Complete Guide to Buying Stocks in Australia | New Investment Opportunities in the Energy Transition of 2025

Why Are Australian Stocks Worth Watching? The New Direction of Global Capital

Australia has long been regarded as a holiday destination, but from an investment perspective, it is one of the most overlooked treasure markets globally. Since 1991, the Australian economy has maintained steady growth, with only 2020 experiencing recession due to the pandemic; all other years have seen positive growth. The annual average return of Australian stocks is 11.8%, with an average dividend yield of 4%, far exceeding the global mainstream market average.

More importantly, amid current global geopolitical tensions, investors are reassessing asset allocations. Compared to the volatility of US stocks, policy risks in Hong Kong stocks, and high valuations of Japanese stocks, Australia, as the most stable economy in the Southern Hemisphere, is becoming a safe haven for global institutional funds.

Additionally, the tax treaty advantages between Australia and Taiwan—Australian dividend tax rates are only 10-15%, compared to 30% for US stocks—making the cost of buying stocks in Australia significantly more advantageous.

Variables in 2025: Policy, Technology, Geopolitical Games

Policy Turning Point: From “Carbon Neutrality Slogan” to “Real Cash Subsidies”

The new energy policy announced by the Australian federal government has completely changed the game. Starting in 2025, the government will provide a subsidy of 2 AUD per kilogram to hydrogen export companies and legislate to phase out all coal-fired power plants by 2030. Meanwhile, the EU’s carbon border adjustment mechanism has officially launched, forcing Australian resource companies to accelerate investments in clean technologies.

What does this mean? Traditional mining companies are beginning to differentiate—those with low-carbon technology gain premium valuations, while laggards become value traps. BHP plans to invest 3 billion AUD in carbon capture, aiming to reduce emissions by 30% by 2030; Fortescue, through its FFI subsidiary, is deploying hydrogen, planning to achieve 15 million tons of green hydrogen capacity by 2030. Policy subsidies are directly translating into corporate profits, which will be the core driver of Australian stocks in 2025.

Technology Demand: Copper More Sought After Than Lithium

Global AI data center construction is accelerating, and these “power monsters” require massive amounts of copper wiring for power supply and heat dissipation. Meanwhile, the penetration rate of electric vehicles continues to rise, and copper demand has surpassed lithium. In 2024, lithium mining stocks plummeted 30% due to overcapacity, but copper giant Sandfire Resources’ stock doubled—markets are redefining scarcity resources with real action.

Banking, infrastructure, and energy transition sectors will maintain high demand for copper, with prices expected to break through 12,000 AUD per ton. Copper companies that understand technology and can reduce costs will become the biggest winners.

Geopolitical Games: Rare Earths Competition

With increasing US-China competition, rare earths have become strategic materials. Australia possesses the second-largest global reserves of rare earths, and the US, seeking to reduce dependence on China, is investing heavily in Australian mining companies. Lynas received a US$200 million contract from the US Department of Defense to expand its Malaysian plant, but low-cost rare earths from Indonesia and Vietnam are also capturing market share. Australian mining companies must rely on technological advantages in refining to maintain high prices.

Nine Recommended Stocks for Buying Australian Stocks

1. FMG Fortescue—The “New Saudi Arabia” of Green Hydrogen

Iron ore contributes 80% of revenue, and subsidiary FFI is actively deploying in the green hydrogen industry. FMG’s logic is simple: use cash flow from iron ore mining to fund hydrogen energy business; if it loses money, they have the backing. Success would make it “the Saudi Arabia of hydrogen.”

By 2030, FMG plans to produce 15 million tons of green hydrogen annually. With policy subsidies, this goal is not just talk. The downside is that hydrogen business faces technological and cash flow risks, but the traditional iron ore business provides a solid foundation. Suitable for aggressive investors willing to tolerate short-term volatility.

2. BHP(——The resource giant with the deepest moat

In 2024, iron ore contributed 65% of profit, with strong cash flow supporting an average dividend yield of 5.8%. Its key advantages include:

• Copper Monopoly: Controls the world’s largest copper mine, Escondida (Chile), with capacity expanding to 1.4 million tons by 2025, directly benefiting from AI and new energy demands
• Long-term Contracts: Signed a 10-year copper supply agreement with Tesla, locking in growth benefits from EV industry
• Continued Coal Profits: Queensland coking coal costs AUD 80/ton, spot prices AUD 320/ton, with profit margins expected to persist until 2026

Unless there is a major global recession or a collapse in major commodity prices, BHP is a high-dividend, limited-downside stock with ample upside. Hedging strategies, such as shorting iron ore futures, can be employed to manage risks.

) 3. RIO###——An alternative with lightweight assets

Compared to BHP, RIO has lighter assets and lower debt ratios, resulting in less cash flow pressure in a high-interest environment. With a dividend yield of about 6%, higher than BHP’s 5.8%, income-focused investors may prefer RIO.

The disadvantage is smaller scale, leading to higher unit costs; if demand for commodities exceeds expectations, profit growth may not match BHP’s.

( 4. CBA)——The Anchor of the Financial Sector

Known as the “defensive line” of Australian stocks, with both offensive and defensive strengths. After the rate-cutting cycle begins, mortgage pressure will ease, and bad debt ratios will stay manageable at 0.4%. The average dividend yield over the past five years is 5.2%, well above the four major banks’ 4.5%, with 28 consecutive years of dividend growth, making it popular among retirees.

