SHIELD – Sustainable High Yield | Yield chase back on after seasonal profit taking
We maintain a bullish long term view on the Australian equity market to reach 6500 in 2016. Falling growth outlook and RBA move has made equities as the preferred risk/return option for investors wanting more than 3% return in an environment where disposable income and standard of living is falling while unemployment is rising. The expected short term profit taking in May has pulled the market down to yield weighted fair value market level of 5600. The disparity between the fiscal and monetary policy settings will not help growth recovery with rising unemployment outlook. We expect the yield thematic to continue with growth outlook remaining very soft and RBA remaining on an easing bias. SHIELD Top 20 picks are: large cap – ANZ, NAB, TLS, WES and SUN; mid cap – AWC and IFL; small cap – IMF, PTM, RCR, UXC, CCV, KMD, MOC, CWP, RKN and GEM ; and micro cap – FRI, DDR and HFA. (VIEW LINK)
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