Returns on shares are “near record highs” after recording their strongest year in four years, according to CommSec Chief Economist Craig James.
Total returns on Australian shares rose by 13.7% over the 2017-18 financial year, while the All Ordinaries Index rose to 6,287.9 points and the ASX200 reached 6,194.6 points.
In CommSec’s review of the 2017-18 financial year, James highlights several other key economic figures:
- Official cash rate remains at record low of 1.5%
- Wage growth up 2.1% from a year ago
- Inflation at 1.9%
- Unemployment at 5.4%
- Economy growing at a rate of 3.1%
The Australian dollar reached a high of 81.35 US cents in January 2018 and a low of 73.23 US cents in June 2017, meaning a range of 8.1 US cents which was just above the 6.25 US cents range in 2016-17.
How did investors do?
Returns on shares were the best performing in 2017-18 with returns on dwellings and government bonds rising by about 3%, according to CommSec.
The following Australian Securities Exchange (ASX) sectors experienced some of the biggest gains (%).
|Autos & Components||41.8%|
|Pharmaceuticals & BioTech||39%|
|Food, Beverage and Tobacco||34.7%|
The Telecommunications sector fell by 34.9% over the 12-month period.
Forecasts for 2018-19
“While housing and infrastructure activity have driven the economy over the past year, in the year ahead exports and business investment are expected to play bigger roles in driving growth,” says James in the review.
CommSec's report also predicts returns on Australian shares may increase by 7-11% this financial year, while the official cash rate may remain on hold until early 2019.
James says the economic situation remains encouraging. “The economy should grow by around 2.75-3.25% – near the 'speed limit' of growth. Unemployment should remain between 5.0-5.5% while wage and price growth will gradually lift towards 2.5%,” he says.
Things you should know:
This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.