Shares

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EXPERT OBSERVER
Key points
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<div class="column">1. The current pullback in shares has been triggered by a range of things – but most notably worries about rising US interest rates and the US/China conflict.</div>
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 2. Shares may still have more downside, but we are of the view that it’s just another correction.</div>
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 3. Key things for investors to bear in mind are that: corrections are normal; in the absence of recession, a deep bear market is unlikely; selling shares after a fall locks in a loss; share pullbacks provide opportunities for investors to buy them more cheaply; while shares may have fallen, dividends haven’t; and finally, to avoid getting thrown off a long-term investment strategy it’s best to turn down the noise during times like this.</div>
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Rough Patches
Every so often shares go through rough patches. We saw this most recently around February on the back of US inflation and interest rate concerns and the start of US tariffs which saw US shares and global shares fall roughly 10% and Australian shares fall 6%. Shares mostly recovered – even getting through the seasonally weak months of August and September surprisingly well – with US shares making new records and Australian shares hitting a ten-year high, but the worry list has returned again with US, global shares and Australian shares now down around 7% from their recent high. This note looks at the issues for investors and puts the falls into context.
What’s driving the latest plunge?
The recent plunge reflects a range of factors.
<ul>
<li>Investors have started to worry again that the very strong US economy will push the Fed into tightening a lot more and that this will cause a further sharp rise in bond yields which will threaten growth and share market valuations.</li>
<li>The trade conflict between the US and China is continuing to intensify and spilling over into other areas.</li>
<li>Technology shares, which have been key drivers of the US share markets rally (and outperformance) have been vulnerable – being somewhat overvalued and facing increased regulation in the US (which is something that President Trump has been threatening).</li>
<li>Rising oil prices due to strong global demand and threats to supply have added to concerns about inflation and growth.</li>
<li>Problems in the emerging world partly due to rising US interest rates poses a threat to global growth as reflected in a recent downgrade to the IMF’s global growth forecasts.</li>
<li>Nervousness remains in the US around President Trump and the Mueller inquiry and the upcoming US mid-term Congressional elections.</li>
<li>Tensions in the Eurozone regarding the Italian budget are weighing on European shares.</li>
<li>October is also known for share market volatility and this October is the 31st anniversary of the 1987 crash which often seems to create a bit of apprehension.</li>
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Because shares have fallen rapidly they are technically oversold and so could have a short-term bounce. But given that many of these issues could get worse before they get better the risk is that the pullback has further to go.
Considerations for investors
Sharp market falls with headlines screaming that billions of dollars have been wiped off the share market (funny that you never see the same headlines on the way up!) are stressful for investors as no one likes to see the value of their investments decline. However, several things are worth bearing in mind:
First, periodic corrections in share markets of the order of 5- 15% are healthy and normal. For example, during the tech/dot. com boom from 1995 to early 2000, the US share market had seven pull backs greater than 5% ranging from 6% up to 19% with an average decline of 10%. During the same period, the Australian share market had eight pullbacks ranging from 5% to 16% with an average fall of 8%. All against a backdrop of strong returns every year. During the 2003 to 2007 bull market, the Australian share market had five 5% plus corrections ranging from 7% to 12%, again with strong positive returns every year. More recently, the Australian share market had a 10% pullback in 2012, an 11% fall in 2013 (the taper tantrum), an 8% fall in 2014, a 20% fall between April 2015 and February 2016 and a 7% fall earlier this year all in the context of a gradual rising trend. And it has been similar for global shares, but against a strongly rising trend. See the next chart. While they can be painful, share market corrections are healthy because they help limit a build-up in complacency and excessive risk taking.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/12/AMP%201.jpg" alt=""> 
