Rising costs are not yet a problem for equities

May 17, 2021

Writing for The Australian Financial Review, lead portfolio manager of the Tribeca Alpha Plus Fund Jun Bei Liu comments on increasing costs and their implications for Australia’s equity market.

Surging commodity prices, supply component disruptions and faster than expected tightening in labour market conditions across many economies, including Australia, are now causing investor concerns around rising input cost pressures and the likely negative impact this might have on corporate profit margins, earnings and ultimately the ability of the equity market to move higher.

The potential for higher inflation to begin seeping into the corporate cost base should come as no surprise to anyone who has been watching the narrative around broader inflationary pressures.

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