-Long Chen

aust-2009

The Australian financial markets have experienced a year of two halves. First, there was a widespread sell-off of assets following the collapse of Lehman Brothers on September 15, 2008. This resulted in a severe drop in Australian equities and a widening of credit spreads, along with a massive unwinding of the carry trade, where investors had borrowed in low interest currencies such as the yen and invested in high interest currencies such as the Australian dollar. The carry trade unwinding in

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