Perpetual Private’s Head of Investment Research, Kyle Lidbury, takes a look at the unexpected events of 2016 and their investment implications for the year ahead.
- Global equity markets performed strongly – surprising many post the election of Donald Trump.
- Australian shares (ASX100) gained 5.8%, led largely by Financials (and the big 4 banks) which were up 10.8% as investors saw a steeper interest rate yield curve helping their profitability.
- Australian Real Estate Investment Trusts (ASX300 A-REITs) logged another fall in the December quarter (-0.7%) in the face of rising long-term bond yields.
- The RBA Cash Rate remained at its all-time low of 1.50%. As of early January 2017, financial markets are pricing that the Cash Rate will remain steady over 2017 with one expected rise of 0.25% in the first half of 2018.
- In response to expensive asset class valuations, Perpetual Private is maintaining high levels of cash in Implemented Portfolios. Ongoing financial market volatility will provide attractive investment opportunities to invest this capital.