Invest
The investments to avoid in 2017
As the US sets off on an inflationary path, an economist has predicted that 2017 will see increasing pressure placed on two particular investments, as Australians look to re-enter the equity market.
The investments to avoid in 2017
As the US sets off on an inflationary path, an economist has predicted that 2017 will see increasing pressure placed on two particular investments, as Australians look to re-enter the equity market.
Speaking on the latest Nest Egg podcast, BetaShares chief economist David Bassanese warned investors of the sectors that would likely struggle this year amid rising bond yields
“The general theme [in 2017 will] be rising bond yields, long-term interest rates and a stronger US dollar, so that would suggest the defensive yield areas, like listed property and gold, will be under pressure,” Mr Bassanese said.
“They would be the two to be wary about under [rising rates].”
The US Federal Reserve hiked rates in March and said it anticipated it would increase rates twice more this year, and three more times in 2018, squeezing bond proxies, such as listed property, telecommunications and utilities.
“You’ve got Donald Trump [promising] fiscal stimulus, and you’ve got the US Federal Reserve raising rates so the valuations [of bond proxies] probably need to come back somewhat, so that’s one area that I think is going to maybe not do so well at the moment,” Mr Bassanese said.
“By contrast, the two big sectors of our market are financials and resources, and the good news is that they look pretty well-placed at the moment.”
This was reflected in the market as investors got out of safe defensive bond proxies and bought back into the big four banks at the end of 2016.
“The dividend yields are looking okay and particularly with the banks, who were kind of left behind during the rally over the last year or so because of the concerns about capital raising,” Mr Bassanese said.
“I think those concerns are now priced into financial evaluations with valuations of the banks, for example, less than what they have tended to be in the last few years, so relative valuations look OK there.”
Mr Bassanese said there were a few factors Australian investors should be aware of in 2017.
“In Australia, keep a watchful eye on China because China’s still stimulating its economy, keeping steel demand high, which will keep iron ore prices up and help the resource’s sector,” he said.
“The main three things [are] Trump, China, and the RBA, but bottom line is the economy’s doing OK and earnings growth is still coming through, which is going to support the equity market.”
RELATED ARTICLES
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
