Australia has been the best performing equities market globally over the last 123 years, according to the latest Credit Suisse Global Investment
Returns Yearbook.

Published in collaboration with London Business School, the report covers all main asset categories in 35 countries. Most of these markets have 123 years of
data to draw on.

It found that since 1900, Australia has been the best performing stock market in real USD terms, with an annualised real return of 6.43%, followed by the US
at 6.38%.

In terms of size, the Australian equity market occupies ninth place globally, trailing after the US market which accounts for over 58.4% of total world equity
market value today.

In local currency real terms, Australia currently ranks as the second-best performing equity market globally, behind South Africa.
“Australia also has a significant government and corporate bond market and is home to the largest financial futures and options exchanges in the Asia Pacific
region,” the report said.

Credit Suisse Australia head of wealth management Michael Marr said that 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, he said.

However, 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,” Marr said.

“The environment is now more conducive to multi-asset investing.”

Credit Suisse Wealth Australia chief investment officer Andrew McAuley said that out of the 35 countries included in the analysis, covering 98% of the world
market capitalisation, the Australian market had the second lowest volatility after Canada.

“Our bond market produced an annualised real return since 1900 of 1.6% in AUD terms, well above all country average of 0.6% p.a.,” McAuley said.
“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.

“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.”

McAuley added: “Australia has a large, well capitalised finance sector and extremely large savings pool in the form on $3.3 trillion in superannuation.”

BY CHLOE WALKER | MONDAY, 27 FEB 2023

FINANCIAL STANDARD