Global sharemarkets drop
About the author:
- Author name:
- By Ken Howard
- Job title:
- Date posted:
- 11 October 2021, 8:00 AM
Over the last six weeks, global share markets have dropped 5% to 6% from their 2021 highs. In many respects this has been no surprise; the share market never goes up in a straight line, there is always volatility and there are always pockets of over and under valuation.
However, the outlook is well supported by;
- Very low interest rates and a buoyant property market (meaning shares are still a compelling option),
- Billions of dollars of Government deficits (which in the short-term, is good for an economy), and
- A rapid recovery in activity, wherever citizens are free to catch-up with friends and family (and hopefully, on this front, most of Australian’s will be freed from curfews and other lockdown restrictions in the coming weeks)
Long-term outlook
Of course, it’s not all clear sailing. There continues to be plenty of evidence of supply side disruption; whether it is a lack of truck drivers to deliver fuel in the UK, coal for power stations in Europe and the US to provide energy for manufacturing, or even just the simple shipping container, making its way through a port facility.
Supply side disruption will certainly be a drag on everyone’s ability to go about their daily lives. Whether it is the ability to buy; furniture, spares parts to repair a car or even access to basic building material, supply side disruption will constrain the recovery.
Although longer-term, I am optimistic that global supply chains will be restocked and restored to their pre-covid levels of resilience and flexibility.
So unsurprisingly I am optimistic about the outlook for the next six to 12 months and would like to believe, that globally, we will work out how to live with Covid; children need to be able to go to school, families need to be able to look after each other and I am sure everyone wants to be able to go about their daily lives unrestrained by local and State borders.
With that background, I have updated the list of companies that I included in my last letter, with the forecast* gross dividend yield for the 2021/22 and the 2022/23 financial year.
| Company |
FY2022 |
FY2023 |
Company |
FY2022 |
FY2023 |
| CBA |
5.90% |
6.40% |
Aurizon |
9.60% |
9.80% |
| BHP |
9.60% |
6.10% |
JB Hi-Fi |
6.50% |
6.50% |
| Telstra |
5.90% |
5.90% |
Scentre Group |
5.70% |
6.40% |
| Coles |
5.10% |
5.20% |
Transurban |
2.80% |
4.20% |
| Wesfarmers |
3.80% |
4.50% |
Amcor |
3.80% |
3.90% |
| Macquarie |
3.80% |
4.10% |
Reliance Worldwide |
3.00% |
3.20% |
All forecasts are inherently uncertain, and it is probably fair to say that the forecasts are premised on the assumption that the global recovery continues and there are no new negative disruptions.
However, even if there are disruptions, I am confident that this list of companies will still be standing on the other side and providing satisfactory returns for their owners.
As always, if you have any questions about your portfolio, or your strategy, please feel free to call me on 07 3334 4856.
More Information
Ken Howard is a Private Client Adviser at Morgans. Ken's passion is in supporting and educating clients so they can attain and sustain financial independence.
If you have any questions about your financial plan or your share portfolio, your strategy, investments or would just like to catch up, please do not hesitate to give me a call on 07 3334 4856.
General Advice warning: This article is made without consideration of any specific client’s investment objectives, financial situation or needs. It is recommended that any persons who wish to act upon this report consult with their investment adviser before doing so. Morgans does not accept any liability for the results of any actions taken or not taken on the basis of information in this report, or for any negligent misstatements, errors or omissions.