There will always be periods where small caps underperform, but over the long term we believe the case for small caps to structurally outperform is stronger than ever. Reasons for this include the high level of inside ownership & alignment with investors. We like the leverage smalls have to M&A... Show More
We are currently witnessing a turning point for small caps. However investors should wait for the final tax loss selling of FY17 to subside in late June before committing. Post 30 June we expect small caps to have a strong period in both an absolute sense and versus large caps.... Show More
Nikkei to rally +30% in 2014: The Nikkei 225 has an almost perfect correlation (0.98) to the USD/JPY cross. As the JPY weakens against the USD the Nikkei rises, but with 2x the leverage. That is, for every 1% depreciation of the JPY the Nikkei rises around 2%. To put... Show More
Can the building materials sector continue to outperform? Investors always underestimate the fixed cost leverage in these businesses when the cycle turns. The market is forecasting a recovery in volumes but pricing upside could see consensus numbers upgraded into FY15. FBU and CSR are the standouts. Show More
Is the recent correction in wealth managers providing a good entry point? I think so. Mark to market downgrades are only minimal at this stage and if the ASX200 holds around 4700 then the 1H14 average will be nicely above 1h13 which should mean revenue growth for the sector. Something... Show More
Good point Jimi, Lloyds Bank has moved very strongly and the UK government has been reducing its stake. There is clearly strong demand. A niec way to play a more broad based European recovery is through MQA which operates over 20% of France's toll rd network.
If you strip out the fiscal tightening in the US the underlying private investment trend in the economy is tracking quite well. The Fed will only taper for the right reason and the market has had time to absorb the noise. I think the Australian market can continue to outperform the SP500 as it did in September Quarter.
James, the upscaled raising is quite a bullish signal for equity markets. The Virtus float has also been a success trading at $6.80 vs float price of $5.68. The IPO/placement market is showing signs of strength for the first time since 2009.
PTM is my prefered exposure with significant leverage to a falling AUD but you do pay a premium for it. PPT is also looking interesting at these levels given their cost out story will enhance bottom line growth and you are only paying a market multiple on FY14 earnings.