Platypus Asset Management chief investment manager Donald Williams said the Australian economy is still being assisted by the lagged impact of low interest rates, while a lower currency is stimulating earnings growth.
“For some stocks and sectors there is an offset in terms of higher cost of goods, but as a generalisation we believe that the lower currency will make Australia more competitive,” said Mr Williams.
He also believes the improved conditions in the residential property market over the later part of last year and the increased activity expected for IPO markets are indicators for stronger Australian equity performance.
“There’s some good evidence now that there’s a recovery in property and that’s obviously important for the economy as we’ll ultimately get a decent building cycle in Australia,” he said.
Mr Williams said Platypus Asset Management expects a “strong health IPO pipeline this year”.
“Hopefully it will be a little bit more measured than what we saw in November and early December; we do think the market has the capacity to take these IPOs as long as the quality is reasonable,” he said.
Platypus Asset Management expects both Medibank and Healthscope to launch onto the market in 2014.
He said, while consumer confidence was not “euphoric”, it had certainly improved from the “darker days of the last five years”, which is also positive for the market.
On a yield basis, Mr Williams said equities remain positive and are not yet overstretched.
“PE is around median as well,” he said.
“The PE’s not as cheap as it was about 18 months ago, but it’s not expensive either.”
