After two years of relative underperformance, Australian small and mid caps are finally showing signs of life. With inflation easing, rate cuts now on the horizon, and investor sentiment gradually shifting back toward growth, we believe the next leg of the market move will be led by the very part of the market that has been overlooked: small and mid cap equities.
These companies, often more nimble and innovative than their large-cap peers, have spent the last few years tightening costs, improving balance sheets, and positioning themselves for a more favourable operating environment. The lag in performance has created a fertile hunting ground for investors who can look past short-term noise.
At TAMIM, we see a wide valuation gap between small and mid caps and the broader ASX 200, one that is unlikely to persist as the macro picture improves. We’ll explore why we believe there is still significant upside ahead, using three companies, Bravura Solutions (ASX: BVS), Emeco Holdings (ASX: EHL), and Symal Group (ASX: SYL), to illustrate how the opportunity is playing out in practice.
The Setup: Why Small and Mid Caps Still Have Room to Run
The Australian equity market is experiencing a classic late-cycle rotation. For much of 2022 and 2023, investors sought safety in large-cap defensives, banks, and resource giants, leaving smaller companies trading at deep discounts. This dynamic is now reversing.
There are three key drivers underpinning the recovery in small and mid caps:
Monetary Tailwinds: Inflation has cooled, and the RBA is widely expected to cut interest rates over the next 9 to 12 months. Lower rates reduce financing costs and tend to reprice growth assets upward, benefiting smaller companies more dramatically than large caps.
Valuation Gap: Small and mid caps are still trading at a 25–30% discount to their historical earnings multiples relative to the ASX 200. This spread has historically narrowed quickly during early bull markets.
Operational Leverage: Many small caps have restructured and streamlined during the downturn. As revenues recover, this operating leverage can lead to outsized earnings growth, driving multiple re-ratings.
These factors combined create a compelling setup for selective small and mid cap exposure, particularly in companies with solid balance sheets, disciplined management, and clear earnings visibility.
Bravura Solutions (ASX: BVS)
Market Cap: ~$250 million FY26 Guidance: Revenue $265–275 million, Cash EBITDA $55–65 million Investment View: Undergoing operational transformation, potential margin expansion and re-rating catalyst.
Bravura Solutions, a global fintech provider to the wealth management and superannuation industries, has been one of the standout recovery stories in our portfolio. The company recently upgraded its FY26 guidance, projecting revenue between $265–275 million and cash EBITDA between $55–65 million, both up meaningfully from previous forecasts.
This positive revision was driven by a mix of foreign exchange tailwinds and approximately $7 million in new professional services wins, primarily from the EMEA wealth management division. Importantly, professional services activity tends to be a strong lead indicator of annual recurring revenue (ARR) growth, the lifeblood of any software business.
Bravura’s management team continues to impress. The appointment of Colin Greenhill as CEO, effective January 1, 2026, adds further pedigree to the company. Greenhill, formerly CEO of SSP Worldwide (a subsidiary of Constellation Software), brings deep experience in customer-focused transformation and disciplined execution. His background is particularly relevant, given Constellation’s track record of improving margins and generating shareholder value through operational discipline.
What we find most appealing is the alignment of incentives. Greenhill’s entire long-term incentive package is tied to cash EBITDA margins and share price performance, two metrics that matter most to long-term investors. This structure ensures management focus remains squarely on profitability and sustainable growth.
At current levels, BVS trades at an undemanding multiple relative to peers in the software space. We believe the company can drive EBITDA margins toward 30% over time as it optimises its cost base and leverages its global platform. The combination of improving fundamentals, high-quality leadership, and renewed customer momentum makes Bravura a strong example of how smaller technology names are regaining investor confidence.
Emeco Holdings (ASX: EHL)
Market Cap: ~$611 million FY25 NPAT: $75.1 million, up 43% Investment View: Strong turnaround story, attractive valuation, and potential takeover candidate.
Emeco Holdings, one of Australia’s largest providers of rental equipment to the mining industry, has emerged as another example of a small cap quietly delivering results while trading at a discount to intrinsic value.
