Australia: S&P/ASX 200 (.AXJO) Tougher year tipped for super sector in 2020

Australia: S&P/ASX 200 (.AXJO) Tougher year tipped for super sector in 2020

Australia: S&P/ASX 200 (.AXJO) Tougher year tipped for super sector in 2020

Superannuation experts are warning fund members they should not expect the stellar returns of 2019 to continue this year, with increased regulation and more mergers poised to reshape the retirement savings landscape.

Many super funds are yet to report their end-of-year results but industry researcher SuperRatings expects an average fund return of between 13.5 per cent and 14 per cent for the 2019 calendar year.

With equity markets at record highs, the valuations of many stocks listed on the Australian Securities Exchange are considered stretched compared to historic levels. As a result super funds are likely to continue their push into alternative assets such as private equity and infrastructure, which offer the potential for stronger upside and sustained performance.

eremy Wilmot, head of advisory consulting at JANA, says the super sector is seeing too much focus on short-term performance.

“This short-term focus can be detrimental to superannuation investors in the longer-term,” he said.

“Superannuation is a marathon, not a sprint. People invest in super not over a year, but a lifetime, and it’s long-term results that matter.”

Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume, told the Association of Superannuation Funds of Australia (ASFA) in November that mergers of underperforming funds “would make our super system more efficient and could significantly benefit members”.

“If their fund is not delivering the best outcomes for members, or if it stands at increasing risk of not doing so – it begs the question – should that fund merge? And increasingly regulators may come knocking to ask – why has that fund not yet merged?” she said.

The Productivity Commission estimates that up to half of all APRA-regulated funds have less than $1 billion in assets and many of them consistently underperform.

If the 50 highest-cost funds merged with 10 of the lowest-cost funds, it could potentially result in an extra $22,000 at retirement for the average fund member.

Senator Hume is also championing the government’s Retirement Income Review, the largest probe into the three key pillars of the retirement system – the age pension, compulsory super and voluntary savings – ever undertaken.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 7,088.78.

The projected lower bound is: 6,776.56.

The projected closing price is: 6,932.67.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.4263. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 63.73. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 131 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 181.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 54.800 at 6,929.000. Volume was 13% below average (neutral) and Bollinger Bands were 0% wider than normal.

Open     High      Low     Close     Volume___
6,874.2006,933.2006,874.2006,929.000 515,996,608
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,791.77 6,758.78 6,591.71
Volatility: 16 15 14
Volume: 407,512,832 563,090,496 614,467,904

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

S&P/ASX 200 is currently 5.1% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .AXJO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 1 periods.

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