Wilson warns of sluggish sharemarket

PROMINENT funds manager Geoff Wilson says profit expectations for the coming year for the Australian sharemarket are too high and analysts will be forced to revise them in coming months.

PROMINENT funds manager Geoff Wilson says profit expectations for the coming year for the Australian sharemarket are too high and analysts will be forced to revise them in coming months.

But he says the "difficult market" is poised to offer "a great buying opportunity".

Wilson Asset Management Capital posted an 80 per cent fall in full-year net profit yesterday of $4.3 million, reflecting accounting treatment of the return on its flagship fund, which fell to 4 per cent from 17 per cent last year.

Mr Wilson said the company holds "a conservative view" for equity markets over the the next 12 months.

"We believe analyst earnings forecasts are too high for [financial year] 2013 given the current low growth environment," Mr Wilson said.

"These earnings forecasts will be revised downward by analysts over the coming period."

Company outlook statements at the coming reporting season would be "very negative", he said.

Global ructions such as the European debt crisis meant local sharemarket investors would have to expect lean returns in the medium term. Equity market returns "may not be as high as experienced in previous periods," Mr Wilson said, because the global economy is in a period of paying down debt, "which we think will continue over the medium term".

Attractive investment opportunities were emerging, he said. "We believe this difficult period provides a great buying opportunity."

Mr Wilson said "there is the prospect of one or two more interest rate cuts" this year.

WAM's revenue fell down 72 per cent and net profit was $4.3 million after $20.4 million last year.

Mr Wilson said the size of the fall resulted from accounting standards that require changes in the value of investments to be recorded on the company's profit and loss statement.

The company announced a 5.5? final dividend, up from 5?.

Mr Wilson said the fund outperformed the ASX accumulation index by 11 per cent.

Earnings per share was 4? compared with 19.1? last year.

"We are pleased that in this tough environment we can continue to deliver strong outperformance."

The best stocks in the WAM portfolio included Signature Capital, Aristocrat and Breville while the worst were Centrepoint Alliance, Symex Holdings and Austar.

The shares closed up 1.5? at $1.575.