Australian equities are in the midst of a hard lesson. The regime that underpinned equity returns – solid global growth, Chinese infrastructure spending, easy fiscal policy and accommodation and monetary policy – is moving in reverse. While economic growth is slow walking it’s way lower, we are entering a downturn that most investors are choosing to overlook (underestimate). Recent underperformance is not over and until we know how high rates are going, how far growth will slow and the success in lowering inflation. equity returns are likely to continue disappointing.
