FN Arena News
Latest News
Asia
Australia
Commodities
Currencies
Feature Stories
FYI
Small Caps
Technicals
Weekly Insights
Weekly PDF
Research Reports

FNArena

Email Us

Member Login


FYI

Weekly Broker Wrap: More Model Portfolios Adjustments
FNArena News - March 12 2012

By Chris Shaw

With Australia's interim reporting season out of the way investment banks and equity brokers continue making adjustments to their recommended exposures and model portfolios. The week past saw Macquarie, Goldman Sachs, Citi and Credit Suisse update their views and macro-recommendations (top down), while JP Morgan and Deutsche Bank undertook in-depth reviews of companies in the building materials sector.

The general outlook in Macquarie's view is global economic growth won't be fast and will continue to be impacted by concerns such as Europe and Iran, but growth will continue on an upward trajectory. This suggests 1H12 will be broadly constructive for global equities, with the US market likely to lead the way.

Domestically, Macquarie suggests headwinds for the Australian market are greater than for most given the combination of a strong dollar, relatively high interest rates, negative productivity growth and an inflexible industrial relations framework.

This has left Australia uncompetitive across a wide range of industries and is likely to see corporate management teams look to cut costs in an attempt to restore cash flows. This leads Macquarie to suggest FY12 earnings per share (EPS) growth will be negative by around 5.0% (current consensus expectations are sitting around +4%).

Sectors where above average growth is expected are Energy and Mining Services, Macquarie's recommended portfolio being already overweight both. This position is being extended via the addition of Santos ((STO)), with this position being funded by a move to Underweight on BHP Billiton ((BHP)) given an expectation of negative earnings growth this year.

This means Macquarie's overall resource allocation is unchanged. Other resource and energy stocks in Macquarie's recommended portfolio include Rio Tinto (RIO), Atlas Iron ((AGO)), PanAust ((PNA)), Oz Minerals ((OZL)), Woodside ((WPL)), WorleyParsons ((WOR)) and Origin Energy ((ORG)).

Outside of the resource sector Macquarie continues to favour a defensive portfolio, with a concentration on a small number of stocks expected to deliver strong top line growth and companies expected to deliver stable and sustainably high dividend yields.

The full story is for FN Arena subscribers only. To Subscribe click here

Or If You're New To FN Arena - click here for a trial

If you are a subscriber login here


Member Login

Username: Password:
Remember Me Lost your logon details?








Our archive tells no lies. FNArena warned its readers well before the price of crude oil peaked in 2008 the speculator bubble would deflate with devastating consequences for those holding oil company shares. In August we warned the most severe correction in modern history was forthcoming for natural resources. In 2007 we warned the problem with US subprime mortgages would prove much bigger than experts and media were anticipating (among other things).

FNArena is showing the true value of truly independent financial analysis and reporting. Our daily news reports can be trialed at no cost and with no obligations at www.fnarena.com. Simply sign up and see it for yourself.

Subscribers and trialists should read our terms and conditions, available on the website.

All material published by FNArena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.


The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.
© News Network 2014. All Rights Reserved. No portion of this website may be reproduced, copied or in any way re-used without written permission from News Network. All subscribers should read our terms and conditions.