Australian equities are the only developed market region where T. Rowe Price is holding an overweight position as the firm issues a “cautiously optimistic” outlook for the country for 2021.
The firm said Australia had supportive valuations, decent dividend yield while earnings estimates were being revised higher. The ASX 200 had returned 1.9% since the start of the year to 16 December while the Small Ordinaries index had returned 7.8%. Unlike other countries, Australia also benefited from the lifting of lockdown restrictions and extensive fiscal and monetary support.
The US had performed better than Australia with the S&P 500 seeing returns of 7.9% but T. Rowe Price said the US suffered from political volatility, rising COVID-19 cases and US dollar weakness. The FTSE 100 had lost 16% over the same period.
Performance of S&P 500, ASX 200 and FTSE 100 since start of the year to 16 December 2020