T. Rowe Price takes 'glass half full' outlook to Australia
Australia has a strong fiscal backdrop as the country moves to re-open following the COVID-19 pandemic, according to T. Rowe Price.
In a monthly update on its global asset allocation, managers Richard Coghlan, Randal Jenneke, Thomas Poullaouec and Wenting Shen said there were several factors which presented near-term tailwinds for the country.
These included the small number of total cases, sustained decline in the spread of the virus and move by the Government on support measures.
The firm also suggested the stockmarket performance failed to adequately reflect the actions taken so there could be a “catch-up rally” in the future. T. Rowe Price was currently neutral on Australian equities as they had experienced recent underperformance but, over a one-year period, the firm said the cyclicality of Australian equities should play in their favour.
“The Australian Government has taken swift action to contain the outbreak, resulting in a relatively small number of cases within the country and a sustained decline in the virus spread. So, while many other countries still remain in lockdown or have extended movement restrictions, Australia has instead moved to reopen its economy ahead of schedule.
“Pent-up demand and the need for inventory restocking as business activity comes back online should provide near-term tailwinds for the economy. That comes on top of considerable policy measures from the Government and the Reserve Bank of Australia that were deployed quickly and aggressively.
“Fortunately for Australia, the country’s fiscal position was stronger than other countries entering the current crisis which we think could lessen the long-term risks of this unprecedented level of accommodation. Importantly, it may also leave further room to unveil new support measures if needed.”
However, it was not entirely a positive situation as the country was likely to be hit by the slowdown in migration as a result of the travel restrictions, dividends on Australian equities would be cut, valuations were stretched at historical highs and it was subject to retaliations from China.
Performance of T.Rowe Price Australian Equity fund versus ASX 200 over one year to 30 April, 2020
AUTHOR
Laura Dew
Recommended for you
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
Former Pendal head of multi-asset Michael Blayney has been appointed as a member of the investment committee at specialist managed accounts provider Evidentia Group.
Australian Ethical has seen its funds under management surpass $13 billion in the latest quarter, thanks to retail and wholesale net flows of $173 million but a transition project by Mercer affected superannuation flows.
A salary guide has unpacked the salaries earned in various asset classes, with managing directors in one space earning north of $500,000.
