Amid the economic uncertainty leading to recent sharemarket falls around the globe, accounting firm Chan and Naylor reminds people that Australia remains the 'lucky country' and there are bargains around for savvy investors in both property and stocks.
Australia is well positioned to weather the current economic storm, according to Chan and Naylor, pointing out that China is now the destination of 25 per cent of Australian exports and Australia's national debt-to-gross domestic product ratio is expected to peak at around 21 per cent, compared to 110 per cent for the Organisation for Economic Co-operation and Development peer group.
Reinforcing Australia's strong position is the continuing strength of the Australian dollar, as well as the Reserve Bank of Australia's continuing expectation of a 3.75 per cent to 4.25 per cent recovery by 2012.
"Even if these figures prove optimistic, Australia is still expected to significantly outperform most other industrialised countries due to slower global growth and returns," said David Hasib, Chan and Naylor partner and head of financial planning. "The stall in growth should take the pressure off interest rate rises locally with the expectation that we may see a rate decrease in the coming months."
Hasib acknowledged that in the short term there'll be some investment pain as a result of the recent volatility. But in times like these, he said, investors should remember their longer-term convictions and look for the opportunity therein.
"A lot of people are understandably concerned about the current health of both the global and local economy which has resulted in defensive herd-like behaviour," he said. "For the focused investor who is willing to resist the pack mentality there is considerable upside in current market conditions.
"Currently stockmarket investors can pick up attractive shares for a bargain and be paid fully franked dividends to watch their share price recover, in some cases between nine per cent to 12 per cent, in coming months," he said.
But Hasib also predicted a rewarding outlook for investors considering investing in a stable but sluggish Australian property market, pointing out that in some regions of Australia property is listed at pre-2004 prices while rental demand remains strong.
Chan and Naylor forecast that yields in the current property market could be a healthy five to six per cent, with the potential for long-term capital appreciation.
