“There’s always more risk than you’re aware of, but part of the reason why I think the Aussie market is [as] an attractive investment opportunity as it is today, is because a lot of those risks are right in front of us and screaming at us,” he says.
“The sovereign debt crisis [is] a real risk that could well hamper global growth, but that’s well and truly priced into the market.
“The US economy; people are fearful of another recession, so that’s well known in the market. People are then very worried of a hard economic landing in China, but they’re all priced into the market.
“In Australia, we do have that two-speed economy, so the fear of higher interest rates [and] a relatively low unemployment rate could lead to inflation and higher interest rates. Industrial relations I guess is an issue as well, around those sorts of topics.
“All of those would be risk points,” Taylor says.
It will be a while before any mass movement into the Australian equities market occurs among retail investors. Having been spooked during the GFC and pulling back from equities, investors remain cashed up and don’t look like budging in the short term.
Briganti says this is truly reflective of where the comfort levels are in certain asset classes.
“Retail investors are holding relatively high levels of cash, and once there’s a resumption of confidence that the global economy’s on track, some of that may move out of cash and back into equities,” he says.
“I think there’s more bigger trends at play within direct equities, like the emergence of ETFs [exchange traded funds], which could see Australian investors take a more active interest in international investing because it’s been made easier for them to do that.”
