10 Key Questions For Investors
Aussie equities have enjoyed a solid reporting season and a more confident start to 2012. Risk appetite appears to be returning as evidenced by recent investment flows from Bond to Equity markets. RBS Morgans’ key picks for 2012 have so far outperformed the Large Cap index by 4.1% and the Small Cap Index by 19.4%. It’s a cliché, but investors need to remain circumspect, be selective and take profits where appropriate. We discuss 10 common questions topical to current markets. Thanks to Di Colledge for allowing us to use this.
|
Theme |
Action |
|
1. What does Greece mean for my portfolio? |
Michael Knox (our Chief Economist) believes that once the Euro area banks have been re-capitalised, then the banking credit crisis will come to an end. This should positively benefit equity markets hence we recommend investors maintain a strong equity exposure. |
|
2. Resources: opportunity or risk? |
Near term demand visibility is still tough, which means near term gains are likely to be hard won but 6-12 month value still looks compelling. Accumulate the majors as well as PNA, AGO, NHC, WHC on weakness. Take profits in ILU. Buy IGR and AQG. |
|
3. Mining services on fire: can it continue? |
We expect further value to be released in line with a cyclical upturn in activity and earnings. Beware of greed and be prepared to lock in profits. Use pullbacks to accumulate quality such as CPB, WOR, MND, AAX, BKN and NRW. |
|
4. US leverage: have you got yours? |
Can “US” cyclicals like BXB and NWS maintain their recoveries? We think so. |
|
5. Do I need to re-think the Banks and my portfolio? |
Diminishing macro risks will benefit Banks but low credit growth and higher regulation remain near term challenges. Our preferences remain ANZ and NAB. Great yield still on offer for income focussed investors. |
|
6. Do I still need bulletproof yield? |
Downside risk to rates and lingering macro risk suggest the utilities are likely to remain in high demand. Our preferences remain DUE and APA. |
|
7. Woolworths or Wesfarmers? |
Both are core portfolio stocks, but we prefer WOW in the medium term. Price moves can change this rating. |
|
8. Are you leveraged to oil price upside? |
Increasing risks to supply suggest oil price risks are firmly to the upside – get your hedges in place with OSH and/or STO. |
|
9. Shale Gas: can the boom roll on? |
We think so, key events and catalysts to watch in 2012 and a great M&A option. Our preferences are STO and SXY. |
|
10. Have Insurers like QBE turned the corner? |
Post natural disasters can be a lucrative time to capitalise on the insurance cycle – premiums have lifted and can provide fatter profits in more “normal” times – but it won’t be a sharp recovery. Our preference in the sector is SUN. |
