Market Matters Morning Report Wednesday 30th March 2016
Australia – resumes its role as the ugly duckling – which is unfair (& sad!)
We’re approaching the end Q1 for the calendar year, and it’s obvious that Australian stocks have once again become the ugly duckling. For the quarter, US stocks are up +0.58% which is impressive given they were off -11.4% at their low point on the 11th February. Australian stocks on the other hand are off -5.49%, which is clearly some big underperformance.
Unsurprisingly, banks have been the main drag as bad debt provisioning comes into question. As we’ve written in the last few days, it’s somewhat of a surprise that the market has reacted so poorly to something that was well known to the market. Bad debts were always going higher; they had to from such depressed levels. The concern it seems is around the rhetoric being used from banks with ANZ unable to confirm actual numbers and Westpac (WBC) even less committal. This will play out over time but initially, it seems to us like an overreaction.
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