Lucky Country Might Be Luckier, According to VanEck

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VanEck, a global fund management company, sees Australia as a ‘lucky country’ in 2023. The country may enjoy several tailwinds from the previous year and is expected to be the go-to-market for both local and foreign investors.

According to VanEck Asia-Pacific CEO and managing director Arian Neiron, “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.”

The CEO added that the country is in a much better position than the other global markets. Neiron sees Australia sail through the economic headwinds of 2023. 

He added, “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.”

Nadine McGrath, a journalist at Stockhead, noted that in 2022, the Australian equities were quite defensive compared to other major asset classes. This contributed to the positive outlook of the country’s economy. McGrath added that the reopening of the Chinese economy provided optimism in the previous months. This helped the Australian equity markets maintain only around 1 per cent of losses for the year.

VanEck’s CEO believes Australia may be one of the few economies to escape the predicted recession this year. He believes that the lower headline inflation compared to the US and the UK helped the RBA contain the country’s high inflation, removing the possibility of a recession. VanEck also predicts that Australian equities will be the preferred investment destination for the year.

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