Australia sailed through the global financial crisis and ensuing recession virtually unscathed. And economists believe that this fact, combined with the country’s increasing integration with Asia, should help Australia expand economically at a good pace for years to come.

Much like Canada, Australia has a healthy banking system and a big resources sector that saw only a short-lived drop in prices. The major difference is that Australia’s major trading partner is emerging Asia, which also has healthy banks and has bounced back quickly from the recession. Meanwhile, about 80% of Canada’s exports are to the U.S., which was the source of the global financial crisis and the nation hardest hit by it.

In addition, Australia had just one fiscal quarter of negative real gross domestic product growth vs four such quarters in Canada. Furthermore, Australia’s unemployment rate had risen to 5.8% in May 2009 from 4% in February 2008, while Canada’s had increased to 8.7% in August 2009 from 5.9% in February 2009.

Australia’s real GDP growth has been running at 3% on a year-over-year basis since the fourth quarter of 2009, interest rates have been increasing since October 2009 and the country’s jobless rate is down to 5.1%, says Paul Bloxham, chief economist for Australia and New Zealand with HSBC Holdings PLC in Sydney.

Bloxham expects Australia’s GDP to continue to grow at a good pace, noting that the cost of big resources projects already underway is equivalent to 18% of GDP. This will mean lots of jobs and rising incomes. Companies are seeking professionals abroad to operate these projects and to do further exploration and development.

Like most other industrialized nations, Australia had brought in a stimulus package when the financial crisis hit. But it was relatively small, consisting mainly of cheques sent to individuals. “It was a very direct way to funnel money into the economy,” says Bloxham. Australia’s government could afford this strategy as it had no net debt prior to the crisis; the government is expecting to be posting budgetary surpluses again within three years.

Like the Canadian dollar, the Australian dollar has appreciated strongly on the back of higher resources prices. This is less of a problem for Australia because it has a smaller manufacturing sector than Canada’s. In fact, the higher AU$ is welcome, says Bloxham, because it helps to cool Australia’s strong underlying growth and, thus, keeps inflation under control.

As for Australia’s stock exchange, it is just as dominated by resources and financial services as Canada’s. The banking system in Australia is similar to ours, with four national banks vs five for Canada. There is, however, less exposure to energy in Australia, although it exports liquified natural gas to Asia. Mining is the bigger sector, with iron ore and coking coal — both of which are used in the making of steel — as its biggest commodities. Like Canada, Australia is also a gold producer.

A big difference between the two nations is that Australia has some global health-care companies.

Only a few Australian companies’ stocks, such as those belonging to BHP Billiton Ltd. and Rio Tinto PLC, are listed in New York and/or London. However, more stocks are available as American depositary receipts. Here’s a look at those companies:

> Australian And New Zealand Banking Group Ltd. Although there’s nothing too exciting about the prospects for banks in Australia, Tim Leung, portfolio manager and head of Asian equities with I.G. Investment Man-agement (Hong Kong) Ltd., likes ANZ’s expansion into Asia. The company is already in Indonesia and India, and recently has started doing business in China.

> Caltex Australia Ltd. is the only publicly traded oil refiner in Australia. Its stock trades at book value, which William Lam, a portfolio manager with Invesco Fund Managers Ltd. (UK) in Henley-on-Thames in Britain, believes is too low. He says Caltex makes “a lot of money” from the convenience stores in its gas stations and also sells diesel fuel and other specialty fuels to industrial customers.@page_break@> Cochlear Ltd. is the dominant provider of hearing implants, with a 65%-70% global market share. The majority of its sales are in the U.S. and Europe, says Don Huber, vice president and portfolio manager responsible for institutional retail global large-cap equity portfolios with Franklin Templeton Investments Corp. in San Mateo, Calif. Cochlear introduced a new version of its implants a year ago and will open a new automated manufacturing facility in Sydney in 2011.

Huber thinks Cochlear’s stock is undervalued, but David Cassidy, an equities strategist with UBS Securities Australia Ltd. in Sydney, considers it fully valued.

> CSL Ltd. is a global leader in blood plasma products and vaccines, which it produces and sells mainly in the U.S. and Europe. Cassidy believes the company has a lot of growth potential.

> Foster’s Group Ltd. is one of Australia’s two big beer producers, and it is a turnaround situation, says Lam. The company acquired a wine business a number of years ago that it had planned to integrate but that didn’t work out. Foster’s now wants to sell the wine business.

Foster’s stock is lower than the book value of the wine and beer businesses, Lam says. The firm has had one offer, which it turned down — which suggests Foster’s is confident that it’ll get a better offer, he adds, noting that it could sell the beer business as well.

However, a UBS report expects pressure on beer prices and notes that Foster’s, which has the largest market share in the premium and full-strength beer segments, “has the most to lose.”

> Iluka Resources Ltd. is the world leader in production of the mineral zircon. In fact, the company has the best zircon deposits and the ability to set prices. It has a new mine that Lam expects will produce strong earnings and allow for a big dividend. The company’s stock price has gone up, but Lam thinks there’s some more — although not dramatic — upside.

> Newcrest Mining Ltd. Leung likes this gold producer, which also produces sizable copper byproducts. The firm recently acquired Papua New Guinea-based Lihir Gold Ltd., making Newcrest the fifth-largest gold producer in the world and the biggest in the Asia/Pacific region. Newcrest’s costs are low and, although Lihir’s are higher, a UBS report estimates that costs for the combined entity will still be in the lowest quartile globally. Also, Lihir’s costs may come down with Newcrest management.

> QBE Insurance Group Ltd. This property and casualty insurer is another global player. It focuses on the small and mid-sized market, which is not as competitive and has better pricing.

Huber, who thinks QBE’s stock valuation is low, likes: the company’s policy of walking away from unprofitable businesses; its tuck-in acquisitions, such as crop insurance, which isn’t tied to the P&C cycle; and its managing general agency network in the U.S., which provides the opportunity for cross-selling and helps reduce costs.

> Qantas Airlines Ltd. With Australia relatively unscathed by the global recession, Qantas is doing very well, says Cassidy. Given the size of the country, domestic travel is heavy; and with the AU$ being strong, Australians have an incentive to travel abroad.

> Woodside petroleum ltd. is favoured by Cassidy and is the major stakeholder and operator of three offshore gas fields. Woodside also operates the natural-gas venture on the northwest shelf, which is in development. There have been delays in this project, but the upside potential is significant.

> Worley Parsons Ltd. is a global engineering company that focuses on all parts of the oil and gas sector. Deepwater and oilsands projects are the biggest part of its business. Worley does a lot of tuck-in acquisitions to add to its expertise.

Huber notes that increasing environmental regulation in the oil and gas sector will increase demand for the firm’s services. IE