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Related to this, shares climb a wall of worry over many years with numerous events dragging them down periodically, but with the long-term trend ultimately up &amp; providing higher returns  than other more stable assets. Bouts of volatility are the price we pay for the higher longer-term returns from shares.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/12/AMP%202.jpg" alt="">
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Second, the main driver of whether we see a correction (a fall 5% to 15%) or even a mild bear market (with say a 20% decline that turns around relatively quickly like we saw in 2015-2016) as opposed to a major bear market (like that seen in the global financial crisis (GFC)) is whether we see a recession or not – notably in the US. The next table shows US share market falls greater than 10% since the 1970s. I know it’s a bit heavy – but I like this table! The first column shows the period of the fall, the second shows the decline in months, the third shows the percentage decline from top to bottom, the fourth shows whether the decline was associated with a recession or not, the fifth shows the gains in the share market one year after the low and the final column shows the decline in the calendar year associated with the share market fall. Falls associated with recessions are highlighted in red. Averages are shown for the whole period and for falls associated with recession at the bottom of the table.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/12/AMP%203.jpg" alt="">
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Several points stand out. First, share market falls associated with recession tend to be longer and deeper. Second, falls associated with recessions are more likely to be associated with negative total returns (ie capital growth plus dividends) in the associated calendar year as a whole. Finally, as would be expected the share market rebound in the year after the low is much greater following falls associated with recession.
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So whether a recession is imminent or not in the US is critically important in terms of whether we will see a major bear market or not. In fact, the same applies to Australian shares. Our assessment remains that US/global recession is not imminent:
• Still high levels of business and consumer confidence globally are only just starting to help drive stronger consumer spending and business investment.
• While US monetary conditions have tightened they are far from tight and they are still very easy globally and in Australia (with monetary tightening still a fair way off in Europe, Japan and Australia). We are a long way from the sort of monetary tightening that leads into recession.
• Fiscal stimulus will boost US growth into next year, partly offsetting Fed rate hikes.
• We have not seen the excesses – in terms of debt growth, overinvestment, capacity constraints and inflation – that normally precede recessions in the US, globally or Australia.
Reflecting this, global earnings growth is likely to remain reasonable providing underlying support for shares. So, for all these reasons its likely that the current pull back is more likely to be a correction rather than a major bear market.
Third, selling shares or switching to a more conservative investment strategy or superannuation option after a major fall just locks in a loss. With all the talk of billions being wiped off the share market, it may be tempting to sell. But this just turns a paper loss into a real loss with no hope of recovering.
Fourth, when shares and growth assets fall they are cheaper and offer higher long-term return prospects. So, the key is to look for opportunities the pullback provides. It’s impossible to time the bottom but one way to do it is to average in over time.
Fifth, while shares may have fallen, dividends from the market haven’t. So the income flow you are receiving from a well- diversified portfolio of shares remains attractive, particularly against bank deposits.
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Sixth, shares and other related assets often bottom at the point of maximum bearishness, ie just when you and everyone else feel most negative towards them. So the trick is to buck the crowd. “Be fearful when others are greedy. Be greedy when others are fearful,” as Warren Buffett has said.
Finally, turn down the noise. At times like this, negative news reaches fever pitch. Talk of billions wiped off share markets and warnings of disaster help sell copy and generate clicks and views. But such headlines are often just a distortion. We are never told of the billions that market rebounds and the rising long-term trend in share prices adds to the share market. Moreover, they provide no perspective and only add to the sense of panic. All of this makes it harder to stick to an appropriate long-term strategy let alone see the opportunities that are thrown up. So best to turn down the noise and chill out – yeah, I agree it’s sometimes easier said than done, but still!
Dr Shane Oliver Head of Investment Strategy and Chief Economist AMP Capital
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soliver-smf6LQXgW9

