By Nick Hedley
Amid fears of a full-blown recession in advanced economies, Lonsec Investment Solutions’ Chief Investment Officer Lukasz de Pourbaix says Australia will hold up better than most.
“The risk of a global recession is elevated as the lagging impact of higher interest rates is yet to come to the fore,” de Pourbaix said in a note.
However, Australia’s large energy and materials industries will likely shield the local economy from a deep recession, he said. “Our base case is that if we do go into a technical recession, it will be mild relative to other regions.”
In August, Australian equities bucked the broader sell-off in financial markets, driven by the materials and energy sectors, de Pourbaix said, adding, however, that diversification was an important strategy in the current volatile market.
He said opportunities would open up in the equity market due to the indiscriminate sell-off, while bonds were becoming attractive for the first time in nearly a decade.
“The forward-looking risk return profile for the asset class is looking very different than the prior 10 years,” he said
Lonsec provides investment research, ratings and implemented solutions to the superannuation industry and other investors.