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Articles by Shane Oliver
Why super returns may be heading lower
This article was provided by a third-party and the opinions expressed here are the author’s. Morningstar values diversity of thought and publishes a broad range of viewpoints From the early 1980s investment returns were spectacularly strong. Despite some bumps, like the 1987 crash, this was reflected in Australian balanced growth superannuation funds returning an average 14.1% pa in nominal terms and 9.4% pa after inflation between 1982 and 1999. And that was after taxes and fees.
Why super returns may be heading lower
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The art of happiness
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses happiness and whether economics is failing us with its focus on GDP and consumption. Key points: Despite a big rise in GDP per person, surveyed measures of happiness have been flat to falling in the US and Australia. Younger people in the US, Canada, Australia and NZ are the least happy age group. This is a major change from 20 years ago and may be due to the rise of social media.
Metrics Credit Partners
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Investing for generations
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The BIG picture: portfolios perform for the passive and patient
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Seven Key Charts for Investors to Keep an Eye on – ShareCafe
Introduction Shares had a strong start to the year seeing gains into early February around or above what we expect for the year as a whole.
The RBA Hikes Rates by Another 0.25% - Are we there Yet? – ShareCafe
Magnis Energy Technologies (MNS.ASX) announced an update to its 2016 Banking Feasibility Study (BFS) for the Nachu graphite project (net 100%), with a post-tax NPV10 of US$1.2Bn. The Tanzanian project has a 2P reserve of 76mt with a TGC of 4.7%; yielding 3.6mt of contained graphite. The project will have a 15.5-year life, with steady state production of ~236kt (236,000t) of graphite concentrate/year for 11.5years before declining.
Bank funding squeeze raises Aussie recession risks
Primary Section The Reserve Bank of Australia (RBA) is widely tipped to increase the cash rate by 25 basis points to 3.Some economists like Deutsche Bank and Goldman Sachs expect the cash rate to peak at 4.1%, but Shane Oliver of AMP Capital warns that this would risk a major recession.Oliver also warns that lenders may need to increase their mortgage interest rates independently of the RBA, given that $188 billion worth of cheap funding via the central bank’s term funding facility (TFF) is...
7 Reasons Oz Shares Will Likely Outperform Global in the Medium Term – ShareCafe
Introduction Since the March 2009 Global Financial Crisis (GFC) low in share markets, Australian shares are up 138%, compared to a 310% gain in global shares in local currency terms and a 500% gain in US shares. Source: Bloomberg, AMP Last year though Australian shares outperformed global shares, helped by strong commodities and a less hawkish RBA. The big question is whether the structural underperformance by Australian shares since 2009 is over? Why have Australian shares underperformed?
2023 - A List of Lists Regarding the Macro Investment Outlook – ShareCafe
Magnis Energy Technologies (MNS.ASX) announced an update to its 2016 Banking Feasibility Study (BFS) for the Nachu graphite project (net 100%), with a post-tax NPV10 of US$1.2Bn. The Tanzanian project has a 2P reserve of 76mt with a TGC of 4.7%; yielding 3.6mt of contained graphite. The project will have a 15.5-year life, with steady state production of ~236kt (236,000t) of graphite concentrate/year for 11.5years before declining.
Weekly economic and market update - week ending 14 October, 2022
Shares had another volatile week, falling initially on interest rate and recession fears with a sharp intraday fall in US shares on Thursday after another worse than expected inflation reading, before having yet another (mostly technical) bounce. This left US, Japanese and Chinese shares up slightly for the week but European shares down slightly.
Weekly economic and market update - week ending 7 October, 2022
Investment markets and key developments Share markets had a strong bounce in the middle of the past week from very oversold levels, helped along by the UK tax backflip, softer US manufacturing and job opening data which may take pressure off the Fed &, for Australian shares, the dovish RBA hike.
Weekly economic and market update - week ending 30 September, 2022
Investment markets and key developments Share markets fell sharply again over the last week in response to continuing hawkish central bank comments and rising recession fears not helped by a mini fiscal crisis in the UK. This capped of sharp falls for the month with US and global shares down around 8%, which saw September live up to its reputation as the weakest month of the year for shares.
Weekly economic and market update - week ending 23 September, 2022
Investment markets and key developments Share markets fell sharply again over the last week in response to another round of hawkish rate hikes pushing up bond yields and adding to recession fears and with a threatened intensification of the war in Ukraine adding to worries. Reflecting the poor global lead Australian shares fell around another 2.7% with falls led by interest sensitive IT, property, utility and retail shares.
