Global Fund Manager Predicts Australia as ‘Lucky Country’ in 2023

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Recent analysis from global fund manager VanEck notes that Australia may be the go-to destination for investors in 2023 due to the number of tailwinds. The company expects Australian equities to outperform global equities this year.

According to VanEck Asia-Pacific CEO and managing director Arian Neiron, Australian equities will continue to outperform global equities and expect an improved performance from small-cap and mid-cap stocks.

Neiron added, “Australia has abundant natural resources in short supply globally and with borders reopened, we expect the return of immigration to offset labour inflation. We favour resources, REITs and consumer staples, are neutral on banks and underweight consumer discretionary. This dynamic bodes well for taking an equally weighted approach to Australian equities.”

VanEck noted that the previous year was remarkable for Australian equities despite being down for the first time since 1994. According to the firm, “This performance was largely due to the Q4 resources rally and Australia’s higher ‘value’ exposure relative to other country equity benchmarks. Australian resource stocks rallied over the past few months on China reopening optimism.”

The CEO also added that Australia has lower headline inflation than the US and UK, which may help the county avoid recession this year. Josh Chiat, writer at Stockhead, noted that Goldman Sachs analysts support VanEck’s prediction. Analysts think the base metal industry may significantly benefit from China’s reopening.

According to the VanEck Australian Investor Survey, the RBA cash rate should peak at 3.85 per cent, and the Australian ten-year yield will remain at around 4 per cent. The survey also uncovers that 80 per cent of investors are planning to start or increase their investment allocation in Australian equities. One in two investors indicated that their preferred investment product would be ETFs, while 57 per cent of the survey participants will plan to start or increase their ETF allocations within the year.

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