After a predictably sound finish to 2015 when the annual retail frenzy aided local and domestic markets, the bears came out at the start of the new year. A plunge in oil prices forced a sell off. While this should help you at the bowser, it unfortunately affects resource companies adversely as our commodities are sold cheaper with iron ore also at new lows.
Our falling $Australian dollar gives some respite however, making overseas funds attractive.
I still anticipate the larger mining companies like BHP & Rio Tinto to grow and provide amazing value at present. Bear in mind though that these are a minimum 5 year investment and it is impossible to pick the absolute rock bottom price so patience is a virtue.
The Banks, in particular ANZ continue to provide great yields, and I expect their share prices to grow also.
With China still our major exporter, the situation over there is still intriguing. The government has trillions of dollars in reserves and will make sure the economy does not have a hard landing. The government has spent most of its wealth on infrastructure which always is a sound base for an economy. Urbanisiation, will still be going occurring for another decade, so building won’t stop soon.
Therefore, while the last half of last year was not great for China, its position as a global superpower is definitely not in jeopardy.
OUTLOOK FOR 2016
Unfortunately, it does not appear that market volatility is going to end in a hurry. Commodity prices and currency fluctuations have seen a shaky yet positive start to the year. With global growth positive yet weakening, I predict Australian markets to rebound and have a positive 2016. There is plenty of value in individual stocks, however patience is the key. You may buy a stock like BHP and it could fall further, however if you stay the course, in 5 years time you won’t regret it. I also see positive returns in global markets, aided again by a falling dollar.
In times of volatility, it is critical to make sure you have adequate insurance. We can conduct a quick needs analysis to assess if you are over or underinsured. We can also use an independent premium comparator to show you the lowest premium on the market for your particular situation.
LOANS AND INTEREST RATES
The American Federal Reserve after much anticipation, finally increased interest rates in the US. This had a positive impact on global markets as it shows confidence in American markets, which still provide the benchmark for world economies.
Still, I would be very surprised if the RBA followed suit in Australia this year. With the oil and iron ore prices still so low, this would be too risky.
My opinion, therefore, would be that fixing your mortgage currently would not be advisable.
We also have access to every lender in the market and can let you know if you are paying too much interest. If you haven’t revised your rate in the last couple of years, this is probably the case. Call us for a free appraisal.