The Australian stock market has achieved an annualised return of 6.8 per cent per annum since 1900, making it the world’s best-performing stock market, according to new research from Credit Suisse.
“The year 2020 was an extraordinary year for investors. Market volatility and volumes hit extreme levels, higher even than in the global financial crisis,” said Credit Suisse head of Australian equities Mark Davis.
“From its March low until the year-end, the bellwether US market, for example, rose by an extraordinary 77 per cent. And with this backdrop Australia has consistently been among the world’s best performing markets both in local currency terms and USD terms.”
That performance has been underpinned by strong fundamentals, including a “healthy and resilient services economy”, a commodities sector linked to Asia’s highest growth economies, and a strong banking sector – backed by flexible monetary policy and a democratic political system.
“It continues to be an attractive destination for both local and international investors. The just completed Australian company reporting season, for example, represents the fastest company earnings recovery in ASX history, with aggregate earnings revised upwards by 6 per cent,” Mr Davis said.
The results come from Credit Suisse’s Investment Yearbook 2021, which – despite a “once in a century pandemic” – have charted little change in the performance dynamics of the major markets.
“Markets have proved very resilient,” said head of Australian private banking Michael Marr.
“A legacy of this crisis is record-low real interest rates and now-burgeoning fiscal deficits as Governments have sought to soften the blow of the pandemic. Pulling this combination of policy levers has of course been to the benefit of financial assets. However, the policy dilemma of if, and how, to unwind these crisis measures looms large, particularly with inflation expectations firming.”
