According to the latest VanEck Australian Investor Survey, Australian equities are the preferred investment destinations in 2023, with 70 per cent of investors planning to start or increase their allocation.
One in two investors indicated ETFs are their preferred investment product, while 57 per cent plan to start or increase their allocation to ETFs this year.
Australian equities are expected to continue to out-perform global equities in 2023.
VanEck sees Australia being “the lucky country” again in 2023 because it is likely to avoid recession. It has lower headline inflation than the US and many European nations. This means the task of the RBA containing high inflation without triggering a recession will be more manageable compared to other countries.
“Australia, on balance, is much better positioned than most countries to manage economic headwinds in 2023,” VanEck Asia-Pacific CEO and managing director Arian Neiron said.
“The country has abundant natural resources in short supply globally, and with the borders reopened, we expect the return of immigration to offset labour inflation.”
Neiron added that VanEck favours resources, REITs, and consumer staples. They are also neutral on banks and underweight consumer discretionary.
“This dynamic bodes well for taking an equally weighted approach to Australian equities,” he said.
“With mortgages being mostly variable we expect a quicker transmission of monetary policy to the economy. We forecast the RBA cash rate to peak at 3.85 per cent with the Australian 10 year yield to remain around the current 4 per cent level, and we may see an inversion of the curve which could support bond proxies like REITs, infrastructure and utilities.”
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