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Australian Miners, Exporters Poised for Further Growth: Strategist

With the Australian economy steaming ahead and the Aussie dollar trekking higher, how should investors place their bets on equities 'down under'?

Gerard Minack, head of global developed market strategy at Morgan Stanley, believes the game plan is fairly straight forward.

"You have an economy at full capacity where mining and capex are going to grow above trend," he said on CNBC's Protect Your Wealth.

"Investors should go with the strength — mining and exports, companies that are selling into Asia."

Minack added that the 28-year high Aussie dollar benefits Australians who go overseas and makes for cheaper imports to the country. The flip side is that companies focused on the domestic economy will feel the pain caused by the Aussie and rising domestic interest rates, he said.



"Consumer stocks, domestic services stocks, tourism-related stocks will be hurt by RBA (Reserve Bank of Australia) tightening and a strong currency," Minack explained.

He cautioned that the below-trend growth in these sectors "will not be one or two quarters but a multi-year affair."

When it comes to the Aussie, Minack said that much hinges on how far the U.S. dollar would slide.

"With the Fed (Federal Reserve) printing money, the dollar can keep falling and the Aussie keep going up," he said.

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Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."