Investors are in line for a pick up in returns on Australian shares next financial year as the economy accelerates, CommSec predicts.
Total returns on locally-listed shares are currently up 8.2 per cent over 2014/15, a bit below the 20-year average of 10.8 per cent, according to CommSec research released on Monday.
While returns on shares have risen this year, they have underperformed against returns on property, which have lifted 13.3 per cent, while returns on government bonds are up 6.5 per cent.
CommSec chief economist Craig James tipped 2015/16 to be better for local shares, noting that total returns would probably be about 10-12 per cent.
"I think we're going to get close back to normal," Mr James said.
He said a pick up in Aussie stocks would depend on whether economic growth increased to around three per cent, which would boost business revenues and profits.
"We think we are already starting to see the economy picking up in terms of consumer and business spending and confidence levels," Mr James said.
He tipped growth-focused stocks like banks and materials to be big improvers in 2015/16, with the All Ordinaries index expected to be trading around 6,000-6,200 points in June 2016.
However the Australian dollar remains a key uncertainty, having fallen by about 18 per cent in 2014/15.
"While we're expecting the Aussie dollar to be little unchanged at the end of the year ... we've always got to be mindful that the currency can move by something like 13 or 14 cents over a year," Mr James said.
Mr James said the local bourse had performed well this financial year, despite numerous challenges and the recent volatility which saw it retreat from the 6,000 point barrier.
"Greece has returned to haunt investors. Interest rates were trimmed to all-time lows. A stimulatory federal budget was unveiled. China continues to rebalance its economy, as does Australia," he said.
"The US Federal Reserve still hasn't decided to lift interest rates. And higher bond yields have served to check the upward progress of global sharemarkets."
According to CommSec's sharemarket snapshot, 15 industry sectors moved higher in 2014/15 led by the consumer durable and apparel sector, up 48.6 per cent, and transportation, up 31.5 per cent.
The worst performers this year have been energy stocks, dropping 19.6 per cent, and capital goods, down 18.1 per cent.
Mid-sized companies performed better than both their larger and smaller counterparts, CommSec found.
STOCK MARKET WINNERS FOR 2014/15
*Consumer durable and apparel, up 48.6 pct
*Transportation, up 31.5 pct
*Pharmaceutical and biotechnology, up 31.4 pct
*Diversified financials, up 24.6 pct
*Healthcare equipment and services, up 24.1 pct
STOCK MARKET LOSERS FOR 2014/15
*Energy, down 19.6 pct
*Capital goods, down 18.1 pct
*Media, down 15.5 pct
*Food and drug retailing, down 13.6 pct
*Materials, down 5.5 pct
(Source: CommSec)
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