The pullback in shares - seven things investors need to keep in mind: Shane Oliver 

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McGrath Estate Agents chief executive John McGrath has spent $430,000 buying shares in the listed real estate group.
Mr McGrath, who is McGrath Limited's biggest shareholder, acquired 317,000 shares at $1.36, about a 35 percent discount to its $2.10 initial public offering price.
His acquisition of 317,000 ordinary shares, made in two tranches on March 18 and March 21, took his total holdings to 27.26 percent of the shares on issue.
John McGrath had been legally restricted from acquiring additional shares post IPO due to a combination of the level of his holding and the pre-IPO restructure, a McGrath spokesperson advised the Australian Financial Review and The Australian.
"He is now able to increase his shareholding and has taken advantage of this buying opportunity, buying 317,000 shares."
McGrath chairman David Mackay and director Cass O'Connor have also increased their shareholdings recently.
Perpetual, McGrath's largest institutional holder, have been regularly lifting its stake to now sit at 13.2 percent.
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jchancellor-FAypfDUnLy

John McGrath buys more McGrath shares

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Real estate group McGrath Ltd, whose shares have lost more than a third of their value since its market debut in December, called for a trading halt on Friday to review its prospectus forecasts.
McGrath said it was "reviewing the 2016 financial year prospectus forecast in light of current market and trading conditions," in an announcement to the stock exchange.
"The trading halt is requested in order to allow McGrath time to finalise its analysis of information and review by the Board," it said. 
It has until Tuesday to provide any update after the board analysis.
The development comes only a day after broker Bell Potter Securities said the <a href="/news/52589-mcgrath-trading-below-international-peers-bell-potter" target="_blank">stock was undervalued</a> compared with international peers. The broker has a 12-month price target of $2.25 and a 'Buy' rating on the stock.
McGrath's stock fell below its IPO price in its market debut at $2.10 and has lost almost a third of its value since. It closed at $1.30 on Thursday.
Its shares fell to a low of $1.20 on March 16, according to data from Thomson Reuters.
The request for the trading halt comes ahead of an update on how the company is progressing against its forecasts.
The collapse in McGrath's share price stems from investor concern about both the earnings as the Sydney housing market subsides, and about the multiple on which those earnings are priced, a recent AFR report said.
But other sources suggest listings and sales volumes have shrunk in the overall market. 
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jonathanchancellor-7SQnKwU6yx

Trading halt on McGrath shares as real estate firm reviews prospectus forecasts

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One of the sponsor brokers of McGrath Estate Agents' IPO says the company's stock is undervalued compared with international peers and it retains a 'Buy' in spite of the decline in the share price ever since its market debut in December.
McGrath's stock fell below its IPO price in its market debut at $2.10 and has lost almost a third of its value since.
But Bell Potter Securities is telling clients that international peers are probably the best comparison for McGrath.
"McGrath does not have a close listed comparable company (comp) in Australia and so this begs the question, what should the stock be compared to?" Bell Potter analyst Chris Savage wrote in a note to clients.
"In our view, therefore, it is appropriate to compare McGrath with offshore listed comps of which there are several in both the US and the UK (i.e. real estate markets with some similarities to Australia). In particular, we believe there are three key offshore comps for McGrath – Realogy, Foxtons and Countrywide – which perhaps provide the best guide for what is an appropriate multiple for McGrath."
McGrath is trading well below them, Savage wrote.
<a href="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%2010.59.12%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%2010.59.12%20AM.png" alt="" width="622" height="173">
"There are several offshore listed comps which we consider reasonable for McGrath – RE/MAX, Foxtons, Marcus &amp; Millchap, Countrywide, Savills and Realogy – which all have a December year end. The average 2016 and 2017 PE ratios for these stocks are currently 14.5x and 13.2x respectively, which are well above the FY16 and FY17 PE ratios for McGrath of 9.7x and 8.5x.
"Similarly, the average 2016 and 2017 EV/EBITDA multiples for these stocks are currently 7.3x and 7.0x respectively which again are well above the FY16 and FY17 EV/EBITDA multiples for McGrath of 4.9x and 4.0x. If we reduce the list to the key offshore comps of Realogy, Foxtons and Countrywide then the average 2016/2017 PE ratios and EV/EBITDA multiples are 13.2x/11.6x and 8.7x/8.7x which are still well above the McGrath multiples," he said.
<a href="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%2011.05.28%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/14/Screen%20Shot%202016-04-14%20at%2011.05.28%20AM.png" alt="" width="236" height="572">
Bell Potter has kept its 12-month price target on McGrath at $2.25, saying it expects the company to achieve its "pro forma prospectus forecasts in FY16". 
McGrath's shares were last trading at $1.29 on the ASX, down 1.9 percent in mid-morning trade on Thursday. They fell to a low of $1.20 on March 16, according to data from Thomson Reuters.
 