Weekly economic and market update - week ending 16 September, 2022
Investment markets and key developments Share markets fell sharply over the last week, reversing their rally from the previous week’s lows as US inflation surprised on the upside adding again to Fed rate hike expectations. The poor global lead saw Australian shares fall back to their lows of the previous week with falls led by property, health, consumer staple and industrial shares. Bond yields rose as higher short term interest rates for longer were factored in.
Australia’s productivity challenge – why it matters and what to do about it - AdviserVoice
Key points The last twenty years have seen a sharp slowdown in productivity growth in Australia from over 2% pa to around 1.2% pa. This has adversely affected growth in living standards and real wages. It will adversely affect asset class returns if allowed to persist.
Weekly economic and market update - week ending 2 September, 2022
Global share markets remained under pressure over the last week on the back of continuing mostly hawkish comments from the Fed and ECB and ongoing concerns about recession. Australian shares had remained a bit more resilient through August than global shares did (helped by mostly positive earnings reports) but are now coming under pressure too with falls over the last week led by miners, energy, utility and IT stocks.
Weekly economic and market update - week ending 19 August, 2022
Investment markets and key developments The global share market rebound faltered over the last week with mixed economic data and mostly hawkish messages from central banks, including the Fed. For the week US shares fell 1.2% and Eurozone shares lost 1.4%, Japanese shares gained 1.3% and Chinese shares fell 1%. The Australian share market rose 1.2% though helped by strong earnings results for some companies led by strong gains in retail, resources and industrial stocks.
Booms, busts and investor psychology – why investors need to be aware of the psychology of investing - AdviserVoice
Introduction Up until the 1980s the dominant theory was that financial markets were efficient – in other words all relevant information was reflected in asset prices in a rational manner. While some think it was the Global Financial Crisis that caused faith in the so-called Efficient Markets Hypothesis (EMH) to begin unravelling, this actually occurred in the 1980s.
Weekly economic and market update - week ending 12 August, 2022
Investment markets and key developments The share market rebound continued over the last week helped by weaker than expected US inflation data. Australian shares were little changed though with strong gains in resources largely offset by sharp falls in IT, health and property shares. Bond yields generally rose as the fall in yields in prior weeks had gone a little too far too fast. Oil prices rose partly due to US supply disruptions and increased demand forecasts on the back of higher gas prices.
Investment cycles – what are they and why investors need to be aware and wary of them - AdviserVoice
Key points Cyclical fluctuations are a key aspect of investment markets. Most are driven by economic developments but are magnified by swings in investor sentiment. Of particular importance are the long-term cycles which are often driven by waves of innovation and the 3-5 year business cycle. Right now, we are still in the downswing phase of the business cycle and may have entered a weaker and constrained phase of the long-term cycle.
Weekly economic and market update - week ending 5 August, 2022 - AdviserVoice
Investment markets and key developments The rebound in share markets continued over the last week helped by good earnings data and relief that increased China/US tensions resulting from US House Speaker Nancy Pelosi’s visit to Taiwan did not spill over into a more serious conflict (at least not yet).
Share positives and negatives, US and global earnings growth, RBA less hawkish, Aus earnings
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses developments in investment markets over the past week, the coronavirus, economic activity trackers, major global economic events and Australia economic events.
Five reasons why the RBA cash rate is likely to peak (or should peak) with a 2 in front of it rather than a 3 (or more) - AdviserVoice
Key points The RBA has hiked the cash rate by another 0.5% taking it to 1.85% and signalling more hikes ahead. We see the cash rate peaking around 2.6% which is at the low end of market and economists’ expectations.
Five reasons the RBA cash rate will likely peak with a 2 in front of it rather than a 3 (or more) Original
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses the RBA's rate hike and why consensus expectations for a rise above 3% are too hawkish. Key points The RBA has hiked the cash rate by another 0.5% taking it to 1.85% and signalling more hikes ahead. We see the cash rate peaking around 2.6% which is at the low end of market and economists’ expectations.
Australian home price falls accelerated in July, 15-20% top to bottom average fall expected Original
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses the trend in falls in average home prices. Key points: Australian capital city average dwelling prices fell another 1.4% in July according to CoreLogic, making it their third monthly decline in a row, and their fastest monthly decline since the early 1980s recession.
