Continuing demand from developing overseas markets has helped the agribusiness sector maintain a healthy run in the face of a potential bear market, according to Commonwealth Bank of Australia (CBA).
CBA commodities strategist Tobin Gorey said agricultural food and energy demand from emerging markets in Asia would continue to be the key driver for future returns.
"Australian agribusinesses are well placed to take advantage of this and investors are continuing to take a shine to agri stocks here and elsewhere across the globe," Gorey said.
According to the latest CBA Agri Indicators Report, as of January 17, the agribusinesses sector had outperformed the broader market by 13.5 per cent to deliver investors a total return, including dividends, of 3.2 per cent.
"Overall, the January Commonwealth Bank Agri Indicators Report shows that the outlook for listed agribusinesses is overwhelmingly positive and the stellar performance we have been seeing over recent months is set to continue throughout 2008," CBA agribusiness executive general manager Jon Sutton said.
However, Sutton did warn possible market volatility could still upset future returns.
"Forecast volatility for the sector is now slightly higher than the market at 16 per cent and exuberance is slightly elevated to around 4 per cent," he said.
"This trend typically indicates the likelihood of a correction in the not too distant future."
The CBA Agri Indicators Report is based on an analysis of 15 major agribusiness stocks, measuring market volatility, exuberance and fundamental shareholder returns.