The company recently confirmed that it had received unsolicited takeover interest from several potential acquirers. While no binding proposal has yet been made, market speculation has pointed to interest from American Equipment Holdings, a major U.S. overhead crane and hoist provider, along with Saudi Arabia’s National Mining Company and Australia’s National Mining Services.
We believe this attention is justified. Emeco’s underlying fundamentals are strong, and its turnaround over the past two years has been impressive. The company reported a 43% increase in FY25 net profit to $75.1 million, supported by robust cash flows and disciplined capital allocation. Emeco currently trades at just below its net tangible asset value (NTA) of $1.36, offering investors significant downside protection at current prices.
Our initial entry into EHL occurred around $0.80 per share, when the market was still pricing in pessimism around mining services demand. Since then, management’s focus on cash generation, cost efficiency, and debt reduction has begun to bear fruit. We also anticipate capital management initiatives, such as share buybacks or dividends, over the next 12 months, which could further support the share price.
At a current valuation of roughly 8x earnings, EHL remains one of the more attractively priced industrials on the ASX. The potential for a takeover adds optionality to the upside, but even on a standalone basis, we see continued value as the business executes on its strategy.
Symal Group Limited (ASX: SYL)
Market Cap: ~$270 million FY26 Normalised EBITDA Guidance: $117–127 million Investment View: Founder-led infrastructure play with strong growth trajectory and multiple expansion potential.
Symal Group Limited is a name that has flown under the radar since its IPO last year, yet it embodies many of the attributes we look for in emerging mid caps: founder leadership, strong balance sheet, earnings visibility, and exposure to structural tailwinds.
The company recently announced the acquisition of McFadyen Group, a Queensland-based water utilities contractor, for $11 million. The transaction is expected to deliver annualised EBITDA of $3 million by FY26 and will be earnings accretive from the first year of ownership. Following the acquisition, Symal upgraded its FY26 normalised EBITDA guidance by $2 million to a range of $117–127 million.
McFadyen’s founder will remain with the business, ensuring continuity and cultural alignment, which we view positively. The acquisition fits neatly within Symal’s broader growth strategy, expanding its national footprint and diversifying into high-demand infrastructure verticals such as renewable energy and defence.
From an investment perspective, Symal’s fundamentals are compelling. The company trades on a 10x price-to-earnings multiple, well below peers in the construction and contracting sector, which are valued closer to mid-teen multiples. It also maintains a net cash balance sheet, providing flexibility to pursue further strategic acquisitions.
We believe Symal is on the cusp of a significant re-rating as it continues to win government and infrastructure contracts, scale operations, and deliver earnings consistency. Our internal valuation sits north of $3.00 per share, implying meaningful upside from current levels.
The Bigger Picture: Why Quality Matters More Than Ever
While the small and mid cap universe is rich with opportunity, selectivity remains crucial. The days of buying broad small-cap ETFs and expecting easy gains are over. Quality is once again the differentiator.
Across our portfolio, we focus on three key attributes that consistently drive long-term outperformance in this part of the market:
Founder or Owner-Led Culture: Companies like Symal, where management retains significant equity, tend to demonstrate superior capital discipline and long-term thinking.
Strong Balance Sheets: Access to capital has tightened. Companies with net cash or manageable leverage, such as Bravura and Symal, are positioned to invest and grow while others retrench.
Earnings Visibility: Predictable cash flow and recurring revenue streams remain the cornerstone of our approach. Bravura’s ARR growth, for instance, provides a solid base for valuation expansion.
These factors not only reduce downside risk but also enhance upside potential as sentiment shifts. When the market turns, investors gravitate toward proven operators rather than speculative concepts.
Looking Ahead: The Path to a Broader Re-Rating
The recent rally in small and mid caps is, in our view, still in its early stages. Historically, periods of strong outperformance have lasted several years once the cycle begins, driven by both earnings recovery and valuation multiple expansion.
If we look at prior cycles, such as the post-GFC recovery in 2009–2012 or the rebound following the pandemic in 2020, small and mid caps outperformed the broader ASX by over 20% annually during the first 18 months of those upswings. We see a similar setup now.
As interest rates decline and investor confidence rebuilds, small and mid cap valuations will likely re-rate toward their long-term averages. The current environment also favours active stock-picking, those able to identify early-stage earnings recovery stories before the crowd arrives.