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prateek24-ezbwHMbNAk

McGrath trading below international peers: Bell Potter

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Which is the better asset class to invest: shares or property?
Off-the-plan marketer Place Advisory pit the share market against Brisbane’s property market, an annual exercise, using the benchmark All Ords Index and sales data for apartments in Inner Brisbane.
Traditionally, shares and property have been strongly correlated and several overall trends have been established: Both asset classes seem to move in cycles together with property responding slightly slower than the All Ords Index to any changes in the wider market. This is likely due to information reporting and the illiquidity of apartments in comparison to shares.
The share market is generally more volatile than the property market – experiencing higher highs and lower lows. The 30-year period has seen the property market outperform the share market – just.
Inner Brisbane apartments have recognised annual median price growth of 6.3% per annum, compared to the All Ords annual return of 5.6%.
Place Advisory used All Ords for the report as it is the best indicator of the health of the share market in the longer term. This is primarily due to the fact that it is the oldest index, and tracks the performance of the 500 largest companies by market capitalisation.
The ASX 500 registered its first annual decrease in 2015 since 2011. As of December 31, the index stood at 5,345 points – down 0.8% on the recorded value 12 months earlier.
The Brisbane property market did not fare much better in terms of price growth. The median apartment price for the six months to December 2015 was $440,000, just $1,000 higher than the corresponding period of 2014.
The share market is generally more volatile than the property market, reacting with a greater level of severity to market fluctuations. In 2008 for example, the values of both asset classes took a hit. However, Brisbane’s median apartment price contracted by 1.5% over that year, whereas the index value of the ASX 500 tumbled by 44%. The trend reversed the following year. Median apartment values in Brisbane rose by 6%, but the ASX 500 value increase by 36%.
"If you’re looking for stability and long term growth, you should consider property as an investment vehicle. There is less volatility in the property market, which means that your hard earned money will generally be more secure in property," says Lachlan Walker, director of Place Advisory and Place Projects in Brisbane. 
"As an investor seeking capital growth, timing is critical- neither shares nor property are completely fool proof."
And as for any investment, research is imperative. 
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Brisbane property outperformed shares in 2015, but only just: Place Advisory

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Crowdfunding company DomaCom (ASX:DCL) has got regulatory approval to “deal in securities” and has also entered into an agreement with a US crowdfund that will expand the range of investment options for its clients.
The Australian Securities &amp; Investments Commission has given approval to DomaCom to vary its Australian Financial Services Licence that would allow it to launch mortgage bond sub-funds and allow for investment loans in the DomaCom property portfolio.
Chief executive Arthur Naoumidis said the “varied AFS Licence will allow us to offer peer-to-peer mortgage bond sub-funds and a fractional investment model for corporate bonds with work well under way to issue a new Product Disclosure Statement (PDS) to support these new products”.
They will offer a yield of 3.54% over the RBA cash rate with the security of a first registered mortgage and a loan-to value ratio(LVR) of less than 50 per cent.
Mortgage bonds will usually have a fixed term of five years and the current expected return of 5.04% with the security of a first registered mortgage and low LVR is expected to be attractive to the SMSF market, it said.
“What DomaCom can achieve with mortgage and corporate bond products is to offer investors the opportunity to lock in yields that are more attractive than bank deposits, use the fractional model to allow them to invest with a minimum amount, and to have potential liquidity of trading using our liquidity facility,” said Naoumidis.
DomaCom has funded 39 property acquisitions — mainly residential — which it claims to be the largest number of book-builds by any crowdfunder in Australia.
Meanwhile, the company announced this week it has signed an exclusive distribution agreement with Prodigy Network, a leading real estate crowdfunding platform in the United States that has raised more than $410 million of equity from the crowd for their portfolio of assets, valued at US$750 million. 
The agreement will pave the way for Australian investors and advisors to invest in prime commercial real estate assets located in Manhattan. 
Naoumidis said the agreement would open up more overseas property crowdfunding opportunities for Australian investors.  
“Whilst crowdfunding is still a relatively new phenomenon in Australia it is gaining significant ground overseas. There are over 125 such businesses globally with the 2015 transactions estimated to be around US$2.5 billion up from only US$20 million 4 years ago,” he said. 
“Enormous buying power exists in our large industry and retail superannuation funds and our growing A$600 billion self-managed superannuation fund (SMSF) market. There are vast sums of money sitting there some of which must be looking for an opportunity to invest in global real estate markets”.
Prodigy Network formally initiated its track record in January 2016, by providing 23% yearly after tax returns to the investors that participated in a 95 unit extended stay property called AKA United Nations, located at 234 E 46th Street. This was the first crowd funded project in the history of New York. 
Their success is explained by two main factors: 1) they both co-develop and co-invest in the deals they present to investors, 2) they have access to an extensive network of US and international mid-sized investors (capital raised from 26 US States and 29 different countries).
The investment platform and developer currently focuses primarily on investments in high-end collaborative workspaces and extended stay hotel developments in Manhattan.
 “We think partnering with DomaCom makes a lot of sense given their strong reputation and scalable distribution network in APAC” said Leonard Chinchay, VP of client relations at Prodigy Network. 
The deal was arranged by Tara Hill Capital in Sydney and Alpine Capital Advisors in New York.
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DomaCom gets ASIC approval for mortgage bonds, enters into deal with US firm

