Australian market watchers are being overly confident in their forecasts for FY12, according to investment company WAM Capital (ASX:WAM).
The company believes analysts forecasts for the Australian sharemarket are too high, it said in a market update, citing the growing costs many companies are facing and weak consumer sentiment.
But it added that the expected interest rate cut that bond markets are now pricing in should help stimulate the broader economy, and move money into higher-risk assets such as equities. This would in turn provide a more positive equity outlook.
The company made the forecast as it reported a 16.5% decrease in net profit to $20.4 million.
But WAM Capital increased its final dividend by 25% to 5 cents per share – taking the total dividend for the year to 10 cents – on the back of gains in the value of its gross portfolio and in pre-tax profit.
The total gross portfolio grew 17.9% for the year, with the top securities by market value being stakes in Reckon Limited (ASX:RKN), Signature Capital Investments (ASX:SGI) and Emerging Leaders Investments (ASX:ELI).
WAM Capital chairman Geoff Wilson said he was pleased with the full-year results, “given the volatility in the equity market over the past year.”
WAM shares fell 0.63% on Wednesday to $1.570.