Australia ranks top-performing equities market

Yasmine Raso

Senior Journalist, Financial Newswire

28 February 2023

The latest release of the Credit Suisse Global Investment Returns Yearbook has named Australia as the best-performing equities market globally in USD of the last 123 years.

Published by the Credit Suisse Research Institute and the London Business School, the report found Australia had an annualised real return of 6.43 per cent in real USD terms since 1900, which was closely followed by the United States at 6.38 per cent.

This comes as the Australian equity markets ranks ninth globally in terms of world equity market value, with the US market accounting for 58.4 per cent, and is the second-best performing equity market in local currency real terms at 6.7 per cent, only trailing South Africa.

“The Yearbook shows what an unusual year 2022 was for returns. Unlike the previous 20 years, bonds did not act as a hedge for weak equity markets,” Michael Marr, Head of Wealth Management at Credit Suisse Australia.

“[With] that said, the long-term data over 123 years shows it is not unusual for both bonds and equities to be negatively impacted, in periods of high inflation.

“After a sharp adjustment, the Australian bond market has entered 2023 with a more attractive yield and higher likelihood of diversification benefits for our clients. The environment is now more conducive to multi-asset class investing.”

The Yearbook also found that the Australia had the second-lowest rate of market volatility after Canada in the analysis that included 35 countries covering 98 per cent of the global market capitalisation.

Andrew McAuley, Australia CIO at Credit Suisse Wealth Management, said the authors of the report see a period of persisting optimism for Australia as a key catalyst of the transition to zero carbon as an exporter and producer of raw materials.

“Australia finds itself in the fortunate position of being the world’s largest exporter of coal, iron ore, lead, rutile and zinc; and the second largest of gold and uranium,” he said.

“More critically, we are the largest or near largest producer of the raw materials needed to facilitate the transition to zero carbon, being lithium, aluminium, nickel, LNG and rare earths.

“Australia has a large, well-capitalised finance sector and extremely large savings pool in the form of AUD3.3 trillion in superannuation.

“At Credit Suisse, we are fortunate to have this comprehensive data set to help our clients maximise returns and control risk in their portfolios. The results show based on history, and expectations for the future, Australian investors should continue to target a long-term strategic asset allocation that generally holds a local bias, augmented with significant exposure to the best opportunities the rest of world can offer.”