Australia’s largest listed and oldest investment company, Australian Foundation Investment Company (AFIC), believes the Australian share market is fully priced and it has concerns about the outlook for China.
AFIC was commenting after announcing its for the six months to 31 December, with net profit rising 2.8% to $154.2 million on revenue from operating activities which rose 3.0% to $173.5 million.
The fully franked interim dividend of 12 cents per share, up 0.5 cents from the previous corresponding period, will be paid on 25 February to ordinary shareholders on the register on 4 February.
The company said the outlook for equity markets remained highly uncertain as heightened geopolitical tensions and election outcomes in many developed markets may lead to a wide dispersion of potential investment outcomes in the near term.
It said equity market volatility was expected to remain a feature, the operating environment for many companies was set to become increasingly challenged, sales growth was set to slow and cost inflation remains elevated.
“Following two strong years of performance, the Australian equity market now appears more fully priced,” the company said in an ASX announcement.
AFIC also said its underweight portfolio position in the underperforming resources sector had contributed to relative outperformance.
“It has been a conscious decision to be underweight in this sector for some time given our concerns about the outlook for growth in China,” the company said.
The portfolio return including franking for the half year was 7.2%, below that of S&P/ASX 200 Accumulation Index (7.6%), but over the 12 months to 31 December 2024 the return of 13.2% was ahead of the Accumulation Index (12.7%).
At 3:50 pm AEDT (4:50 am GMT) AFIC (ASX:AFI) shares were trading 1.9 cents (0.3%) higher at $7.59, capitalising the company at $9.48 billion.
Established in 1928, AFIC described itself as a long term investor focussed on quality companies with strong balance sheets, unique assets and highly capable boards and management teams.