Whether the global economy is improving or declining, CBA’s business logic remains robust—when geopolitical risks decrease, global growth increases; when risks rise, immigration boosts profits. Long-term investment risk is very low; conservative investors can buy at current prices to lock in dividends, while short-term traders can wait for the stock to fall to the lower Bollinger Band before entering.

5. Sandfire Resources(SFR)——The Cost Killer in Copper Mining

Known as the “cost killer” of copper mines, showing strong potential amid AI and EV trends. The Motheo copper deposit in Mozambique has a grade of 6%, far above the global average of 0.8%, with production costs of only AUD 1.5 per pound, lower than peers at AUD 2.8 per pound.

Expected to expand capacity to 200,000 tons annually by 2025. More importantly, SFR has signed a five-year supply agreement with Tesla, ensuring 50% of capacity is sold at LME copper prices plus a 10% premium. Facing future copper supply-demand gaps, SFR is a “leverage tool” for copper price increases, ideal for investors optimistic about the metals market.

6. CSL Limited(CSL)——The Beneficiary of Aging Population

Over 5 million Australians aged 65 and above, with government Medicare budgets increasing annually. CSL’s core logic is—companies that help reduce government healthcare costs, naturally receive orders.

Competitive advantages are clear: 45% of plasma collection globally is controlled by CSL, with purification technology costs 20% lower than competitors; influenza vaccine market share is 30%, with performance improving as winter epidemics worsen; rare disease drugs priced over 100,000 USD per dose, with government insurance covering costs.

In 2024, market funds are focused on AI, and many profitable medical stocks have stagnated, creating a rebound opportunity in 2025. Long-term, aging and chronic disease trends are irreversible; CSL’s profit growth is clear, making it a top choice in “medical essentials.”

7. Westfarmers(WES)——A Value Fortress in Retail

Australia’s largest retailer, with 2024 being a strong year for retail, driven by consumer demand recovery. Compared to many AI stocks with PE ratios in the dozens, retail stocks have smaller valuation bubbles and are safer to buy.

The company remains in a bullish trend; long-term investors can buy regularly, while traders can buy when the stock price hits the lower Bollinger Band and sell at the upper band or previous highs.

8. Zip Co Limited(ZIP)——BNPL’s Bottom Rebound

Zip is Australia’s largest buy-now-pay-later (BNPL) platform, with revenue similar to VISA/Mastercard. The past two years of rising interest rates have been disastrous for BNPL—main customers are often financially vulnerable, with high default risks. ZIP’s stock fell from a peak of AUD 14 to a low of AUD 0.25.

But as the rate hike cycle ends, business is recovering, with bad debts decreasing. The stock has rebounded to AUD 3.1. With the start of rate cuts in 2025, bad debts will further decline, and customer numbers will continue to grow, making it worth watching.

9. Gamin Group(GMG)——The Invisible Infrastructure King

Australia’s largest property developer, essentially a REIT, mainly investing in warehouses, logistics centers, offices, and retail properties, with income from rent and management fees.

Known as “the king of invisible infrastructure”—owning 65% of top-tier logistics warehouses in Australia, with giants like Amazon and Coles signing long-term leases of over 8 years, with a 98% occupancy rate. 12 consecutive years of dividend growth, stable net profit margins, significantly better than peers.

As Australia’s inflation eases and the economy recovers, rents and property prices are rising sharply. GMG’s net worth and profits are steadily increasing. Entering a rate-cutting cycle, lower capital costs benefit the real estate sector. Caution is needed regarding potential impacts of global recession and rising interest rates on occupancy rates.

Why is buying Australian stocks the top long-term allocation choice?

( Advantage One: Proven Stable Returns Over Thirty Years

As the most developed economy in the Southern Hemisphere, Australia boasts abundant agricultural, pastoral, and mineral resources. Since 1991, except for the 2020 pandemic recession, it has experienced positive growth every year. The Australian stock market’s annual return is 11.8%, with an average dividend yield of 4%, making it an extremely attractive long-term investment target.

) Advantage Two: A Safe Harbor Amid Global Geopolitical Risks

Historically, investors focused on US stocks, Taiwan stocks, and Hong Kong stocks mainly due to proximity and high news coverage. But with increasing global geopolitical disputes, Australia’s political and economic stability leads the world, attracting more international capital inflows.

Advantage Three: Tax Advantages of Buying Australian Stocks

Australia and Taiwan have tax treaties—Australian dividend tax rates are only 10-15%, compared to 30% for US stocks, significantly lowering investment costs. Long-term holding can save substantial tax expenses.

Outlook for Australian Stocks in 2025: Finding Certainty Amid Change

The appeal of Australian stocks lies not just in hedging but in “excess returns amid volatility.” In 2024, the ASX 200 rose 12.95%, but style differentiation was clear—lithium stocks plummeted 30% due to overcapacity, while copper stocks doubled.

Looking ahead to 2025, three major variables will reshape the Australian stock landscape:

• Federal elections will reshape energy subsidy policies, directly impacting the profits of green energy-related companies
• AI computing power upgrades will redefine mining valuations, with companies controlling key minerals enjoying valuation premiums
• The retreat of high interest rates will trigger asset rotation, with high-dividend and defensive sectors taking turns leading the rally

Remember, investing in Australian stocks is not about following the trend but about building your own strategy—understanding policy directions, identifying technological trends, and seizing geopolitical opportunities. Instead of predicting the wind, seek those “certainty” stocks most resilient amid change.