Interest Rate Shock in 2022?

A rocky road ahead for Australia in 2022 on the back of rolling Delta variant lockdowns, and some commentators predict the post-2020 earnings rebound that reached its peak.

What are the main volatility risks on the horizon?  

Policies seeking to address climate change have the potential to be inflationary, while supply chain shocks from the pandemic that is additional and more permanent costs around Australia. 

What sectors and companies will do well in the next 12 months and why? 

We have seen new energy advocates for several years now and while recent strong gains have brought the sector into the spotlight, we think the opportunity is so big it will endure for a while yet. We think Independence Group and emerging copper player Aeris Resources represent good value.  

What are the biggest opportunities for companies in the next 12 months?  

From the pandemic one of the biggest opportunities over the next 12 months is human nature. It suggests demand for experiences will re-emerge with a vengeance, while Australia’s enviable COVID record should ensure it’s at the front of the queue when borders open and vacation, and so on. We anticipate capital investment over the next year, as supply chains are modified to become evolved and improvements are made after years of underinvestment.