Mr Oliver explained, however, that while the Ukraine emerging in the media following the downing of Malaysia Airlines flight MH17, the Israeli-Palestinian conflict heating up and the civil war continuing in Iraq may lead to a short-term dip in shares, we are not at a major share market top.
The downing of the plane does not necessarily increase the risks around the Ukraine or substantially impact international travel, while the Israeli-Palestinian crisis “has been flaring up for years with no broader consequences”, he said.
Mr Oliver believes valuations are not currently stretched, especially if low interest rates are allowed for and global earnings continue to grow following an improvement in economic growth.
“There is no sign of the euphoria that comes with major market tops; if anything, there is still a lot of scepticism about global recovery and about financial markets,” he said.
This is a “long way from the sort of confidence that is normally seen when bull markets end”, he added, and any temporary dip in the share market should be “seen as a buying opportunity”.
Regarding Australian equities, Mr Oliver disputed the idea, explored in the Financial System Inquiry interim report, that dividend imputation creates a bias to invest in domestic equities and adversely affects the corporate bond market.
“The trouble is that dividend imputation actually corrects a bias by removing the double taxation of earnings, once in the hands of companies and again in the hands of investors,” he argued.
“It also encourages corporates to give decent dividends to shareholders as opposed to irrationally hoarding earnings.”
Mr Oliver argued that removing dividend imputation would not only “reintroduce a bias against equities but substantially cut into the retirement savings of Australian investors and lead to lower returns from Australian shares”.