At TAMIM, our process continues to focus on uncovering mispriced quality. We believe the companies discussed, Bravura, Emeco, and Symal, exemplify how selective exposure to this segment can drive strong long-term returns.
The TAMIM Takeaway
The narrative around Australian equities is shifting. The large-cap-driven defensive trade that dominated the past two years is losing steam, and the baton is being passed to growth, innovation, and operational agility, all hallmarks of the small and mid cap segment.
As rate cuts approach and economic conditions stabilise, we expect investors to rediscover the structural appeal of smaller companies: stronger earnings leverage, more targeted growth drivers, and management teams with real skin in the game.
Bravura’s transformation under new leadership, Emeco’s disciplined turnaround and takeover appeal, and Symal’s founder-led expansion into national infrastructure all highlight a common theme: operational execution is being rewarded again.
In our view, the Australian small and mid cap market is only at the beginning of its next re-rating cycle. For investors willing to look beyond the headline indices, the opportunity set is both broad and deep, and still undervalued.
Disclaimer: Bravura Solutions (ASX: BVS), Emeco Holdings (ASX: EHL) and Symal Group Limited (ASX: SYL) are held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
After three years of monetary whiplash, the Australian banking sector enters FY 2026 not with a roar but with a calm, deliberate hum. The Reserve Bank of Australia has ended one of the most rapid tightening cycles in modern economic history. Inflation has eased into the RBA’s comfort zone, growth is stable, and unemployment sits at a healthy 4.2 per cent.
For investors, the picture appears deceptively tranquil. Bank profitability remains world-class, capital buffers are robust, and loan impairments are virtually non-existent. Yet beneath the surface, subtle crosswinds are emerging. The age of easy margin expansion is over, replaced by a phase where execution, efficiency, and technology adoption will define winners from laggards.
The End of Monetary Tailwinds
The big four banks, CBA, NAB, ANZ, and Westpac, delivered half-year results to March that can best be described as “steady as she goes.”
Bank
1H25 Cash Profit
ROE
CET1
Comment
CBA
≈ A$5.3bn
13.5%
≈12%
Still the benchmark in retail efficiency and digital execution
NAB
A$3.6bn (+1%)
12.9%
12.1%
Gains in business lending offset slower housing
ANZ
A$3.6bn (flat)
11.8%
11.8%
Suncorp integration broadens deposit base
Westpac
A$3.3bn (–1%)
11.1%
12.2%
Margin squeeze, but corporate lending up 14%
Capital ratios remain comfortably above regulatory minima, with CET1 levels north of 11.5% and liquidity buffers exceeding 130%. Impairments are near record lows. Yet margins, the lifeblood of bank profitability, have peaked.
Competition for deposits is intensifying, and the rate hedges that boosted earnings in 2023 and 2024 are rolling off. What was once a tailwind from RBA tightening has become a crosswind that will test how well management teams can navigate without monetary leverage.
A Central Bank in Equilibrium
The RBA’s October statement struck a note of cautious confidence. Inflation is retreating, household incomes are rising, and credit conditions are normalising. The central bank is no longer fighting inflation nor stimulating demand; it is holding the line.
This equilibrium matters. A 3.60% cash rate sustains healthy banking margins while keeping credit affordable. Mortgage growth is running at 3–5% year-on-year, business lending at 6%, and deposit inflows remain strong.
For the RBA, this is the “Goldilocks zone” where liquidity is ample, inflation subdued, and credit flowing. For banks, it represents a transition zone. The easy gains from rising rates have disappeared, leaving a landscape where organic growth, not repricing, will determine earnings.
Profitability on the Plateau
Return on equity across the major banks averages around 12%, a level that remains the envy of global peers. However, the composition of these profits is evolving.
Volume over Spread: Loan growth, not repricing, is now the main profit driver.
Rising Costs: Wage inflation and technology investment are eroding the cost-to-income advantages of the last two years.
Capital Management: Payout ratios of 65–75% signal steady dividends but little surplus capital for large buybacks.
