Looking back at the performance of the Australian stock market over the past year, it’s still quite interesting. In 2025, the Australian stock market went through a lot of changes—ranging from the initial energy transition policies to later market adjustments—and along the way, there were indeed many investment opportunities that were overlooked.

When it comes to buying stocks in Australia, many people’s first instinct is mining stocks. And it’s true: as the world’s richest country in terms of minerals, Australia’s advantage here is unmatched. But last year’s story was far more than that. The government’s hydrogen subsidy policy (2 Australian dollars per kilogram), which may seem like just an energy policy on the surface, actually reshaped the valuation logic of the entire resources sector. Companies like FMG use cash flow from traditional iron ore business operations to fund hydrogen projects, while also speeding up expansion—aiming to reach 15 million tons of green hydrogen by 2030. This “left hand nurturing the right” model is definitely worth paying attention to.

By comparison, the performance of the two major mining giants, BHP and RIO, was steadier. BHP benefited from its long-term copper supply agreement with Tesla, as well as its advantage from controlling Escondida, the world’s largest copper mine. It captured the upside from the copper demand surge brought by AI computing power. RIO’s advantage is that its asset base is lighter and its debt-to-asset ratio is lower, so under a high-interest-rate environment its cash-flow pressure is relatively smaller. From the perspective of buying stocks in Australia for high-yield returns, RIO’s 6% dividend yield is indeed more attractive than BHP’s.

However, what’s most interesting is the copper mining segment. Take SFR (Sandfire Resources): the copper grade in its Motheo mine in Mozambique reaches 6%, yet costs are only 1.5 Australian dollars per pound. In the entire industry, that kind of cost advantage is truly overwhelming. Combined with a five-year supply agreement signed with Tesla—where 50% of capacity is sold at the LME copper price plus a 10% premium—it effectively locks in future profit potential. Last year, copper prices kept climbing, and SFR’s stock price doubled—there’s nothing unreasonable about that.

There are also highlights in the financial sector. As Australia’s largest bank, CBA performed steadily during the past year’s rate-cutting cycle. It delivered 28 consecutive years of dividend growth, and its average dividend yield of 5.2% far exceeded that of its peers. From the angle of buying stocks in Australia to pursue stable income, CBA is the kind of stock you can hold long term and receive regular dividend payments from.

The healthcare sector is seriously undervalued. CSL, which controls 45% of the global plasma collection stations, has purification technology costs that are 20% lower than those of its competitors. Coupled with Australia’s accelerating aging trend (over 5 million people aged 65 and above), and the government’s Medicare budget increasing year after year, these companies are essentially benefiting from policy tailwinds. In 2025, market funds were all chasing AI. As a result, many healthcare companies with stable profit growth didn’t rise much—until last year, when there was indeed an opportunity for a catch-up rally.

For retail and logistics, WES and GMG are also worth watching. As Australia’s largest retailer, WES benefits from the tangible performance growth brought by consumer recovery. GMG is even more interesting: as Australia’s largest logistics real estate developer, major players like Amazon and Coles are lining up to sign long-term leases. Its occupancy rate is 98%, it has delivered 12 consecutive years of dividend growth, and this is a classic “rent-collecting boss” logic.

From the overall logic of buying stocks in Australia, the biggest change last year was that policy-driven factors became increasingly clear. Where government subsidies go, what technological upgrades are needed, and what resources major powers are competing for—these three questions basically determine the direction of investment. Add to that the increase in global geopolitical risk, and with Australia being the most stable economy in the Southern Hemisphere, its appeal is indeed rising.

We also can’t ignore the advantages of the Australian stock market itself. Over the past 33 years, it only experienced a recession in the year of the pandemic; during all other periods, it delivered positive growth. Its average annual return was 11.8%, and its average dividend yield was 4%. This kind of long-term stability ranks among the very best worldwide. Plus, with the tax treaty between Australia and Taiwan, the dividend tax rate is at most 15%, which is much more favorable than the 30% in the United States.

Overall, last year’s story in Australian stocks wasn’t simply about defensive positioning—it was about finding certainty amid volatility. Policy shifts, technological upgrades, and the scramble for resources are all reshaping the valuation logic of Australian stocks. If you’re interested in buying stocks in Australia, rather than blindly following the trend, you’d be better off first understanding these underlying logics, and then choosing according to your own risk preferences.