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Compliance & Regulation

Aust needs assessment in global context

Despite a number of positive factors that would make further portfolio allocations in the domestic share market attractive to SMSF investors, individuals need to assess the Australian market in light of the global economy, a respected equities analyst has said.

“Domestically here earnings season wasn’t that bad. While we didn’t see earnings growth last year, I guess if you strip out BHP Billiton and the big loss that you saw there, you saw some earnings growth,” Bell Direct equities analyst Julia Lee told the recent selfmanagedsuper SMSF Trustee Empowerment Day 2016.

“The Australian share market is due to come back to earnings growth for the first time in a few years in the current financial year. The Australian economy is growing strongly, 3.3 per cent was the last GDP (gross domestic product) read, which was driven by government spending, and interest rates over here are not negative but they are still going lower.

“So you could say the Australian economy is doing well so why not invest in the Australian share market and I guess that the answer to that is we are in a global market.”

Lee said the consequence of being in a global market was assets were all moving together and if the United States market was showing signs of a downturn, then the Australian market was going to experience the same negative hit.

She suggested a different way in which investors could examine the domestic share market in the worldwide landscape.

“Unfortunately the Australian economy is often sort of grouped in what you can view in a global context as an emerging market,” Lee noted.

“It’s because of the region we are in, we are in a very high growth region, so a lot of the time when you see emerging market assets being hit, the Australian market tends to go along for the ride.”

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