NAB and CBA continue modest buyback programs that offset dilution, while ANZ and Westpac are tightening costs and investing heavily in digital service delivery.
The focus has moved from rate leverage to productivity leverage. Investors should expect stable earnings rather than explosive growth. That stability, however, has value, especially in a world where credit risk remains minimal and capital is abundant.
The Housing Revival
Perhaps the most underappreciated development is the quiet re-acceleration in housing. Policy easing is filtering through the economy faster than expected. Auction clearance rates are climbing, new loan approvals are rising, and residential construction demand is stabilising after two years of contraction.
Despite this pickup, household leverage remains under control. Post-pandemic savings buffers, conservative underwriting, and tighter serviceability rules have prevented households from overextending. Delinquencies remain below 1%, and pre-payments are elevated.
For the RBA, this is validation that its approach is working. For the banks, it means renewed loan growth without a blowout in bad debts. That combination, if sustained, is the most attractive possible backdrop for the sector.
Global Undercurrents: Resilience Amid Noise
Globally, the environment is less serene. Trade tensions between the United States and China have re-emerged, global manufacturing data remains soft, and financial markets are still adjusting to the new interest rate paradigm.
Yet Australian banks are less exposed than in previous cycles. Their funding mix is now heavily domestic, relying on retail and business deposits rather than offshore wholesale markets. Maturities have been lengthened, and liquidity coverage ratios remain well above APRA requirements.
Even so, a major external shock could ripple through business credit and non-interest income streams, particularly in trade finance and markets divisions. A prolonged global slowdown would not threaten solvency, but it could flatten profit growth and place downward pressure on valuations.
The Outlook: A Year of Earning, Not Windfalls
Sid Ruttala’s analysis outlines three possible paths for the next 12 months.
Mid Case:
The RBA holds the cash rate at 3.60% through mid-2026.
Lending growth continues between 4–6%.
Sector profits remain flat to slightly higher at +3%.
Dividend yields of 5–6% remain well supported by strong capital buffers.
Upside Case:
Inflation declines faster than expected, prompting one or two 25 basis point cuts.
Mortgage volumes and fee income rise, and NIMs stabilise.
Total shareholder returns move toward 8–10%.
Downside Case:
A global trade shock or sticky domestic inflation forces the RBA to hold longer or tighten.
Loan demand softens, profits dip by 2–3%.
Balance sheets remain resilient despite the slowdown.
Overall, 2025 is shaping up as a year of consolidation, not acceleration. Investors should view it as a return to normal, where management skill rather than macro momentum will determine outcomes.
The Technology Frontier
Beneath the surface of stable profits lies a transformation that may prove even more significant than rate cycles. The next frontier of competition in banking will not be balance-sheet strength but technological agility.
Expect continued investment in:
Automation and AI to improve credit assessment, fraud detection, and risk management.
Cloud-based infrastructure to enhance scalability and efficiency.
Open banking ecosystems that allow integration with fintechs and small-business platforms.
These initiatives will not move quarterly earnings, but they will determine which institutions sustain profitability over the next decade. The most successful banks will translate their operational scale into personalised customer experiences, using data to build trust and convenience.
The Australian banking system is entering a phase where technology becomes the key differentiator between maintaining steady profits and unlocking the next phase of growth.
Valuation and Investor Perspective
At current valuations, investors face a challenging equation. The banks’ financial strength and dividend stability are undeniable, yet the market already prices in much of that comfort.
CBA trades at over 28 times forward earnings, reflecting its dominance in digital banking and customer engagement but leaving limited margin for disappointment.
NAB and ANZ trade on mid-teen multiples, offering more reasonable entry points for exposure to corporate lending.
Westpac remains a turnaround story, offering the highest yield but still rebuilding credibility and efficiency.
Australian banks remain defensive holdings, not deep-value opportunities.The more attractive entry points are likely to emerge during cyclical pullbacks or through exposure to smaller, more agile lenders that trade at discounts yet continue to grow earnings and improve balance sheets.
The Macro Implications: The Banks as Barometer
The banking system is often a mirror of the wider economy, and its current stability suggests that Australia is entering a phase of moderate, balanced growth. Credit demand is expanding, household balance sheets are improving, and corporate investment is cautiously increasing.