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Altair Asset Management’s move to sell off its entire Australian portfolio of underlying shares in unit trusts citing an impending property market "calamity" and an "overvalued" equity market has been described as an over-reaction by industry executives.
Macquarie Group's former head of real estate business Bill Moss said it was overstated, while economist Saul Eslake was of the view that it was difficult to predict accurately period forecasts of collapses.
Altair’s chairman and investment officer Philip Parker said on Monday the fund had advised clients it would sell "hundreds of millions" of dollars of "underlying shares in the Altair unit trusts and then hand back the cash to those same investors". Interestingly, he has also been named a defendant in a court case brought in by his mother in an unrelated assets case involving his firm. 
“The main reason is in my opinion that there are just too many risks at present, and I cannot justify charging our clients fees when there are so many early warning lead indicators of clear and present danger in property and equity markets now,” he said. 
“I would like to make clear this is not a winding up of Altair, but a decision to hand back client monies out of equities which I deem to be far too risky at this point,” Parker said on livewiremarkets.com.
The risks he listed included the Australian East Coast ‘property bubble’ and its impending correction, China’s property and debt issues later this year, overvalued Australian markets and the unpredictable geo-political situation.
He also made it clear that Altair wasn’t being wound up, but the decision was to hand back client monies out of equities which were deemed “far too risky at this point”.
But Moss was of a different view.
"You could have said that [about China] a long time ago," Moss was cited by saying by Fairfax Media.
Australia's property was experiencing a "one-off adjustment" to yields and values because of "incredible demand" from Chinese investors, Moss said.
"I'm not convinced that it's over. From what I'm seeing, there is still a lot of strong interest from China. I would be looking for the real reason they [Altair] have pulled out," he added.
Meanwhile, Eslake said various hedge funds and economists had in the past predicted a property bust but that he had “always struggled to find credible the period forecasts that there is a collapse around the corner”. 
"Are Australian house prices and household debt high? Yes, of course they are and there are some risks that flow from that."
"But to be a 'calamity' .. you would need some things to occur that I can't see occurring anytime soon," he said.
Montgomery Asset Management funder Roger Montgomery, who knows Parker, told The Australian that his funds may not have had the flexibility to go completely to cash while continuing to manage the money, and he would not have taken the decision lightly.
“You have to give someone a lot of respect for doing that,” Montgomery said. “They are genuinely putting their clients’ interest before their own. They are not taking any fees from it.”
Amid all this, Parker is grabbing more eyeballs, with Fairfax Media reporting that he is one of the defendants named in an action stemming from claims brought by his elderly mother, Faye Mary Parker and F M Parker Pty Ltd.
Faye Mary Parker filed the suit against Attis Capital, its director David Reynolds, and Altair Assets and Pepsec, which is an entity linked to Philip Parker and Altair. 
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Altair Asset fund's total Australian selloff questioned by experts

