Post on 23-Jun-2020
Savanth Sebastian, Economist, @CommSec
Important Information
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This presentation has been prepared without taking account of the objectives,
financial situation or needs of any particular individual. Before acting on the
information in this seminar, you should consider its appropriateness to your
circumstances and, if necessary, seek appropriate professional advice.
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AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of
Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the
ASX Group.
Examples used in this presentation are for illustrative purposes only.
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Inflation in focus
Oil price slumps
Weak growth Europe, Japan
Skittish confidence
China transition
US rates decision
Australia lacks momentum
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Global Issues
Negative interest rates
Deflation/disinflation
Currency wars
Budget deficit/debt
Quantitative easing
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The big 2 in driver’s seat
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Chinese economy will slow over time
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More diversified trade…
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Lacking confidence
In Short Could do better
So What? Job market risks
Rates to stay low
Kinder budget
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Strong housing; uncertain business
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Job market improves
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Still spendingWhat We Bought
Annual change, December quarter 2014
% change Real (inflation-adjusted) spending
15.3 Electrical, Electronic & Gas Goods Retailing
11.3 Footwear & Other Personal Accessory Retailing
9.2 Hardware, Building & Garden Supplies Retailing
8.0 Furniture, Floorcovering And Textile Goods Retailing
5.5 Takeaway Food Services
5.0 Liquor Retailing
3.6 TOTAL
2.2 Cafes And Restaurants
2.1 Supermarkets And Grocery Stores
1.8 Department stores
1.8 Pharmaceutical Cosmetic And Toiletry Retailing
1.3 Sporting goods, toys, video games
0.6 Flowers, antiques etc
-1.2 Clothing Retailing
-5.6 Butchers, fruit, bread, fish shops
-7.3 Newspapers And Books
Source: ABS (unpublished), CommSec
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State of homes
HOME PRICES
March 2015 2.7%
1.5%
5.6%
-0.3%
2.2%
-0.1%
-0.8%
13.9%
Annual % change
Source: CoreLogic RP Data, CommSec
Supply & Demand
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In Short Strong housing market
So What? Positive for building trades
Positive for retailers
Need to follow cycle
Construction boom & foreign investment
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Stimulus factors
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Super-low rates
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Shares, rates, houses
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Opportunities & Risks
Opportunities
Wealth is rising
Housing-dependent areas to do well
Tame Budget
Interest rates to stay low
Risks
Economy not growing fast enough
Rising unemployment
No lift in confidence
Scant real wage growth
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Outlook
FORECASTSend 2015end 2014
2.75-3.25%2.5%Economic Growth
2.25-2.75%2.4%Underlying inflation
5.75-6.25%6.1%Unemployment
end 2015mid 2015
2.00-2.25%2.00-2.25%Cash rate
6,100-6,3005,900-6,100Sharemarket (All Ords)
US70-77cUS71-78cAustralian dollar