Economics

Valuing companies and their potential for growth is a slippery, convoluted process. Quality is a key metric, according to Loomis Sayles, but other factors play an equal role.

The uncertainty now blanketing the global banking sector adds to the risk of recession, but it comes with a silver lining, AMP’s Shane Oliver told The Inside Network’s Growth Symposium: it’s a sign that central banks’ battle against surging inflation may be nearing its end.

Dividend investing can be a good source of defensive income in volatile times, but changing fundamentals mean resources companies and banks may be the weaker play in 2023, with opportunities emerging beyond these traditional Australian dividend payers – although valuation will be key.

Recent buyers of homes are at the greatest risk of negative equity, and the rising interest rate environment increases the likelihood that some homebuyers will default on their loans. With Australia’s large cohort of new homeowners, that could lead to losses for the big banks.

The US Federal Reserve may have guaranteed deposits at the failed bank, but its collapse constitutes a major scare for private equity managers with outsized technology exposure and is creating stress points in finance systems the world over.

A new report from AMP shows homeownership rates in Australia steadily declining from their peak in 1966, as longer lifespans and greater individual freedoms contribute to a changing definition of what wealthy means for Australians.

Lending specialist Daniel Zwirn spoke candidly about investor “credit myths”, and the misunderstandings that hold people back in the selection and movement of assets in portfolio construction.

Australia can still avoid a recession, RBA Governor Philip Lowe told Parliament in dual grilling sessions in Canberra – while he was keen to remind the country of the need for further belt-tightening and a drop in inflation expectations to keep the path to a soft landing open.

The regulator will look into the discrepancy between the interest rates banks charge borrowers and those they pay depositors, as the RBA’s rate-hiking campaign propels the big four banks toward record profits.

Australians are being hit hard by rising interest rates as banks seek to keep pace by lifting borrowing costs, and the RBA’s latest move will only add to the pain. Mortgage payments for employee households soared 27 per cent in the December quarter alone, and further increases are expected.

While avoiding recession is possible, the continuation of restrictive macroeconomic policies for the near term is needed to fight inflation, according to the IMF’s annual economic report card for Australia – and tax reform and stronger housing policies would also help.

Ever since the GFC, interest rates around the world have been on a trajectory to zero, which acted as a proxy tax on investing for retirement for millions. But the current economic is a whole new ball game, writes Drew Meredith.