In a quietly bullish assessment of the investment world for Australians, Credit Suisse’s Private Banking division has reviewed global markets and delivered a ‘steady as she goes’ report to clients.
At a briefing in Sydney this week, the global bank noted that the post-tax yield from Australian equities in the past few years has been 5 to 5 and-a-half per cent. No other asset class around the world has matched it.
Credit Suisse is forecasting a continued, though modest, rise in the Australian equity market this year, with the S&P/ASX index ending the year at about 6,500. The growth for Australia remains sound, the bank said.
The demand for equities is continuing to rise at the same time as it is not being “fed” by new issues. For instance, the big Australian banks are likely to net “retirers” of equity.
According to Andrew McAuley, the CIO of Credit Suisse Private Banking in Australia, the best prospects for equity markets, outside Australia, are emerging markets, Europe and, to a lesser extent, Japan.
He said: “We’re in the second half of the recovery phase, so investors should also have an allocation to absolute return funds.”
He expects capital expenditure by corporates to increase in 2018, which could trigger a rise in M&A activity. Areas to look at include stocks with M&A potential, software and media sub-sectors, industrials and private equity.
Credit Suisse develops what it terms “Supertrends” for long-term investing. These include the rise of emerging markets consumers, and increasing demand for security and defence stocks because of the “Angry Society” Supertrend (the rise of political populism around the world).
Credit Suisse has been operating its private banking in Australia for about 10 years. Its assets under management here have doubled since 2015 – currently sitting at about $20 billion.