Investors May See Upside Down Under

Scharar concedes that the housing market, particularly in Australia, could be a weakness.

"The market could certainly be deemed to be overpriced in terms of the relative valuation of housing," he says. "While I don't disagree that there is going to be some softness, I don't think it is going to drag everything else down. It won't be as painful as it was in the U.S."

Australia's still-evolving election outcome may prove beneficial for investors, Scharar says.

"The winner with the Australian Labor Party, [Julia Gillard] had to cobble together a majority by bringing in some people from the Green Party and some other independents," he says. "That's a pretty fragile arrangement and it may not last the three years you normally expect the government to be around. The good news is that it might stymie any kind of really momentous change."

"The Australians have a couple of key things they are dealing with right now," he explains. "One of those is resources. They want to put a new tax of [30% on coal and iron ore profits] because they don't have all the infrastructure needed to deliver these products out of the country, and they will need new rail, new ports and a host of other things."

The initial proposal for that tax, on mining resources, "basically brought down the former prime minister," Scharar says.

"I think that while the Green Party prefers this original tax, because they really want to slow down mining, the middle will now ultimately prevail. What they will do now is come up with something that supports continued growth, but not be draconian in how it affects companies," Scharar says.

Another initiative, for national Internet access, has been largely a public project. Scharar expects the new coalition government to open that process more to private interests.

As for New Zealand, he describes it as "very business oriented" and "one of the most transparent nations in the world in terms of their financial information."

-- Written by Joe Mont in Boston.



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