1. Australian food prices are expected to rise by as much as 9% by the end of 2024 due to supply chain issues, extreme weather events, and scarcity of land and water resources. Foreign investors are acquiring Australian farmland and agriculture assets.
2. Australia is entering the worst corporate default cycle since the Global Financial Crisis and the 1991 recession. Inflationary pressures, including elevated wage costs and poor productivity, are impacting asset valuations. Asset prices will face downward pressure until they offer higher returns than risk-free assets like cash and government bonds.
3. The post-COVID revenge travel trend is not expected to last, with evidence such as declining US credit card spending on travel and shorter wait times at attractions like Disneyland. Chinese travelers are more interested in domestic travel and duty-free shopping in China, impacting international travel destinations. Australian airlines will be affected as international travel declines.
4. Superannuation funds will make Australia the wealthiest nation on a per capita basis in 20 years, benefiting millennials who will have substantial assets in their superannuation accounts. Long life expectancies will drive consumption in sectors like consumer discretionary and travel.
5. “Sticky” inflation is expected to collapse and return to its long-run average. Small caps historically outperform large caps in periods of declining inflation, and the AI and quantum computer revolutions are predicted to contribute to low inflation in the future.
In a world where the only constant is change, it is both a daring and necessary endeavor to forecast the trends that will shape our near future. As we stand on the cusp of 2024, Livewire Markets brings together a panel of seasoned fund managers to share their startling predictions in various domains ranging from economic landscapes to lifestyle changes. These predictions are not just exercises in speculation but are grounded in deep analyses and current trends, offering a lens to glimpse into a future that is just around the corner. In this blog post, we delve into these six bold predictions that promise to challenge consensus views and stimulate thoughtful debates among investors and enthusiasts alike. Join us as we unpack each prediction, shedding light on the potential shifts in food prices, corporate dynamics, travel trends, and much more, as we navigate through these unprecedented times with an eye on the opportunities and challenges that lie ahead.
1. Significant Rise in Australian Food Prices
Speaker: Dania Zinurova, Portfolio Manager, Wilson Asset Management Timeframe: 1 year
Dania Zinurova anticipates a substantial increase in Australian food prices, potentially as much as 9% by the end of 2024. This trend is driven by a challenging geopolitical environment, extreme weather events, and disruptions in the global value chain. Zinurova highlights the opportunities in agriculture assets, emphasizing the steady capital growth and income it offers.
2. Australia to Face the Worst Corporate Default Cycle Since the GFC and 1991 Recession
Speaker: Christopher Joye, Portfolio Manager & Chief Investment Officer, Coolabah Capital Timeframe: 1 year+
Christopher Joye foresees a downward pressure on equity prices until they offer returns that match those from relatively risk-free asset classes. He attributes this to inflationary pressures, particularly elevated wage costs and poor productivity. Joye advises avoiding short-term illiquid assets and focusing on long-term liquidity.
3. Downturn in the International Travel Boom
Speaker: Casey Mclean, Portfolio Manager, Fidelity International Timeframe: 1 year
Casey Mclean predicts a decline in the international travel trend, citing various indicators including a decrease in US credit card spending on travel and a drop in wait times at Disneyland. He also mentions the shift in Chinese tourists’ preferences towards domestic travel and staycations.
4. Superannuation to Make Australia the Wealthiest Nation Per Capita
Speaker: Andrew McKie, Portfolio Manager, Elston Investment Management Timeframe: 20 years
Andrew McKie is optimistic about Australia’s financial future, attributing it to the superannuation guarantee levy and the compounding effect over long time horizons. He encourages advisors to target millennials, who will benefit the most from this wealth accumulation.
5. ‘Sticky’ Inflation to Subside and Return to Long-Run Average
Speaker: Marcus Burns, Portfolio Manager, Spheria Asset Management Timeframe: 1 year+
Marcus Burns expects the current high inflation to be temporary, foreseeing a return to low inflation due to advancements in AI productivity and quantum computing. He notes that small caps tend to outperform in periods of falling inflation.
6. The End of Obesity
Speaker: Dr. David Allen, Head of Long Short Strategies, Plato Investment Management Timeframe: 1 year+
Dr. David Allen predicts a significant impact on the obesity crisis due to the success of anti-obesogenic drugs. He identifies potential winners and losers in this scenario, with drug companies standing to benefit the most.