Morning Report Monday 4 January 2016
Market Matters view over recent months has been that 2016 will be a tough year for equities with the US S&P500 likely to fall at least 15%, ideally after making one final all time high - see chart 1.
A significant pullback in equities should be exciting for prepared investors not scary. It will be an opportunity to buy quality companies at discounted prices for long term investments.
The question many investors are asking is how will our banks perform if the US corrects aggressively? An obvious question for local investors who are heavily weighted into this high yielding sector. Many people feel that 2015 was a bad year for banks but both CBA and Westpac actually closed up for the year, while yielding ~5% fully franked, compared to 1-year term deposits paying under 3% unfranked = a good return!
Show more...
