Volatile overseas economies could still affect Australian investors despite predictions the share market will improve over the next year, according to industry experts.
Although the domestic market has been showing signs of correction, regulatory reform and ongoing global instability may still affect the finance industry, according to HLB Mann Judd.
"Some areas are showing signs of improvement but others suggest that the problems businesses have been facing for the last few years will continue over the next 12 months," HLB Mann Judd Sydney partner Simon James told InvestorDaily.
"For example, at the end of 2012 the share market had shown definite improvement, and the recent interest rate cuts by the Reserve Bank of Australia have boosted confidence for businesses and consumer alike.
"But the economic environment remains challenging and much of the cost-cutting that has taken place over the last few years will continue in 2013."
With conditions still volatile in overseas markets, investors should still be wary of external influences affecting domestic conditions, according to Colonial First State (CFS).
"Market activity in the US, Europe and China will continue to have an impact on the Australia outlook," Colonial First State executive general manager Linda Elkins said.
"2013 is likely to present the market with a challenging global macroeconomic environment and ongoing dialogue about Australia's economic growth path."
Despite the uncertain market conditions, The Trust Company (TTC) has still predicted that 2013 will provide better stock market returns than the previous year.
In particular, the company said the Reserve Bank of Australia's (RBA) latest interest rate cut should move investors towards equity investments, increasing the interest in the market.
"Given the current earnings growth prospects, we continue to expect the capital growth for Australian shares to be moderate over the short term," TTC executive general manager personal client services Ray Gould said.
"Should the RBA cut interest rates, it will flow through to lower returns from term deposits and fixed interest investments for investors."
