Evolving investment opportunities in both the local economy as well as globally

Investment seminar

Our Founder and Director, Lou Stojanovski, was a key note speaker at a recent private function of business people and investors in Newcastle along-side Westpac Private Bank’s Chief Investment Director, George Toubia and Sidcor Founder and Managing Director, Paul Siderovski.

George provided an overview of the Private Bank’s views of the Australian and international economies with an investment focus which Lou thought helpful to share with Keystone clients.

On the international scene George commented on the fact that the European banks are still too big but Europe is slowly deleveraging and continuing to restructure. George said that there should be no underestimating the power of the US economy and its ability to reinvent itself. He said many US companies are doing very well because of their resilience and desire to innovate and grow. Asia also provides exciting opportunities for investors particularly because there are people in those economies willing to establish businesses and grow them within the region before expanding globally.

“On the interest rate front, the Australian and US yield curves will converge next year providing more choices for people to invest in the US for their yield enhancement,” George said.

On the Australian front, George was upbeat in describing it as an “evolving opportunity set” with opportunities from lower risk yield enhancement through to growth focused private capital opportunities.

A maturing local real estate market and commodities cycle; tightening consumer spending and increasing competition, including for traditional oligopolistic businesses, means the economy is changing and investment opportunities are coming via different, non-traditional areas of the economy.

“In the media and business circles we are not giving enough credit to the brave Australian companies who are successfully exporting their services overseas in order to grow and capture new market share,” he said.

He said the technology sector was particularly strong globally with the challenge for investors being to decipher the companies that have global earnings drivers.

With local consumers doing it tougher as a result of falling savings, slow wages growth and debt to disposable incomes increasing, George’s message to local business was that if you can provide an affordable service for people you have more opportunity to succeed.

He sees non-traditional opportunities evolving for investors to become alternate providers of capital where banks continue to face tightening credit constraints.

Also at the presentation, Paul Siderovski spoke on asset allocation approaches and provided a financial blueprint to his investment thinking as outlined in his six part series on Money. One of Mr Siderovski’s key messages was that people should treat their business and investments as separate. He said it was important for people to use the “bus test” to determine if they wished to build a real business or be an operator of a business. He said for business people wanting to invest, the key is to build a business that creates sustainable and growing incomes that can then be invested.

Lou took those gathered at the forum through using trusts for family business structures. He said there are a range of trusts with different ownership structures. Trusts can protect the assets held in the trust and can offer flexibility for income distribution as well as tax benefits and estate planning benefits. Trusts have come into the spotlight recently with the Labor opposition announcing they will introduce an across the board 30 percent tax rate on discretionary trust distributions to people over the age of 18 if they win the next election. Read a full explainer article on trusts by Lou here.