Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market started positive and then doubled the gains on the back of better than expected GDP data. It was all about the banks after the GDP data came out. The GDP data showed that the economy was starting on a good position in 2016 while majority of the drivers of outperformance will start to taper in 2016. But the key message was that Australia was doing better than most despite government inaction. “The Big Short” scare story turned into “The Big Short Covering” story. The market was covered in short covering while Banks were back in yield favour. We have been saying for the past two weeks that the bank yield premium to bond yield is at historical high and history shows that bank stocks have had massive runs from these levels. Despite macro risks, we continue to be overweight banks as global investor’s struggle to understand the intricacies of the Aussie banking and property sector..........…. (VIEW LINK)