This “soft landing” scenario, where inflation normalises without recession, is precisely what policymakers aimed to achieve. It provides a stable foundation not just for banks but also for sectors tied to credit expansion and consumer confidence, including housing, construction, and services.
If this balance holds, 2025 could mark the beginning of a multi-year period where Australia’s economy grows steadily without major imbalances.
What Could Go Wrong
No outlook is free of risk. The main vulnerabilities to watch include:
Global Shocks: A renewed slowdown in China or an escalation in trade disputes could weigh on business lending and confidence.
Sticky Inflation: If inflation proves stubborn, the RBA may be forced to hold rates higher for longer, compressing margins.
Wage Pressures: Persistent labour shortages could drive ongoing cost inflation.
Regulatory Shifts: Political intervention or new capital requirements could limit returns on equity.
Despite these risks, Australian banks remain exceptionally well capitalised, with high-quality loan books and strong liquidity. Even in adverse scenarios, the system’s structural resilience limits downside risk.
The TAMIM Takeaway
For long-term investors, the value of Australian banks lies in resilience and yield, not in spectacular growth. As Sid Ruttala describes, the sector is entering a plateau phase, characterised by steady earnings, strong balance sheets, and measured capital management.
While the coming year may lack excitement, it offers something arguably more valuable: predictability. In an uncertain global environment, stability has its own premium. Investors seeking high income and dependable dividends will continue to find the banks attractive, but those chasing higher growth may need to look elsewhere.
The TAMIM view is that valuations are currently full, and risk to the downside exists purely on this basis. Future outperformance will depend on cost control, efficiency, and the ability to adapt technology to enhance returns.
Disclaimer: Commonwealth Bank of Australia (ASX: CBA), NAB (ASX: NAB), ANZ Bank (ASX: ANZ) and Westpac (ASX: WBC) are held in TAMIM’s Equity Income IMA’s as at date of article publication. Holdings can change substantially at any given time.
When markets think of Donald Trump, they often think of volatility. Tweets that move oil prices, tariff threats that unsettle Asia, and the ever-present promise to “bring manufacturing home.” Yet beneath the noise lies something far more structural, a reshaping of global trade that could define the next decade. And surprisingly, according to a new EY report, Australia might be one of the winners.
In an ironic twist of geopolitics, a world of trade walls and tariffs could create a golden window for Australian exporters, miners, and advanced manufacturers. It is a reminder that, in markets, disruption does not just destroy, it reallocates. The question is not whether the world will change, it is who stands to benefit when it does.
A New Trade War on the Horizon
At first glance, the return of Trump’s signature economic policy lever, tariffs appear inflationary and self-defeating. Global trade volumes would likely slow, manufacturing costs could rise, and the world might again brace for the “trade war” headlines of 2018. But peel back the political theatre, and a subtler dynamic emerges.
Multinationals have already spent five years re-engineering their supply chains. The lesson from COVID-19, the Ukraine war, and rising U.S.- China tensions are simple: resilience now matters more than efficiency. Friend-shoring, sourcing from allies rather than rivals, is not just a buzzword, it is becoming an industrial strategy. And this, EY argues, is where Australia’s opportunity lies.
The EY Thesis: Australia as a Geopolitical Safe Haven
The EY report, Trump Tariffs: Australia to Gain from Trade Shake-Up, flips the common narrative. Instead of seeing tariffs purely as a threat, it frames them as a potential trade diversion windfall for countries aligned with U.S. interests.
Australia, the report notes, is a trusted, resource-rich democracy sitting at the intersection of American strategy and Asian demand. As companies reroute supply chains away from China, they will look for reliable partners who can provide energy, minerals, food, and even technology inputs within a stable legal and political framework.
In short, when the U.S. redraws its trading map, Australia could find itself coloured in as a preferred supplier. This dynamic has precedent. When Trump’s first round of tariffs hit Chinese steel and aluminium in 2018, Australian exports to the U.S. actually rose. A similar pattern could play out again, but on a broader scale and with higher stakes.
