Midyear state of affairs: A closer look at the country’s markets
With market conditions changing at varying degrees across the country, seven experts from Property Investment Profession...
Australia remains a 'lucky country' with bargains both in property and stocks up for grabs for savvy investors, according to Chan & Naylor.
With China now the destination of 25 per cent of Australian exports and Australia's national debt-to-GDP ratio expected to peak at approximately 21 per cent compared to 110 per cent for the OECD peer group, the accounting firm is confident Australia is well positioned to weather the current economic storm.
Reinforcing this is the continuing strength of the Australian dollar, which is now regarded as a safe-haven currency, as well as the Reserve Bank's continuing expectation of a 3.75 per cent to 4.25 per cent recovery by 2012.
"Even if these figures prove optimistic, Australia is still expected to significantly outperform most other industrialised countries due to slower global growth and returns," said David Hasib, partner and head of financial planning at Chan & Naylor.
"The stall in growth should take the pressure off interest rate rises locally with the expectation that we may see a rate decrease in the coming months."
Mr Hasib conceded that in the short term there will be some investment pain as a result of the recent volatility. However he said investors should remember their longer term convictions and look for the opportunity therein.
"Currently stock market investors can pick up attractive shares for a bargain and be paid fully franked dividends to watch their share price recover, in some cases between 9% to 12%, in coming months," said Mr Hasib.
He also predicts a rewarding outlook for investors who are considering investing in a stable but sluggish Australian property market.
With rental demand strong, Chan & Naylor expects property investments in current market conditions to offer a healthy yield of five to 6 per cent as well as long term capital growth.
"A lot of people are understandably concerned about the current health of both the global and local economy which has resulted in defensive herd-like behaviour," Mr Hasib said.
"For the focused investor who is willing to resist the pack mentality there is considerable upside in current market conditions."