Content provided by Msquared Capital
Article written by Paul Miron, Managing Director, Msquared Capital
The end of financial year normally marks an annual ritual of self-assessment of one’s investment portfolio performance relative to the market as well as creating financial goals for the next 12 months.
A key takeaway from living through the extraordinary circumstances due to Covid-19, is to expect the unexpected.
According to Credit Suisse, Australians have become financially the wealthiest people in the world. This has been driven by the ongoing performance of our two principal sources of wealth – housing and financial assets, underpinned by robust GDP growth.
With record-low interest rates, asset prices have essentially experienced a boom, with house prices being the largest contributing factor, adding an extra 7 trillion dollars to our net wealth.
Whilst still being in the epicentre of the pandemic, Australia has performed remarkably well notwithstanding international border closures and associated lack of tourism and international students. Remarkably, the construction industry and certain property types, such as units, have not faltered despite limited international immigration and a substantial exodus of temporary residents from Australia.
In fact, due to record iron ore prices and in increase in demand for mining products in combination with an elevated Australian dollar, we are one of only three countries in the world with GDP now higher than pre-pandemic levels. Once again, Australians collectively have done much better compared to the rest of world.
As a result, the extraordinary V shape recovery is placing pressure on supply chain constraints and the combination of labour shortages resulting in the inflation bells sounding the alarm.