Commodity Winners: From Lithium to LNG
Every trade cycle produces its commodity darlings. In the 2000s, it was iron ore and coal. In the 2020s, the new power plays are lithium, copper, nickel, and rare earths, the essential inputs of electrification, defence, and AI-era infrastructure.
If U.S. tariffs further isolate China’s manufacturing ecosystem, global firms will seek alternative sources of these critical inputs. Australia, already one of the world’s largest suppliers, stands to benefit disproportionately.
Lithium: Pilbara Minerals (ASX: PLS) and IGO (ASX: IGO) could regain pricing momentum as the U.S. accelerates EV-supply independence.
Copper and Nickel: Sandfire Resources (ASX: SFR) and Nickel Industries (ASX: NIC) may see long-term demand support.
Energy and LNG: Woodside Energy (ASX: WDS) and Santos (ASX: STO) are positioned to supply allies seeking cleaner, non-Russian energy sources.
An overlooked beneficiary might be uranium, a commodity re-entering the conversation as countries pursue energy security over ideology. ASX names like Boss Energy (ASX: BOE) and Paladin Energy (ASX: PDN) could re-rate as geopolitical alignment drives policy support for nuclear baseload.
In this context, tariffs act less like walls and more like funnels, redirecting trade flows from China toward U.S. partners and their supply ecosystems. Australia’s role as a “trusted quarry” could evolve into something more strategic, the bedrock of allied industrial policy.
Defence, Technology, and AUKUS: The New Industrial Complex
The geopolitical dividend does not end with mining. The AUKUS agreement, and the broader technological integration between the U.S., UK, and Australia, signal a multi-decade commitment to shared defence and innovation pipelines.
While the headlines focus on submarines, the real opportunity lies in dual-use technology, AI, cybersecurity, advanced manufacturing, and sensors, where defence and civilian applications overlap.
Under a Trump administration prioritising industrial self-reliance, U.S. capital could flow into allied countries with aligned values and technical capabilities. Australian companies building secure cloud infrastructure, semiconductor materials, or defence tech could benefit from funding and procurement ties.
A few emerging beneficiaries to watch on the ASX include:
Electro Optic Systems (ASX: EOS) – advanced weapons and satellite systems.
DroneShield (ASX: DRO) – counter-drone and defence electronics.
Codan (ASX: CDA) – communications equipment with both defence and commercial uses.
The AUKUS framework could become an industrial accelerator, binding the three nations into a shared innovation economy. And as capital moves to where it is geopolitically welcome, Australia could find itself at the forefront of this new “security-industrial” cycle.
Agriculture and Food Security: Quiet Winners in a Noisy World
Protectionism does not just change factory flows, it reshapes food supply too. If U.S. tariffs target South American or Asian exporters, Australian agriculture could quietly step into the gap.
EY highlights grains, meat, and dairy as potential areas of upside.
The U.S. may lean on allies like Australia to help stabilise food inflation.
China, meanwhile, may continue to import Australian barley, beef, and wine as bilateral relations thaw.
The result could be a dual-market opportunity, selling premium produce into Asia while benefiting from U.S.-aligned diversification in the West. With global food security once again in focus, Australian farmers could enjoy tailwinds not seen since the early 2000s commodity boom.
The Macroeconomic Picture: Inflation, FX, and the Trump Dollar
So, what happens to the broader economy if the Trump Trade 2.0 becomes reality?
Tariffs would likely raise U.S. inflation in the short term. That, in turn, could strengthen the U.S. dollar as capital flows chase higher yields and “America First” rhetoric draws funds home. A stronger dollar would usually mean a weaker Australian dollar, but this time, the story might be more complex.
If global investors see Australia as a geopolitical safe haven, a stable supplier of energy and minerals into the allied supply chain, then the AUD could decouple from its traditional risk-on behaviour. Think of it as a “Trump premium” for nations inside the U.S. economic perimeter.
For investors, that matters. A weaker AUD boosts export earnings for ASX companies, but it also makes offshore investments more valuable in local currency terms. Meanwhile, domestic inflationary pressures from higher global tariffs could nudge the RBA to maintain a cautious policy stance even as other central banks pivot.
In short, volatility would rise, but Australia’s relative resilience could shine through.
