It’s customary at this time to reflect on the year past and more importantly look at the year ahead and consider some stock ideas.
The year appears set to finish with a healthy return from the Australian stock market, delivering a positive return of around 12%. In the year ahead, driven by an abatement of fear and further falls in interest rates, we expect the Australian market to move ahead by 10%-15%.
As interest rates fall further, company values increase as Price Earning (P/E) multiples rise and economic activity improves. With around $1.6 trillion in Australian bank deposits and rates trending lower, the capacity for these funds to flow into other asset classes is significant, providing a boost for the stock market.