The backyard barbecue may be Australia's best-known institution. But these days it's the conversations going on around the "barbie" that are the best evidence of Australia's latest obsession: dotcom drive.
Attend any party in Sydney these days, and you'll likely be inundated with stock tips: Buy Davnet. Sell Kidz.net. Whatever happened to ecorp? You're not still holding Solution 6, are you?
These internet startup firms mean little to most people outside Australia. But they are almost household names here, and have all done their part to create what can seem like staggering wealth for savvy investors and speculators alike.
Having watched the Internet-driven surge on Wall Street, Australian investors in the last year have flocked to new high-tech stocks, creating what some analysts call a stock market "bubble."
Of course, the rise dotcom stocks is global. Even Queen Elizabeth II, currently touring Australia, is a recent dotcom millionaire. Her 100,000 ($157,000) investment in getmapping.com, a firm producing an aerial map of Britain, surged to 1.2 million ($1.9 million) in just four months, according to London's Sunday Telegraph.
The Wall Street connection
Australian stocks have a connection with Wall Street. Economist Craig James says the Australian Stock Exchange depends heavily on the US markets for direction. Last week, as Nasdaq recovered from a steep slide, the Merrill Lynch Internet index of Australian internet stocks, followed suit and rebounded 2.5 percent.
Historically, resource-rich Australia's stock market was a haven for mining companies. But in the last 12 months, more than 100 new high-tech stocks have been listed on the Australian Stock Exchange, many of them by highly speculative mining explorers seeking new fortunes in cyberspace.
The trend has coincided with a prolonged period of economic prosperity for Australia. Much like the US, Australia has in recent years experienced high growth and low inflation - the latest figures show the Australian economy has grown at 4 percent in the last year.
As in the US, the boom is incomprehensible to many Australians. "I can understand some people scratching their heads and wondering what the conversion of small amounts into large amounts without any apparent effort - whether that really represents productive lasting economic activity," Prime Minister John Howard said recently.
But to some the incredible boom Mr. Howard is talking about is a perfectly rational reaction to the arrival of what many call the "new economy."
According to Michael Blythe, an economist with Commonwealth Bank, one of Australia's largest, the Internet has the potential to bring about a quantum change in the same way the steam engine or the automobile did. And "potentially, Australia should be one of the bigger beneficiaries of that," he says.
If the Internet has helped cut costs and increased productivity for businesses using it in the US, then it has also helped undermine the "tyranny of distance" that for so long has kept Australia out of the top tier of the global economy. Over the Internet anyone can do business - it just doesn't matter anymore if you live Down Under.
But if there is indeed a speculative "bubble" growing over Wall Street, then, economists say, that is a worrying prospect for Australia, whether or not you believe Australia has its own equivalent. Australia, they say, is one of the countries most vulnerable to any downturn in the US economy.
According to Mr. James, a bursting of the stock-market bubble could affect Australia worse than the Asian economic crisis that began in Thailand in July 1997, which Australia managed to survive relatively unscathed.
The internet boom here is helping to fuel a rise in in the number of shareholders. According to a recent survey, Australia has the highest level of shareholders per capita in the world, with 53.7 percent of its adult citizens now holding stock either directly or through retirement funds.
In the last year alone, the number of trades carried out each day has gone from an average of 40,000 to more than 90,000. "That increase," says Gervase Green, a spokesman for the exchange, "is almost solely due to the tech boom. The enthusiasm is obvious. Dotcom means give us your money."
The high level of share ownership in Australia will also, many fear, expose more and more small-time investors to any resulting crash.
"Australia is very vulnerable because of the enormous growth in shareholders in recent years," says Tony McLean of the Australian Shareholders Association. "Many of those shareholders will not have experienced a downturn and may not be as prepared for volatility in the market as longer- term investors."
Part of the problem though, McLean says, is that the Internet trend has also hit some big names on the Australian stock market.
The two biggest companies on the exchange - media tycoon Rupert Murdoch's News Corporation and Telstra, the country's largest telecommunications company - are both staking their future on the Internet and have seen their stock soaring into record territory.
Murdoch's News Corp., most visible as entertainment's Fox brand in the US, has seen its shares rise some 150 percent since October because of speculation over its future plans online.
Both the shareholders association and the Australian Stock Exchange have been trying to urge investors to be careful. "The message we try to get across to people is that now is the time to be as cautious as ever," Mr. McLean says.
But that's a hard message to get across when around the backyard barbecue people are boasting about doubling and tripling their money in a matter of weeks.
It's also a tough message to get out to a nation that has a love affair with gambling and a history of speculative bubbles.
A tradition of gambling
Australians gamble away 11 billion Australian ($6.7 billion US) dollars each year, according to a recent report, and the country is home to more than 20 percent of the world's slot machines - more than any country other than the US.
While investing in the stock market may not exactly be gambling, for Australians. "I think the psychology of it [gambling] is as important as any real return on investments," says John Knott, a historian at Australian National University in Canberra. "You don't want to be the one who doesn't have any Internet stocks in your portfolio."
And there's a rich history in Australia of not wanting to be left behind by a boom.
The gold rush of the 1850s resulted in a speculative rush on gold stocks on the old Bendigo Exchange that saw the same kind of immense profits for a time, according to Mr. Knott. That was followed by a speculative land grab in the 1880s that eventually crumbled. And more recently, in the late 1970s, a speculative bubble grew over nickel mines in Western Australia before a spectacular collapse.
That ended in tears for many Australian investors and more and more analysts express concern that what could turn out to be a new speculative bubble will end no differently. In Australia "the holes used to be in the ground," one said recently. "Now they're in cyberspace."
(c) Copyright 2000. The Christian Science Publishing Society