Kangaroos

Definition

“Kangaroos” is an informal, slang term referring to Australian stocks or equities. Particularly, it may allude to shares in the country’s most prominent companies listed on the Australian Securities Exchange (ASX). The term originates from the kangaroo, a well-known symbol of Australia, and suggests the potential for high growth or bouncing returns from these investments.

Phonetic

The phonetic spelling of the keyword “Kangaroos” using the International Phonetic Alphabet (IPA) is: /ˈkæŋɡəˌruːz/

Key Takeaways

1. A kangaroo bond is what? An Australian bond issued by a non-Australian company is known as a “kangaroo bond” and is often priced in Australian dollars (AUD). Investors that want to be exposed to the Australian economy frequently purchase kangaroo bonds, a sort of foreign bond.
2. What is the purpose of kangaroo bonds? For a variety of reasons, kangaroo bonds are issued by non-Australian organizations. They can first give you access to a fresh source of funding. Second, they can aid in broadening the investor base of the issuer. Third, they can be utilised to benefit from Australia’s advantageous market conditions.
3. Kangaroo bonds’ advantages for investors. Investors can gain from kangaroo bonds in a number of ways, including:
   1. the chance to learn more about the Australian economy.
   2. possible greater yields than those of domestic bonds.
   3. the advantages of investing in a foreign bond for diversification.

Importance

The term “Kangaroos” in business/finance may not be a commonly known term, but it essentially refers to companies or stocks originating from Australia. This is important because Australia has a significant impact in the global economy, particularly in the natural resources and commodities sectors. Generally, it is used to draw attention to the performance and potential investment opportunities in Australian stocks. By monitoring Kangaroos, investors can gain insights into the Australian market, diversify their investment portfolios, and potentially capitalize on the growth opportunities provided by these companies operating in a stable and well-regulated economic environment.

Explanation

Kangaroos, in the context of finance and business, refers to a type of foreign bond issued by non-Australian entities in the Australian market, typically denominated in the Australian Dollar (AUD). This term is unique to the Australian bond market, just as Yankee bonds refer to foreign bonds issued in the U.S., or Samurai bonds for those issued in Japan. Kangaroo bonds play a crucial role in diversifying the portfolios of international investors and providing an attractive fundraising mechanism for corporations and organizations seeking to tap into the Australian market. The purpose of Kangaroo bonds is to achieve a wider investor reach, expand foreign issuers’ sources of financing, and capitalize on the local investor base that is more familiar with the Australian economy. They provide Australian investors with an opportunity to benefit from exposure to non-local entities, while issuer companies can potentially take advantage of favorable market conditions, such as relatively lower borrowing costs or higher liquidity levels in the Australian market. As Kangaroo bonds are regulated under Australian laws and regulations, they can foster confidence among the local investor community, who may be more comfortable investing in products operating under a familiar jurisdiction. In addition, Australian investors can diversify their investment risk without the need for currency conversion, as these bonds are denominated in AUD. Consequently, Kangaroo bonds serve as a bridge between international issuers and Australia’s dynamic financial market, fostering growth and diversity.

Examples

The term “Kangaroos” in business/finance is often used to describe Australian stocks, bonds, or financial instruments. Here are three real-world examples related to the Kangaroo term: 1. Kangaroo Bond: An example in the real world is when Apple Inc. issued its first Kangaroo bond in 2015. The tech giant raised AUD 2.25 billion ($1.6 billion) through the sale of these Australian dollar-denominated bonds in four tranches, providing Australian investors an opportunity to invest in Apple’s securities. 2. Australian Stock Market: Companies listed on the Australian Securities Exchange (ASX) can be considered Kangaroos. A real-world example is BHP Group Limited (ASX: BHP), one of the world’s leading mining companies, which is an Australian-based company with shares traded on the ASX. 3. Kangaroo ETFs: In the financial market, there are Exchange Traded Funds (ETFs) focused on Australian companies or themes. One such example is the iShares MSCI Australia ETF (EWA), which tracks the performance of the Australian equity market. Through this ETF, international investors can gain exposure to Australian stocks, which are also considered Kangaroos.

Frequently Asked Questions(FAQ)

Related Finance Terms

• Australian Securities Exchange (ASX)
• Blue Chip Stocks
• Foreign Exchange Rate
• Market Capitalization
• Dividend Yield

Sources for More Information

• Investopedia
• Zoe Financial
• Corporate Finance Institute
• Finance Strategies