Why is Australian housing so expensive and what can be done to improve housing affordability?

The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:

  • The key drivers of poor housing affordability and high household debt levels in Australia have been low rates and poor housing supply.

  • Macro prudential controls to slow home lending now look imminent. But this is just a cyclical measure.

  • More fundamental measures to improve housing affordability need to focus on boosting housing supply and decentralising away from major cities.

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How to get help with your bills during COVID-19

If you’re one of thousands of people who has lost income due to COVID-19, you might be finding it hard to pay your bills. Here are some tips to help you get back on track.

As COVID-19 lockdowns continue across much of eastern Australia, many people have once again found themselves out of work. Those working in service industries, and casual workers in particular, are doing it tough, and your cash reserves may be getting low.

If you’re feeling the pressure of mounting bills, it can be very stressful. But there is help at hand. Depending on your situation, you could be eligible for government financial support. And, you can always negotiate an arrangement with your suppliers that lets you hang onto your cash while you weather the COVID-19 pandemic.

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Five reasons why the Australian dollar is likely to resume its upswing over the next 12 months

The attached note looks at the outlook for the Australian dollar and what it means for investors. The key points are as follows:

  • Since its February high of around $US0.80 the $A the $A has fallen on the back of global growth concerns, a slowdown in China and the Delta outbreak in Australia.

  • However, there is good reason to expect the $A to resume its rising trend: sentiment towards the $A is negative; global growth is likely to remain strong; commodities look to have entered a new super cycle; Australia has a large current account surplus; and Australia is likely to see strong growth next year.

  • There is a case for Australian based investors to tilt a bit to hedged global investments but while maintaining a still decent exposure to foreign currency given the diversification benefits it provides.

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China's growth slowdown and regulatory crackdown - what does it mean for China's growth outlook?

China is seeing a regulatory crackdown on tech companies, the property sector and inequality aimed at supporting its middle class.

  • The shift to “bigger government” in China likely has further to run.

  • Chinese economic growth is likely to be soft this half but policy easing and maybe a pause in some regulatory moves should allow a rebound next year.

  • This will be positive for commodity prices and Australia.

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Six reasons why share markets are at or near record levels. But is it sustainable?

The attached note looks at relative strength of share markets at a time when bond yields have fallen sharply on the back of concerns about the threat to economic activity from Delta coronavirus outbreaks amongst other things. The key points are as follows:

  • Bonds and shares often diverge – we saw this a year ago with shares rallying but bond yields staying low.

  • Shares have been boosted by strong earnings news, improved valuations, investor awareness of last years’ experience of a post lockdown bounce back, vaccines providing optimism in a more sustained reopening, some pressure for more stimulus & M&A activity.

  • While shares remain vulnerable to a correction, the trend is likely to remain up.

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Great investment quotes for topsy turvy times

The current environment seems to be one of extreme uncertainty. We have seen a strong economic recovery from last year’s global and Australian recessions – but there are worries about the resurgence of coronavirus driven by the Delta variant, peak growth, peak monetary and fiscal stimulus, high inflation, and high debt levels. And ‘get rich quick’ trading around crypto currencies and ‘meme’ stocks like GameStop on the back of the Reddit/WallStreetBets forum phenomenon have seen some question traditional approaches to investing. In the meantime, investors are getting bombarded with more information and views around investing than ever.

Despite this, the basic principles of investing remain timeless. Fortunately, some investment experts have a knack of encapsulating these in a few words that are insightful and inspiring. This note looks at those of particular relevance to the environment investors face today drawing on Sir John Templeton, Jack Bogle, Peter Lynch, Warren Buffett, Aldous Huxley, Frank Zappa, The Beatles and others.

More information here

Coronavirus continues to cause havoc globally and in Australia – but here are five reasons for optimism

The attached note takes a look at the renewed rise in coronavirus cases globally and the outbreak in Australia and the implications for the economic recovery. The key points are as follows:

  • The news on coronavirus has been bleak again lately - with rising cases globally and the ongoing NSW lockdown.

  • However, there are five reasons for optimism: lockdowns still work against Delta (eg, in SA & Victoria where lockdowns were able to be relatively short because they started early and hard); vaccines are working; once lockdowns end economic activity rebounds quickly; the threat posed by Delta will keep fiscal & monetary policy easier for longer; and vaccinations are ramping up in Australia.

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Seven key charts for investors to watch - where are they now?

This note takes a look at seven charts we highlighted in January for investors to watch as being critical to the investment outlook this year. Put simply, where are they now? The key points are as follows:

  • While shares are at risk of a near term correction on the back of coronavirus and inflation concerns, the trend is likely to remain up against the backdrop of continuing economic recovery and low interest rates

  • Seven key global charts worth keeping an eye on by investors are: the trend in new coronavirus cases and deaths - particularly in the UK; global business conditions PMIs; unemployment & underemployment; global inflation; bond yields; the gap between earnings yields and bond yields; and the $US.

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2020/2021 Year in review

In the last 12 months, we've witnessed a period of extraordinary change yet despite the odds, markets are holding up incredibly well. Our investment experts from around the world share insights from their region and look and some of the opportunities and pitfalls facing investors in the new financial year.

To read through the full review, click here

Warning: Telstra bonds investment opportunities are fake

  • ASIC is alerting investors about fake Telstra Corporation Limited (Telstra) corporate bonds

  • Scammers are promoting Telstra bonds offered on the ASX to legitimise the existence of the fake bonds

  • Do not buy bonds from Telstra (or any other company) that are offered via email or as a recommendation from a comparison website – these are a scam.

Read here for more information

Five ways to turn down the noise and stay focussed as an investor

The note looks at the ever increasing level of noise around investing and how investors can manage it. The key points are as follows:

  • A surge in financial information and opinion along with our natural inclination to focus on bad news is arguably making us worse investors: more fearful & short term.

  • Five ways to help manage the noise and stay focussed as investors are: put the latest worry list in context; recognise that shares return more than cash in the long term because they can lose money in the short term; find a process to help filter noise; make a conscious effort not to check your investments so much; and look for opportunities that investor worries throw up.

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Steps towards financial independence for women

Helen Baker AFP® discusses the importance of making financial advice more accessible to women to improve outcomes for their security and wellbeing.

In the World Economic Forum Global Gender Gap Report 2017, Australia ranked 35th. Many would consider this an achievement at first glance – 35 out of 200+ countries looks good on paper. To put this in perspective, Ireland and New Zealand ranked eighth and ninth respectively. Meanwhile many developing nations also outperformed Australia, including Rwanda (fourth), Nicaragua (sixth) and The Philippines (10th). So why is Australia lagging in closing the gender gap?

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2020-21 saw investment returns rebound - expect more modest but still good returns this financial year

The attached note reviews the investment performance of the last financial year for major asset classes and looks at the outlook for the current financial year. The key points are as follows:

  • 2020-21 saw investment returns rebound after the coronavirus hit depressed 2019-20 returns.

  • Key lessons for investors from 2020-21 were to: allow that share markets look ahead; timing markets is hard; don't fight central banks; and turn down the noise.

  • Over the next 12 months returns from a well-diversified portfolio are likely to be slower but still solid.

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