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Superannuation fund returns continued their eight year bull run in April.
Boosted by international shares and a fall in the Australian dollar, the median balanced option return posted 1.4 percent.
It built on the 1.5 percent returned in March taking the financial year to date return to 10 percent.
"Even a 300 point loss on Wall St in mid-May wasn’t enough to stop the momentum with May now also looking like delivering positive returns for funds,” said SuperRatings chairman Jeff Bresnahan.
“We have not seen the strong boost in confidence many have been hoping for, but neither have we seen any sign of a sustained pullback or dramatic loss of momentum.
“Despite the fact that significant risks remain, including in the housing market, the outlook for 2017 remains somewhat positive.”
Cash and fixed interest returns remain meagre, sitting at 1.4 percent and 1.3 percent for the financial year to date respectively.
Australian and global shares have been the star performers for the financial year thus far with returns of 15.3 percent and 15.6 percent respectively.
“It would be a great result to achieve a double-digit return for the financial year, but we still have a bit longer to go,” said Mr Bresnahan.
“Volatility has begun to increase in line with continued political uncertainty globally, and market momentum is positive.
“However, investors should be careful not to under-price risk in this environment.”
<a href="https://www.propertyobserver.com.au/images/2017/05/24/Screen%20Shot%202017-05-24%20at%2010.21.24%20am.jpg" target="_blank">Click to enlarge</a>
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The Australian market had a mixed month in April, posting a return of 1.0 percent, weighed down by negative performance from the Materials (-0.2 percent) and Energy (-0.6 percent) sectors, and a challenging month for Consumer Staples (-2.6 percent).
The main gains came from the Industrials sector (+4.4 percent), with strong gains from Brambles (+10.6 percent) following its announcement that it is on track to meet its 5 percent sales growth target.
Another recovery story came from the much-maligned Bellamy’s, which gained strongly late in the month to post a return of 22.4 percent with the installation of new management, as well as continued demand for Australian baby formula from the Chinese market.
The US market rally continued unabated through April, with the Dow Jones Industrial Average price index posting a rise of 3.6 percent – this despite a disappointing GDP reading of only 0.7 percent for Q1 2017.
The French CAC 40 returned 7.1 percent in April as Emmanuel Macron sailed to victory in the French presidential election, while the EuroStoxx 600 Index gained 5.8 percent, as confidence in the European recovery continued to build.
“Interestingly, equity market gains have coincided with a fall in yields in major markets, as well as a fall in the US dollar,” said Mr Bresnahan.
“With valuations starting to look high in the US, investors are holding out for the President’s proposed tax cuts to be made law, which are needed to consummate the reflation trade.”
Global yields fell in April, continuing a downward trend started in the previous month.
While rates have been trending higher since October 2016 and yield curves have steepened, investors have appeared to embrace duration again, reflected in longer- term fund flow.
The US 10-year Treasury yield fell from 2.39 percent to 2.28 percent after reaching an intra-month low of 2.17 percent.
While recent CPI releases in both Europe and the US have been promising, the numbers have moderated in recent months, and core inflation remains below central bank targets.
Longer-term returns for super continue to sit close to funds’ inflation targets, with the seven-year return sitting at an estimated 7.8 percent p.a. (above most funds’ CPI targets).
The 10-year return moved lower to 4.8 percent p.a., although it remains impacted by the Global Financial Crisis, which occurred nearly ten years ago.
The point of maximum monetary stimulus has passed, signalled by the US Fed’s March rate hike, although monetary policy remains very accommodative globally, and quantitative easing measures in Europe have not yet been tapered.
Compared to a year ago, when the FYTD return was 1.4 percent, there has been a strong turnaround in returns, but the idea of returns being lower for longer is still a key point of discussion in the industry.
While inflation appears to be taking hold, it has moderated in recent months, prompting central banks, and especially the US Fed, to reconsider the pace of tightening.
<a href="https://www.propertyobserver.com.au/images/2017/05/24/Screen%20Shot%202017-05-24%20at%2010.23.21%20am.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/24/Screen%20Shot%202017-05-24%20at%2010.23.21%20am.jpg" alt="">
 
He noted Australian markets have been supported by fundamentals, with full-time employment continuing to grow in April, and manufacturing firmly in expansion.
However, there is also evidence of a loss of upward price pressure, partly as a result of declining energy prices and tumbling iron ore values through March and April.
The 2017-18 Federal Budget, delivered this month, presented an optimistic view of the economy, with the path back to surplus in 2020-21 predicated on a gradual lift in wages growth from 1.9 percent to 3.75 percent.
“Economic indicators remain robust, although weaker inflation figures may be of some concern to investors as well as central banks."
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j.ballantyne1990-6AQqhLzZaK

