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2018 reporting season outlook

2018 reporting season outlook

Reporting season is underway, bringing focus to the stock market, company earnings and the global and domestic economies.

Fund managers report the global economy is experiencing synchronised growth, but caution that companies listed on the Australian Securities Exchange (ASX) will be closely watched for earnings details and any outlooks during reporting season.

In 2017, the top 20 stocks on the ASX returned 7.3%, while the ex-20 stocks returned 18.7%, according to Bennelong Funds Management’s investment partners.

Australian shares

Julian Beaumont, investment director at Bennelong Australian Equity Partners (BAEP), thinks “the biggest risk for markets is a material jump in interest rates”, and adds that with Australian 10-year government bond yields around 2.8%, “this seems to be some time off”.

However, particularly for Australian exporters and for global businesses, he says “a question mark hangs over whether the Australian dollar will strengthen”.

Property

Justin Blaess, portfolio manager at Quay Global Investors, agrees “the Australian dollar is a wildcard in the mix”.

He says global real estate returns for Australian investors were “negatively impacted by a strong dollar in 2017”.

Global infrastructure demand

Greg Goodsell, global equity strategist at 4D Infrastructure, says private sector financing will be an essential element of future projects if global infrastructure needs are to be met.

A rapid expansion of the middle class, particularly in Asia, is likely to change consumption, which could mean greater demand for food, housing, education and healthcare facilities and more people travelling, increasing the need for airports and roads, for example.

“At the end of 2016, there were 3.2bn people in the global middle class,” Goodsell says. “That will increase by 160m each year for the next five years. In all, 88% of the next billion entrants into the middle class will reside in Asia.”

You can follow daily coverage during reporting season with updates from CommSec.

Things to consider: 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. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. Neither Commonwealth Securities Limited nor members of the CBA Group accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.

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. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. Neither Commonwealth Securities Limited nor members of the CBA Group accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.