In a conference call with investors, Wilson Asset Management chief investment officer Chris Stott gave a cautiously upbeat assessment of the Australian equities outlook.
"We’re starting to see companies reinvesting to drive growth, and that’s something that we haven’t seen for many years, probably since the GFC," Mr Stott said.
Australia has seen a long period of sub-par economic growth that has incentivised companies to hoard cash, he said – but that could be changing.
"We’re now starting to see companies announce reinvestment programs, whether it be iSelect or Seek – two examples from the recent reporting season. That's a positive from a longer-term perspective," he said.
"It’s showing that corporates are becoming more confident about the outlook for the Australian economy."
Earnings growth in the 2016-17 reporting season was one of the best in a number of years, Mr Stott said, with the mining sector (and mining services) leading the way with earning upgrades.
"If the market is to go higher from here it really needs to be led by earnings upgrades from companies coming through," he said.
"In he past 12 months, however, the upgrades haven’t been as good for the ex-mining sector. And the industrials sector is where we spend a lot of our time."
