Billionaire investor Alex Waislitz warns of interest rate rise as economy strengthens

Billionaire investor Alex Waislitz predicts the ASX will continue its strong run but warns interest rates might rise before many expect.

Thorney chairman Alex Waislitz says a strong economic recovery could increase interest rates faster than many are expecting. Picture: David Geraghty

Billionaire investor Alex Waislitz predicts the stockmarket will continue its strong run into 2021 but warns interest rates could rise before many expect due to a strengthening economy.

While Mr Waislitz conceded “it can be argued that some valuations are stretched” given the strong rebound for many stocks since the market hit a low in March at the height of the COVID-19 pandemic, he said he remained optimistic heading into the new year.

“They say nobody rings a bell at the top or the bottom of the market. Whilst we … cannot predict with certainty the outlook for the market next year, as this point the momentum is on the upside.”

But he did warn there was a chance central banks around the world could raise interest rates at a quicker rate than many market observers were predicting.

“While it appears likely that historically low interest rates will prevail for the short term at least, it’s possible strong economic growth could lead to interest rates moving up sooner than many currently expect.”

Mr Waislitz’s comments came after a spate of well-received initial public offerings, including Nuix and Liberty Financial Group in Australia and the stunning stock market debut global brands such as Airbnb and DoorDash in the US.

At the same time local tech stocks, including buy now, pay later majors Afterpay and Zip have pushed record highs.

There has also been a series of better than expected news recently about the Australian economy as state borders begin opening up and pent-up demand for consumer spending as Christmas nears flows through the retail sector.

Economies, buoyed by massive government stimulus, are so far proving more resilient than many earlier predictions,” Mr Waislitz said when discussing how the coronavirus had impacted investment and the wider public around the world.

“Despite the tragic loss of life, there is cause for optimism that we can, and will, learn to live with the virus. This should become an ever more realistic scenario as more vaccines and therapeutics emerge in the coming 12 months.”

A member of The List – Australia’s Richest 250, Mr Waislitz was speaking at the annual general meeting for his listed investment company Thorney Technologies (TEK) on Tuesday.

He noted that COVID-19 had caused a “stimulatory impact on many of the companies we have invested” given the pandemic had “accelerated by five years what was already a well-established global trend of digitisation and the adoption of new technologies.”

The technology stock and investment focused TEK holds a combination of listed shares that have performed well this year, including market darling Afterpay, ZIP and Mesoblast, as well as a range of pre-IPO investments.

Some have floated on the ASX in recent weeks, including Booktopia and Doctor Care Anywhere, both of which have increased in value from their listing prices.

While the listed shareholdings serve as the foundation for TEK, Waislitz is pursuing plenty of unlisted companies. He will often take profits from holdings in fast-growing listed companies such as Afterpay, in which TEK has a small stake, and reinvest the funds in private companies that look headed for the market.

But he said TEK was raising $37m in new capital from investors to take advantage of pre-IPO opportunities now on offer rather than keep selling down existing listed stakes for reinvesting purposes.

“Our deep networks in Australia, the USA and Israel are putting forward some highly prospective candidates which meet our mandate of investing in disruptive, scalable companies in the medtech, biotech, agtech, edtech, fintech, AI, robotics and related spaces.

“Witnessing the level of exciting deal flow provided us with considerable encouragement to take in fresh capital to participate in the best of these new opportunities without liquidating some existing positions.”

Mr Waislitz said TEK already holds stakes in more than a dozen unlisted companies, some of which will come to the market in the next few months.

One he was keen to see move in that direction was TEK’s largest unlisted holding, the US-based moving home app Updater.

Having controversially privatised and delisted from the ASX in 2018 to seek a better valuation on the US private markets, Mr Waislitz said he was hopeful the move would soon bear fruit.

“We are particularly watching developments at our largest unlisted holding, Updater, which we anticipate should move towards a liquidity event sometime in 2021.”