Risks and Counterpoints
Of course, this story is not one-sided. There are meaningful risks that could blunt or even reverse these tailwinds.
Chinese Retaliation: If Beijing views Australia as complicit in a U.S.-led containment strategy, it could selectively restrict imports again.
Inflation Feedback Loops: Tariffs raise prices, and higher inflation could erode consumer confidence and global growth.
Market Volatility: Equities could experience sharp swings as traders re-price global trade risk.
Policy Uncertainty: Trump’s unpredictability remains a wild card. Policies could shift overnight.
That is why valuation discipline and diversification remain central to the Tamim philosophy. We look for businesses with durable competitive advantages, low leverage, and strong cash generation, the kind that can withstand macro cross-currents rather than depend on them.
Investment Implications: Turning Policy Shock into Portfolio Opportunity
For long-term investors, the lesson is not to bet on the next U.S. election outcome, it is to recognise the direction of travel. The global system is fragmenting into economic blocs defined by trust, proximity, and politics. The efficient but fragile globalisation of the 1990s is being replaced by something messier but potentially more profitable for countries in the right networks.
Australia sits near the centre of one such network. It is allied with the U.S., embedded in the Indo-Pacific, and rich in the materials and expertise that the new industrial order demands. Whether it is lithium for EVs, LNG for baseload, or cybersecurity for defence, Australia’s relevance is rising.
From an investment perspective, that means:
Looking for ASX companies with U.S. or allied supply chain exposure.
Prioritising balance sheet strength in cyclical sectors like resources and manufacturing.
Identifying technology and defence niches that benefit from AUKUS or allied industrial policy.
Maintaining exposure to agriculture and infrastructure as physical-asset hedges against inflation.
Protectionism may make the world less efficient, but it also makes it more predictable in one respect, countries that share values and security ties will trade more with each other, not less.
A Broader Reflection: The End of the Free-Trade Era
Investors sometimes forget that the past 30 years of falling tariffs, open borders, and cheap labour were the anomaly, not the norm. History’s default setting is competition, not cooperation. What we are witnessing now is a reversion to the mean.
That does not mean we should fear it. The companies and nations that adapt, those that align their capital with security, technology, and resilience, can thrive in this new paradigm.
Australia, as the EY report reminds us, has a rare combination of resources, rule of law, and relationships that make it one of the best-placed economies to benefit from this shift. It will not be smooth sailing. There will be volatility, and the headlines will be noisy. But if the Trump Trade 2.0 is indeed coming, the smart money should already be positioning for it.
TAMIM Takeaway
In a world where walls are going up, Australia’s open-pit mines and open-data partnerships might just be its greatest strengths. A new Trump administration could spark the next great rotation, away from hyper-globalisation and toward trusted-ally trade. For investors, that is not a reason for fear, it is a call to focus on the enduring advantages Australia already holds.
Trade wars make headlines, but alignment builds wealth.
Disclaimer:Woodside Energy (ASX: WDS) is held in TAMIM’s Equity Income IMA’s as at date of article publication. Holdings can change substantially at any given time.
This week’s TAMIM Reading List spans the frontiers of power, people, and perception. We look at how YASA, a UK-based company, is quietly electrifying the future of performance cars, and we travel beyond the solar system with astronomers who’ve now identified over 6,000 exoplanets. Closer to Earth, the unorthodox lifestyle of Jane Street’s billionaire co-founder raises eyebrows, while a data breach at Western Sydney University sparks questions about digital vulnerability. We also unpack why AI isn’t replacing radiologists just yet, examine France’s political deadlock, and dive into how China’s fake social media army is shaping geopolitical narratives.
This week’s TAMIM Reading List explores power, progress and perception across markets, cities and culture. We begin with the newly released Forbes 400, highlighting shifts among America’s wealthiest, while Philadelphia marks a milestone by no longer ranking as the nation’s poorest big city. Jaguar Land Rover’s cybersecurity breach exposes the fragility of digital supply chains, and the story of Thomas Peterffy traces the origins of modern market making. We examine changes to Australia’s Home Guarantee Scheme, test-drive the fastest car ever on Australian roads, and close with a sharp reflection on the fading art of deep thinking in today’s distracted world.
