What's New @ Dewings?

Morgan Stanley here in Adelaide have released their December Investment Viewpoint.

"Though the recent news flow and outlook on global growth remains positive, our asset allocation analysts have trimmed their tactical overweight in equities to lock in some of the strong outperformance (particularly versus defensive asset classes like bonds) over the last 17 months. However, they still expect further upside over the coming year on the basis that liquidity remains ample, confidence is improving, and earnings revisions will turn positive. Indeed, they forecast the ASX200 to reach 6100 by year-end 2014."

Read more: Morgan Stanley Investment Viewpoint December 2013

Morgan Stanley here in Adelaide have released their November Investment Viewpoint.

"Highly accommodative policy, reasonable valuations and good earnings momentum leaves us comfortable on equity markets."

Read more: Morgan Stanley Investment Viewpoint November 2013

The Federal Government announced this week that they will not proceed with a number of tax initiatives announced by the previous Labor Government. These are measures that were not legislated prior to the election. These measures include:

• The proposed $2,000 cap on claiming deductions for self education expenses. This is a welcome announcement. As we highlighted in a recent newsletter one of the biggest problems with this measure was that it proposed extending the definition of self-education beyond merely courses conducted at universities and other educational institutions. The effect would have been to limit self-paid training of almost any kind, including conferences and related travel.

• The proposed change to the way in which motor vehicle fringe benefits are calculated. This proposal had caused considerable consternation for both the car industry and salary packaging specialists, as it had the potential to make motor vehicles less attractive as a salary packaging tool - which could mean less cars being sold.

• The proposed tax on superannuation pensions where the income of the super fund exceeds $100,000. The Coalition had been largely silent on this measure prior to the election. Superannuation income is traditionally tax free for members that are receiving a pension, however Labor had proposed to tax any excess income over $100,000 at 15%.

Morgan Stanley here in Adelaide have released their September Investment Viewpoint.

"Australia and Germany head to the polls on the 7th and 22nd of September respectively. Barring any surprises, we expect the outcomes in both cases are unlikely to upset markets...We are cautiously optimistic and feel the worst is over, but Europe’s recovery is still fragile and the level of public debt remains a burden."

Read more: Morgan Stanley Investment Viewpoint September 2013

Amongst the recent bickering between the major parties over their respective budget costing announcements, the changes proposed by the Coalition for small-medium businesses may have been overlooked a little.

As a part of its promised $31 billion in savings, the Coalition has pledged to:

• abolish the instant tax write-off for assets costing less than $6,000;
• abolish the up-front deduction of $5,000 for the cost of a motor vehicle; and
• scrap the company loss carry back provisions, which allows companies that make a loss in one year to offset that loss against prior year profits (rather than carrying it forward and having to wait for future year profits to offset it) - effectively giving businesses a cash injection in the form of a tax refund.

This is indicative of more pain to come, regardless of who wins the election this weekend. A change in Government will likely not be the panacea for the economy that many expect as global economic factors, more than anything else, continue to weaken the Federal Budget position. A surplus is unlikely for a number of years yet, despite the rhetoric from both sides.

You can read more of of the Coalition's costing analysis here.