BlackRock: Don't look for double-digit returns in Australia

SYDNEY (Reuters) - The chief investment officer of BlackRock Inc’s Australian arm said on Friday that investors should not expect double-digit gains from the country’s stock market in the near-term.

A man walks next to a BlackRock sign pictured in the Manhattan borough of New York, October 11, 2015. REUTERS/Eduardo Munoz

“We don’t think that over the next one year, three years, the expectation for Australian equities is for double digit returns,” Michael McCorry said in an interview at the Reuters Global Investment 2018 Outlook Summit.

“We think there are better opportunities,” said the CIO of BlackRock Australia.

In Australia, where BlackRock manages A$91.5 billion ($69.49billion) for clients across equities, fixed income, and real estate assets, the firm is currently “neutral” on local equities.

McCorry noted the market’s high exposure to banks that were facing increased regulation and capital requirements; as well as commodities, where he expected prices to fall slightly in the medium term.

He said investors should have Australian equities in their portfolios, but it’s “very important to have exposure to so many of the sectors you just can’t get exposure to” in the country, such as technology and manufacturing.

Heading into 2018, BlackRock is “reasonably positive about global growth, including China,” he said. “We like Asia-Pacific, in this environment.”

MSCI’s benchmark emerging stocks index is up around 30 percent this year, making it the top-performing major asset class. And McCorry said he expected to see more investment flows into the asset class, as it still offered attractive valuations because those stocks were “increasingly tilted toward growth companies.”

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Reporting by Paulina Duran; Editing by Richard Borsuk