\n\tBy Rudi Filapek-Vandyck<\/p>\n
\n\tWe might as well label the strategists for the Asia Pacific region at RBS as “non-believers”. Where others have been sceptical about the immediate, short term effect of the Chinese decision to abandon the RMB\/USD peg, strategists Dylan Cheang and Emil Wolter have gone one decisive step further by reiterating their advice to remain Underweight the Australian share market, and to sell materials stocks.<\/p>\n
\n\tClearly, Cheang and Wolter don't think the sell-off in industrial commodities has run full course just yet. Other negatives mentioned in their latest market update include increased risks for European banks to hit the wall plus increased risks for a hard landing in China.<\/p>\n
\n\tThe date on their strategy update -18 June 2010- suggests the report was written prior to China's currency flexibility announcement, but would it still have been distributed this week if both strategists thought things have now changed materially?<\/p>\n
\n\tWe think not.<\/p>\n
\n\tAt Macquarie, however, those responsible for the Model Portfolio have elected to increase exposure to materials heavyweights BHP Billiton ((BHP)) and Rio Tinto ((RIO)) during recent share price weakness.<\/p>\n
\n\tMacquarie is clearly taking a more positive approach, arguing the overall environment for resources is actually improving. This doesn't sit well with both shares falling to their lowest valuation levels in two decades – this while earnings outlook is actually very strong, argues Macquarie.<\/p>\n
\n\tTwo key assumptions underpin Macquarie's positive outlook:<\/p>\n
\n\t1.) investors in the US will increasingly turn their attention away from problems in Europe and focus on the improving economy on the homefront
\n\t2.) Chinese authorities will turn to a softer approach in order to facilitate a soft landing with GDP growth at around 8%<\/p>\n
\n\tToday's Model Portfolio update also revealed the overall exposure to Westpac ((WBC)) has been reduced, while Platinum Asset Management ((PTM)) and Sonic ((SHL)) have both been removed.<\/p>\n
\n\tStrategists at BA-Merrill Lynch, already positioned at the bottom end of market expectations for the year ahead in Australia, published another one of their insights today, arguing demand for credit has been such an important factor behind Australia's stellar growth in the past, the future can only hold less of the first and less of the second.<\/p>\n
\n\tBA-ML predicts banking shares will be de-rated as a result, while the future should look a lot less promising for retailers as well.<\/p>\n
\n\tThis is not to say there won't be any winners from the new credit environment environment. BA-ML predicts dwelling investment will remain constrained by finance availability and planning restrictions. REITs with cash and large land holdings should benefit most.<\/p>\n
\n\tThe strategists see a major stand-out role for Stockland ((SGP)) in the sector, arguing the property developer is cashed up plus it has acquired residential land during a period when other developers could not.<\/p>\n
\n\tOver at JP Morgan, the team of emerging companies specialists has reiterated its list of preferred candidates on the Australian Stock Exchange: Blackmores ((BKL)), Credit Corp ((CCP)), Miclyn Express Offshore ((MIO)), Norfolk Group ((NFK)), Retail Food Group ((RFG)), Salmat ((SLM)) and Wotif.com ((WTF)).<\/p>\n","protected":false},"excerpt":{"rendered":"
Strategists at Macquarie, RBS and BA-ML updated their thoughts, while JPM’s emerging companies team lined up a list of favourites.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56777"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=56777"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56777\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=56777"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=56777"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=56777"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}