Intech backs Australia

Investment consulting house Intech has backed the performance of the Australian sharemarket over its global counterparts for growth prospects in the coming years.

A paper issued by Intech general manager investments Daniel Needham said the group expected Australia to extend its period of strong economic and sharemarket performance relative to other developed world markets.

Needham pointed to Australia’s ability to leverage off Asian growth, the well-capitalised nature of the Australian banking system, the supply dynamics underpinning residential loans and a likely continuing tight supply of commodities as factors likely to extend Australia’s period of growth.

The Intech paper said this would particularly be the case given the “continuing expansion of global trade and the progressive shift of economic power from the West to the East”.

Of the US, UK, Japanese and European economies, Intech said they “remain heavily mired in public and private debt, and household balance sheets will take more time to repair”.

“The normal processes of the capital cycle are unlikely to lead to a genuine expansion in profit margins and a demand-led recovery in revenue growth for some time,” the paper states.

“With this backdrop in mind, Australia is indeed the ‘lucky country’. It is well-positioned relative to other developed nations to deliver solid economic and earnings growth.”