Invest
Economic fears constricting growth, says UBS
Despite Australian housing prices rising an average 8.1 per cent since the GFC, households are saving at unprecedented levels, according to asset manager UBS.
Economic fears constricting growth, says UBS
Despite Australian housing prices rising an average 8.1 per cent since the GFC, households are saving at unprecedented levels, according to asset manager UBS.
UBS Asset Management’s head of investment strategy, Tracey McNaughton, says persistent fear about the economy that has lingered since the GFC has led to “feeble growth” in a number of key areas, including household spending.
“The savings ratio in Australia has averaged 9.8 per cent of income in the eight years since the Global Financial Crisis, more than double the average of just 3.9 per cent in the 20 years prior,” Ms McNaughton said.
“In Australia during the 2004-2008 housing boom, when house prices were rising on average by 6.9 per cent, households were spending the built-up equity in their home to such an extent that the savings ratio actually turned negative.”
“[Now,] the average household with a mortgage in Australia is 22 months in advance of their payments,” she said.
“Fear means equity has been built up on household balance sheets rather than cashed out.”
In order to achieve a recovery, we must learn from previous crises to boost confidence in the market, Ms McNaughton suggested.
Despite the international efforts of governments and central banks, global economic growth remains weak almost a decade on from the GFC, she added.
Unexpected good growth out of the US, interest cuts around the world and dovish central banking policy have done little to stimulate growth.
“Just as the Great Depression left lasting scars on the household psyche, the GFC has left workers, consumers and business leaders fearful and conservative,” Ms McNaughton said.
“Nearly a decade on from the GFC, after more than 660 interest rate cuts globally, an expansion of major central bank balance sheets worth more than $US12 trillion and the creation of 14 million jobs in the US alone, the global economic growth still remains so sluggish.”
Ms McNaughton said this fear has rendered global monetary and fiscal policies ineffective at jump-starting growth.
“Ironically, low interest rates are turning fixed income assets into long-term investments and making equity assets more short term in nature,” she said.
“Yield-hungry, growth-fearing, conservative investors are rewarding companies for paying dividends and conducting stock buy-backs instead of undertaking new capital investment that has a longer payoff period.
“The preference by corporates for dividends is putting downward pressure on new investment spending, thereby undermining potential growth in the future.”
Stock market
Could this bull market be losing steam?
There’s an old investment adage that bull markets never die of old age, with the current market showing signs of cracking just months after the recovery, an industry expert warns. ...Read more
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Stock market
Could this bull market be losing steam?
There’s an old investment adage that bull markets never die of old age, with the current market showing signs of cracking just months after the recovery, an industry expert warns. ...Read more
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
