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.”
Property
3 reasons why Australia’s booming housing market won’t last long-term
Despite Australia’s property market growing at a pace not seen for three decades, a leading economist suggests there are warning signs that the property boom could be short-lived. ...Read more
Property
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said. ...Read more
Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more
Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more
Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more
Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more
Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more
Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
Property
3 reasons why Australia’s booming housing market won’t last long-term
Despite Australia’s property market growing at a pace not seen for three decades, a leading economist suggests there are warning signs that the property boom could be short-lived. ...Read more
Property
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said. ...Read more
Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more
Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more
Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more
Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more
Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more
Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
