Australia: Credit Suisse tips sharp GDP fall in 2011

Credit Suisse tips sharp GDP fall in 2011
January 10, 2011 - 3:54PM

Investors should sell resources stocks and position portfolios defensively in 2011 ahead of a likely sharp slowdown in Australia’s economic growth, according to Credit Suisse.

The global bank today voiced a position contrary to the Reserve Bank’s outlook and the market consensus, both of which expect strong growth in Australia’s gross domestic product (GDP) over the next two years.

Borrowers face high interest rates, banks are tightening lending criteria and the Australian dollar is overvalued relative to base metals prices, Credit Suisse’s analysts Adnan Kucukalic and Atul Lele told clients today.

This adds up to very tight monetary conditions, ‘‘historically consistent with a near hard-landing over the next year’’, they said in a note.

‘‘As a whole, monetary conditions are pointing to a sharp slowdown in GDP growth in 2011.’’

Most economists expect between two and four more interest rate hikes by the RBA this year, adding another 100 basis points to the current cash rate of 4.75 per cent in an effort to curb inflation pressures from China’s growth and the local mining investment boom.

Home borrowers expect the same, with Mortgage Choice reporting an increase in the take-up of fixed rate mortgages during December to buffer the hit to household budgets.

Fixed rate home loans now account for 15.22 per cent of all mortgages, up from 11.24 per cent in November when the RBA last raised the key interest rate, the national mortgage broker said.

Credit Suisse said the RBA should be cutting rates in 2011, especially if China continues to raise its interest rates to counter inflation. This would slow China’s growth, which would produce a headwind for local resources stocks.

Local investors should rotate out of resources stocks and take a defensive portfolio position, favouring interest rate-sensitive stocks such as retailers and banks, Credit Suisse said.

Although looking cheap when measured by conventional metrics, the Australian share market is expensive based on the long-term trend and should trade flat or lower in 2011, the analysts said.

The benchmark S&P/ASX 200 lost 2.6 per cent in 2010 to finish at 4745.2 points. It closed at 4712.3 points today.

AAP

http://www.brisbanetimes.com.au/business/credit-suisse-tips-sharp-gdp-fall-in-2011-20110110-19kw4.html

Australia: The Year in Review

Australian companies usually have high dividend payout ratios and dividend yields.

http://topforeignstocks.com/2009/08/24/top-10-banks-of-australia-by-assets-deposits/

Public Mutual’s new Australian fund

Public Mutual’s new Australian fund
Written by Edge
Tuesday, 08 September 2009 13:59


KUALA LUMPUR: Public Mutual Bhd is launching a new fund, Public Australia Equity Fund (PAUEF), today to provide investors the opportunity to capitalise on the long-term growth potential of that market.
In a statement yesterday, Public Mutual chief executive officer Yeoh Kim Hong said this was on the back of Australia’s strong position in natural resources and its diversified services sector.

She said commodity exports in Australia were likely to benefit from a pick-up in demand from emerging economies such as China and India, while Australia’s services sector was supported by a wide range of services such as the property, financial, health, transportation and educational services. “In addition, the Australian government’s fiscal stimulus measures and expansionary monetary policies are expected to stimulate domestic demand and benefit both the services and consumer sectors,” she said.

Yeoh said despite the recent market rebound, both the Australian and New Zealand markets had lagged the performance of the Asian markets. Thus, she said long-term investors should tap the opportunities to accumulate undervalued blue-chip stocks, index stocks and growth stocks in the Australian market.
PAUEF is an equity fund that seeks to achieve capital growth over the medium- to long-term period by investing primarily in the Australian market with the balance invested in the New Zealand and domestic markets. The fund will mainly focus on sectors such as the natural resources, banking, real estate and consumer segments. The equity exposure of PAUEF will generally range from 75% to 90% of its net asset value (NAV).

Yeoh said PAUEF was suitable for investors with an aggressive risk-reward profile who could withstand extended periods of market volatility in order to achieve their objective of long-term capital growth. It is also suitable for investors who seek to hedge their children’s future educational expenses in Australia.
“Investing in Australian equities is expected to keep pace with the rising cost of Australia’s university education over the long term,” she said.

The initial issue price of PAUEF is 25 sen per unit during the 21-day initial offer period until Sept 28, 2009. The minimum initial investment is RM1,000 and the minimum additional investment is RM100

http://www.theedgemalaysia.com/personal-finance/148891-public-mutuals-new-australian-fund-.html

Comment:  As usual, do your own due diligence and in particular, be aware of the costs involved.

How To Invest In The Australian Stock Market

How To Invest In The Australian Stock Market
by Michele Perdue

The heart of the stock market system in Australia is the Sydney Stock Exchange. The exchange lets investors both foreign and domestic supply the regional companies with the funds that are needed in order to expand the economy of Australia. You can be among the investors that deal with the yop-performing companies in the Australian market in just a few simple steps.

Your first step is to hire a broker that is registered with the Australian Stock Exchange; this stockbroker will be able to help you fill out the agreement forms, set up your international account for the trades and give you valuable advice on the changes and trends before you begin to invest.

Investment clubs are popular because they let the investors share the learning experience of how the stock exchanges work; you should gather some friends and fellow investors in an investment club to follow the Australian stock market together. When your club meets you should discuss your individual portfolios as well as observe the rising stocks.

In order to counteract the riskier investments it is advisable to purchase some futures in the Australian stock exchange. The people who invest in the futures will sell their shares back at a predetermined time with the price established before any transactions are made. Using this investment too you can have longer range stocks mixed in with the day trading.

One of the rapidly expanding industries in which to invest is the biotechnology industry. Take advantage of the rapid expansion of the biotechnology industry by investing in some of the hundreds of publicly owned and traded biotech firms that are accessible to the foreign investors. These are the ideal stocks if your intent is to invest over a long term in an industry that is gradually growing.

There are other things to consider and more investing options, Andrew Baxter who is an expert investor and hedge fund manager can offer you some great insights about investing in the Australian Share Market.

http://www.howtoinvesttoday.com/2009/10/02/how-to-invest-in-the-australian-stock-market/