Australian shares are expected to open higher after Wall Street, which cast away its US-China trade anxiety, rebounded for its third straight day.
The past week has seen a renewed intensification of concerns about global growth. Bond yields have plunged and associated growth worries have weighed on share markets. This note looks at the global growth outlook, why shares are vulnerable to a pullback and why it’s unlikely to be a resumption of last year’s downtrend.
Much has been made of Australia’s nearly 28 years without a recession. The question now is whether Australia’s luck has run out with housing turning down (and less economic reform in recent times)? While we see a constrained period for Australia as housing turns down, we still don’t see recession (albeit it’s a risk).
- Dividends are great for investors. They augur well for earnings growth, provide a degree of security in uncertain times, are likely to comprise a relatively high proportion of returns going forward and provide a relatively stable source of income.
- Including reinvested dividends, the Australian share market has surpassed its 2007 record high.
- It’s important that dividend imputation is not weakened in Australia to ensure dividends are not taxed twice.