Overall, the February reporting season was generally positive for Australian small caps, with the domestic economy remaining resilient, and many small cap company results beating market expectations.

As the Australian tech sector matures, we believe share price performance will be increasingly driven by medium-term earnings delivery, transcending the ‘growth at all costs’, loss-making strategy of recent years.

After a frothy end to 2023 our Head of Australian Value Equities Dougal Maple-Brown assesses the prospects for Australian equities through 2024.

There is much to think about in geopolitics and macroeconomics over 2024 and it is unlikely to be a stable year. Real yields have fallen and the global economy looks to be slowing which should benefit defensive essential service assets like infrastructure, relative to more economically sensitive investments.

An unpredictable landscape sets the scene for substantial risks – and opportunities – for investors in 2024. Our investment heads set out their views on the year ahead across Australian value equities, Australian small companies, global emerging markets and global listed infrastructure.

In the context of the Australian small cap sector, we believe strong corporate governance via executive incentivisation and board composition is the most influential ESG factor driving shareholder returns.

We believe worries about the ‘Big Four’ banks are already baked into share prices. Modest valuations and choppy markets see us ready to take advantage of emerging pockets of longer-term value.

Despite potential for a softening labour market, we believe material wage inflation will come through over the next 6-12 months. Our research indicates this will significantly impact select sectors of the Australian small cap market, increasing our focus on companies with genuine pricing power.

Coming out of COVID, persistent demand and supply constraints in listed transportation infrastructure has highlighted the ability of these assets to shield investors from cost inflation and higher interest rates.