Weekly economic and market update - week ending 27 July, 2022 - AdviserVoice
Investment markets and key developments The bounce back in shares continued over the last week on hopes that slowing growth will see central banks ease up on the pace of monetary tightening helped along by mostly good earnings results. However, while US and European shares rose, Japanese and Chinese shares fell.
Have shares bottomed, Technical recession, Global inflationary pressures, RBA to hike 0.5%
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses developments in investment markets over the past week, the coronavirus, economic activity trackers, major global economic events and Australia economic events. Investment markets and key developments over the past week The bounce back in shares continued over the last week on hopes that slowing growth will see central banks ease up on the pace of monetary tightening helped along by mostly good earnings results.
The good news in the plunge in markets – higher medium term return potential (assuming inflation is tamed) - AdviserVoice
Key points The fall in bond and share values and rise in their investment yields on the back of higher inflation has seen our medium term (5 to 10 year) return projections for a diversified mix of assets rise to around 6.8% pa. If inflation falls back to around 2.5% pa this suggests reasonable average returns ahead. The main downside risk would be if inflation continues to trend up. The key is to have realistic return expectations and focus on assets with decent & sustainable income flows.
The good news in the market plunge - higher medium-term return potential (assuming inflation tamed)
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses the medium-term potential for major investment asset classes. Key points: The fall in bond and share values and rise in their investment yields on the back of higher inflation has seen our medium term (5 to 10 year) return projections for a diversified mix of assets rise to around 6.8% pa. If inflation falls back to around 2.5% pa this suggests reasonable average returns ahead.
Welcome to Firstlinks Edition 467
"Glory days, yeah they'll pass you by Glory days, in the wink of a young girl's eye Glory days, glory days Think I'm going down to the well tonight And I'm going to drink 'til I get my fill And I hope when I get old I don't sit around thinking about it But I probably will Yeah, just sitting back trying to recapture A little of the glory of, well time slips away And leaves you with nothing mister but Boring stories of glory days" Excerpt from Glory Days, by Bruce Springsteen Fund manager...
Weekly economic and market update - week ending 15 July, 2022 - AdviserVoice
Investment markets and key developments Share markets mostly fell over the last week on fears that still rising inflation will trigger faster rate hikes and recession. While US and European shares both bounced on Friday as US rate hike fears abated a bit, for the week they fell 0.9% and 1.1% respectively.
Rate hike and recession, Covid, Booming jobs v plunging confidence and home prices, ECB to hike
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses developments in investment markets over the past week, the coronavirus, economic activity trackers, major global economic events and Australia economic events. Investment markets and key developments over the past week Share markets mostly fell over the last week on fears that still rising inflation will trigger faster rate hikes and recession. While Japanese shares rose, US, European and Chinese shares fell.
Jobs growth boomed in June, unemployment at 48-year low, RBA to hike by 0.5% in Aug, possibly 0.75%
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses employment figures.
Inflation in the 70s – baby boomer fantasy or nightmare? Why central banks must focus on getting inflation back down - AdviserVoice
Key points The high inflation of the 1970s was bad for economies and bad for investment returns. The long-term downtrend in inflation and interest rates is likely over removing a tailwind for investment returns. But a return to sustained 1970’s levels of inflation appears unlikely. Introduction I grew up in the 1970s and it was fun – Abba, Elvis, Wings, JPY, flares, cool cars, etc. But economically it was a mess. Inflation surged and so did unemployment. And it was bad for investors too.
Inflation in the '70s - baby boomer fantasy or nightmare?
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses the high inflation of the 1970s. Key points: The high inflation of the 1970s was bad for economies and bad for investment returns. The long-term downtrend in inflation and interest rates is likely over removing a tailwind for investment returns. But a return to sustained 1970’s levels of inflation appears unlikely. Introduction I grew up in the 1970s and it was fun – Abba, Elvis, Wings, JPY, flares, cool cars, etc.
Weekly economic and market update - week ending 8 July, 2022 - AdviserVoice
Investment markets and key developments Share markets mostly rose over the last week on hopes that central banks will be able to tame inflation without causing a recession. However, it was messy with Eurozone shares – where the risk of recession is greatest – first making a new bear market low earlier in the week. For the week US shares rose 1.9%, Eurozone shares rose 1.7%, Japanese shares gained 2.2% and Chinese shares fell 0.8%.
