Quant Strategy Portfolio | February update - Managing RBA and CNY effects | Strategy outlook: We maintain our long term positive view that the market will...

Quant Strategy Portfolio | February update - Managing RBA and CNY effects | Strategy outlook: We maintain our long term positive view that the market will reach 6500 in the next 12-18 months while short term profit taking risks remain with post reporting season lack of buying support, post Chinese New Year (i.e. CNY) commodity price risk and RBA rate cut expectations already in the price. Historically strong February market performance leads to flat or negative March performance while commodity prices have been soft after Chinese New Year since 2011. The market is already pricing in RBA cutting rates again in March, while we expect them to not waste another rate cut with substantial macro head winds still hanging around. We expect domestic consumer confidence to remain low, RBA to cut rates around April/May and currency to trend down to mid to low 70s. The yield differential and currency stabilising in the mid to low 70s will bring Australian high yielding equities back in favour of global investors. (VIEW LINK)