Australian super funds offering 10 percent returns 

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It is the age-old query of anyone with capacity to invest. Which is the better investment - shares or property?
After allowing for costs, residential property has often provided a higher return than shares according to many studies. Both tend to be far superior to cash and bonds.
But the answer invariably depends on the selected timeline involved.
Property wins in the decade or two decades to December 2015, outperforming Australian shares for the lowest and highest marginal tax rates after gearing, but shares win in the 13 year period to December 2016. That's for an average Australia-wide property investment scenario, with Sydney property investors enjoying far greater success than say regional NSW investors.
Hence the determination really is best answered by your individual capacity, stage of life circumstances, the desired diversity and your outlook.
Much comes down to your risk tolerance, so for some bank deposits rank as the wisest place for savings. 
The recent spending spree by investors on Sydney property was hardly short-term speculation- rather actually driven by the flight to longterm surety with investors seeking a mix of yield and capital gain along the way to hopefully funding their looming retirement years.
Its exuberance almost ended up pushing too far, but it appears the regulatory cooling measures has nipped the Sydney boom back from the edge, before it gave way to a hurtful price reversal.
Housing investment is less volatile than the wild ride of the sharemarket.
And for many investors the actual bricks and mortar seem safer than the stockmarket and its share scrip.
You can always drive past your investment property and see it.
But those share certificates in the bottom draw of the desk in the home office can become totally worthless. These shares can also suffer at the hands of a market of short sellers, speculators who don't want shares to necessarily go up in price.
But property does also offer a much lower level of liquidity and diversification. Investing in the stock market comes with virtually no transaction costs apart from capital gains tax when you exit your investment. Shares potentially offer income and low costs as you don’t directly pay pesky maintenance costs, council rates and land tax bills. 
Your labour of love as an investor can see worrying times when the property is vacant.
A recent analysis from a cashed-up sharemarket investment company rightly warned the very long-term investment chart showed several occasions of property prices going down by significant amounts.
However the example it highlighted was the crash in 1896 when it took six decades before property prices recovered to their previous levels in real terms.
As we all know, past returns are not a good guide to future returns.
And the world is vastly different for the current generation of investors than pre-Federation 1896.
Investors do need to envisage worse case scenarios in our modern times, because yes price growth isn't guaranteed, and indeed prices can go backwards.
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Which is better: Shares Vs Property

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Car sharing platform Car Next Door, is raising $1.5 million through a crowd-sourced equity funding platform Equitise, a move its CEO says will drive more engagement of its members with the startup. 
Founded in 2013, Car Next Door has 50,000 users and 1,300 cars listed on the platform. Members can rent a car from as little as $5 an hour to $25 a day. 
The start-up operates in Sydney, Melbourne and Brisbane with plans to expand to the Gold Coast, Canberra, Perth and Adelaide in the next few months.
Its users and revenue have doubled each year since it launched. Turnover is expected to hit $1 million in January.
The move has been a long-term plan of co-founder and chief executive Will Davies.
"Since we started our users have been really keen and passionate about what we're doing and keen to invest and get involved," he was cited as saying The Australian Financial Review.
"It's a good way to get them more engaged and it will help with retention and word-of-mouth."
Car Next Door, which lets users find a car in their neighbourhood to hire from a minimum of $25 per day, 
Car Next Door expects to raise a minimum of $500,000 from sophisticated investors using Equitise, as part of a $4-5 million Series B round, the AFR said.
It has already raised $2.3 million in its latest round from existing investors such as Caltex and Trevor Folsom's Investible.
If the crowdfunding move pays off, Davies expects to go in for another capital raising which would be open to the public once the legislation permitting private companies to partake in crowd-sourced equity funding passes the Senate.
On September 29, the federal government's legislation to enable crowd-sourced equity funding from retail investors for unlisted public companies came into effect, but an amendment to the laws that will open it up to private companies is still going through the Senate.
"The big thing for us will be retail investors. We want people to be able to invest a few thousand dollars," he said.
 
 
 
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