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Buy Penny Stocks And Get A Resident Visa

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Australia Visa

When all central banks started to print money like crazy we thought we had seen all possible incentives for investors to get into the stock market to push it higher. If anyone wanted to have a decent return on its net assets, the stock market was the only place to be as the yield on both savings accounts and bonds were absolutely unacceptable.

On top of that, the current strong momentum on the general markets is fueled by share buybacks which are definitely the result of cheap debt and not because of extremely strong underlying performances.

So when we thought we had seen the craziest things, the Australian government is stepping up the plate and is doing something which is completely unheard of. In an attempt to cool the booming real estate market in Australia down, Australia will start incentivizing rich foreigners to invest in small-cap companies instead of in real estate.

Aus smallcap Source: Money Morning

As per the Australian law, any investor which invests A$5M in residential properties and government bonds can receive a ‘significant investor visa’, something which Chinese investors are very keen to get. From July 1st on, the system will see a complete overhaul. Whereas under the current system only residential real estate and government bonds are allowed, at least 40% of the A$5M will HAVE to be invested in high-risk small-cap companies in Australia.

AUS smallcap index

Source: S&P Dow Jones Indices

This means that everybody who would like to apply for a Significant Investor Visa will need to invest A$2M in highly speculative companies, and A$500,000 will have to be dedicated to fund start-ups and small private companies.

This is absolutely stunning and could very well lead to a bubble on the Australian stock market as small companies will see a huge volume boost and an increased demand for its stock, but unfortunately this won’t be based on the quality of said companies.

Goldman Sachs estimates the potential cash inflow in the small cap market could easily be A$3B per year which would be 30 days of trading volume, which is huge by any standards. On top of that, by forcing applicants to invest A$500,000 in venture capital, the total amount of available venture capital on the Australian market will increase by a stunning 800%!

This is a really bold move by the Australian government and could trigger other first world countries like Canada and the USA to do the same. It’s a cheap way to push the stock markets and investments in companies higher to keep the momentum going, whether it’s warranted or not.

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Mon, 06/08/2015 - 03:58 | 6173450 honestann
honestann's picture

Central Planning: 100
Markets: 0
-----

Typical for the 21st century.

Mon, 06/08/2015 - 07:56 | 6173630 willwork4food
willwork4food's picture

Luv your avatar!

Mon, 06/08/2015 - 08:42 | 6173745 honestann
honestann's picture

Just little ol' me.

Sun, 06/07/2015 - 21:58 | 6173027 TheGreatRecovery
TheGreatRecovery's picture

"The Wolf of Wall Street" says thanks.  :-)

Sun, 06/07/2015 - 19:24 | 6172686 dumdum
dumdum's picture

 

 

You can't buy shit in Sydney for $752k.

The link below gives a more accurate picture of the Australian Real Estate market. These indices are produced by Corelogic RPdata, a well renowned company. They started producing these figures somewhere around 2007.

I'm not sure, but I think Money Morning are using official government data, which in my opinion are not worth the pixels their written in.

http://www.corelogic.com.au/research/monthly-indices.html

Overall, this is a good policy change. If Chinese gamblers want to gamble, let them gamgle with penny stocks. Leave our god damned real estate market alone. Residential Real estate should not be a commodity that can be traded at will, freezing out young families fromm ever getting their foot into the door of their first home.

A roof over ones head, is not an option. It is a necessity of life.

Sun, 06/07/2015 - 14:33 | 6172000 kchrisc
kchrisc's picture

The Australians better work on their Chinese. They're too far out in Zion's empire to be retained when the collapse comes.

Liberty is a demand. Tyranny is submission.

Sun, 06/07/2015 - 13:07 | 6171726 Sudden Debt
Sudden Debt's picture

Australia is the only vacation I cut short because it was so freaking boring.

And a long story short, that’s how I discovered Thailand where you pay for the girlfriend experience without the yelling when you leave the toilet seat up and where she actually cheers when you ask her to bring her sister along.

Sun, 06/07/2015 - 20:11 | 6172807 dumdum
dumdum's picture

 

 

You know what, for a country that is so "freaking boring", it surprises me at how many (I assume that you are an American) Americans live here, especially in my neighbourhood.

I suppose they've made the move, in the hope of living a peaceful life without the fear of some stranger putting a bullet through brain, for no reason.

Mon, 06/08/2015 - 10:26 | 6174154 Kprime
Kprime's picture

by stranger, you do mean cop of course.

Sun, 06/07/2015 - 21:55 | 6173016 Matt
Matt's picture

Better to live somewhere boring and visit exciting places, than vice versa. 

Sun, 06/07/2015 - 13:45 | 6171827 sethstorm
sethstorm's picture

Australia is the only vacation I cut short because it was so freaking boring.

That's your own fault. 


And a long story short, that’s how I discovered Thailand where you pay for the girlfriend experience without the yelling when you leave the toilet seat up and where she actually cheers when you ask her to bring her sister along.

Those weren't women.

Sun, 06/07/2015 - 12:23 | 6171646 ThisIsBob
ThisIsBob's picture

US already does it.  I own stock in a (now very) minor miner which got a mere 300 thou from a Chinaman a few years ago in exchange for a visa.

Sun, 06/07/2015 - 10:03 | 6171433 JBilyj
JBilyj's picture

Australia is a crap show, but I guess anything is better than China. I wonder if there's a leveraged ETF REIT that can tap into this..someone make one!

Sun, 06/07/2015 - 11:22 | 6171537 HenryHall
HenryHall's picture

Where isn't awful modernly? The list is very short.

Sun, 06/07/2015 - 11:37 | 6171562 0b1knob
0b1knob's picture

So is now the time to front run penny Aussie stock to later sell to the Chinks?   Or is it already too late? 

Sun, 06/07/2015 - 12:27 | 6171658 Cheduba
Cheduba's picture

Aw man, this means the can will be kicked down the road for another two years at least.

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