Easing inflation pressures, yield curve inversion, cash rate expectations, floods, Covid
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses developments in investment markets over the past week, the coronavirus, economic activity trackers, major global economic events and Australia economic events. Investment markets and key developments over the past week Share markets mostly rose over the last week on hopes that central banks will be able to tame inflation without causing a recession.
2021-22 saw poor investment returns – the bad news and the good - AdviserVoice
Key points 2021-22 was a rough year for investors as high inflation, rising interest rates and recession fears impacted. Shares could still fall further as interest rates continue to rise and recession risks are high. However, inflation pressures are showing some signs of easing which may take pressure off central banks from later this year.
2021-22 saw poor investment returns - the bad news and the good
The past financial year was poor for investors as inflation, rising interest rates and recession fears hit investment markets. Inflation and recession worries While inflation was on the rise in the six months to December pushing up bond yields the impact for share markets was swamped by economic recovery from the pandemic and surging share markets so overall returns slowed but were still positive.
2021-22 saw poor investment returns - the bad news and the good
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses the 2021-22 year, inflation and key things for investor to bear in mind. Key points 2021-22 was a rough year for investors as high inflation, rising interest rates and recession fears impacted. Shares could still fall further as interest rates continue to rise and recession risks are high. However, inflation pressures are showing some signs of easing which may take pressure off central banks from later this year.
RBA increased cash rate to 1.35%, Expect more hikes but we see cash rate peaking around 2.5% Original
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses the cash rate increase. Key points: The RBA raised the cash rate by 0.5% taking it to 1.35%, as widely expected. This is the fastest back-to-back increase in rates since increases of 0.75% and 1% in November and December 1994 respectively.
Weekly economic and market update - week ending 1 July, 2022 - AdviserVoice
Investment markets and key developments Recession fears dominated over the last week pushing US, European and Japanese shares down, although Chinese shares (having already had a 35% bear market) rose. Australian shares were little changed with gains in utilities, energy and industrials offset by falls in property, IT and telco shares. Recession fears also pushed down long-term bond yields, oil prices and metal prices with the iron ore price falling about 10% on Friday.
Rough year, Central banks hawkish, China PMIs bounce, La Nina, RBA to hike 0.5%, Falling home prices
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses developments in investment markets over the past week, the coronavirus, economic activity trackers, major global economic events and Australia economic events. Investment markets and key developments over the past week Recession fears dominated over the last week pushing US, European and Japanese shares down, although Chinese shares (having already had a 35% bear market) rose.
Australian home price falls accelerating
Australian home price falls are accelerating, down 0.6% in June, with prices in Sydney and Melbourne down sharply. We now expect a 15-20% top to bottom fall in average home prices. Key points: Australian capital city average dwelling prices fell 0.8% in June according to CoreLogic, making it their second monthly decline in a row. Including regional dwellings, national dwelling prices fell 0.6% in the month, and they are up 11.2% year on year.
High household debt and rising interest rates - not as bad as it looks, but still an issue
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses the rise in household debt since the 1980s, the effects of interest rate rises and dwelling price falls, and how the RBA might react. Key points Australian household debt has risen dramatically since the 1980s and is high compared to other countries. The rise is not as bad as it looks because it’s been matched by rising wealth and debt servicing problems are low.
Weekly economic and market update - week ending 24 June, 2022 - AdviserVoice
Investment markets and key developments Share markets managed to stabilise and, in most major markets, bounce from oversold levels over the last week as there were no new hawkish surprises from central banks and weak economic data saw bond yields fall taking pressure of share market valuations despite increasing worries about recession. For the week (to date) US shares are up just over 3% and Australian shares rose by just over 1% led by IT, property and health stocks.
The Plunge in Shares & Flow on to Super – ShareCafe
Introduction Usually share markets are relatively calm and so don’t generate a lot of attention. But periodically they tumble and generate headlines like “billions wiped off share market” & “biggest share plunge since…” Sometimes it ends quickly and the market heads back up again and is forgotten about. But once every so often share markets keep falling for a while.
Shares bounce, Slowing data and recession, Easing pipeline inflation pressure, Home price fall
Dr Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, discusses developments in investment markets over the past week, the coronavirus, economic activity trackers, major global economic events and Australia economic events.
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