Global economic factors such as interest rates and the Australian dollar will be particularly influential in shaping the outlook for superannuation funds over the coming year, according to Kinetic Super.

Paul Kessell, chief investment officer of the $3 billion fund, made the forecasts at Kinetic Super’s Global Predictions 2016 session this week.

The panel he was part of also agreed the global economy is poised to enter a healing phase as the United States, the United Kingdom and other leading western economies continue to strengthen with jobs, rates and growth all trending upwards.

“The US interest rate rise – the first in a decade – signals a new cycle of growth, and comes at a time when the Australian economy is rebalancing from mining-led growth to non-mining and services,” Kessell said.

He added that the ongoing structural changes within the domestic economy, including the shift from mining-driven growth to tourism, services and agriculture, were positive for the superannuation sector.

“Australian businesses are well positioned. There will be challenges for some industries and I think that creates opportunities. If businesses can adjust for the impact of higher interest rates and possibly a lower Australian dollar, they will be well positioned in the longer term.”

Stephen Walters, chief economist of Australia and New Zealand at JP Morgan, said that as the US and UK economies moved “out of intensive care” into a stronger growth phase interest rates would likely rise.

“The winners in 2016 will be those economies like the US and UK that are generating jobs and where interest rates are starting to rise. However, higher [global interest] rates will make it harder for emerging world economies such as Brazil, China and Eastern Europe, who are already facing high debt and weaker growth,” Walters said.

Walters urged Australian businesses to be optimistic in 2016 and “take a glass-half-full approach and start investing for the future because the outlook is quite bright”.

Neil Margolis, chief executive and lead portfolio manager of Merlon Capital Partners, told the forum that Australia’s trade-exposed economy meant its economic fortunes would be closely tied to that of its major trading partners in 2016.

“2016 will be an important year given that the US and China are diverging: the US is getting stronger and raising rates, while China is slowing and has a lot of debt so is less likely to lower rates. China needs to rebalance from a fixed investment focus to a consumer spending focus,” Margolis said.

“The good news is that the Australian economy is already rebalancing: residential construction is booming and retail spending is stronger. The tourism and education sectors employ more people than mining, which is contracting.”

Margolis said that, in contrast to the US, Australia still had some flexibility with interest rates.

“Interest rates can be cut further. While the Reserve Bank is reluctant to do so at this stage, it has the ability to if the currency doesn’t weaken further.”

He urged investors to take a long-term view to investing: “The economy is open and flexible enough to adjust to any challenges ahead”.

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