Wilson Asset Management: Five key themes to shape the market this Financial Year

Wilson Asset Management: Five key themes to shape the market this Financial Year. 1) Given economic growth in Australia remains below trend, we expect interest rates will remain low for the next two to three years. Inflation will continue to soften and perhaps leave the door open for the RBA to reduce the cash rate further. 2) With interest rates to remain at record lows, house prices will continue to move higher. 3) Earnings growth remains anaemic with a raft of profit downgrades in recent months across a number of sectors. The market's expectation of 8% earnings per share (EPS) growth for the next twelve months looks too high. 4) US Federal Reserve could increase interest rates by the end of 2014. 5) We expect IPO and M&A activity to increase further this year as companies look to grow earnings off the back of a weaker economy in Australia.