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Mathan Somasundaram

2017 - Now > Blue Ocean (AUS) > Market Portfolio Strategist 2012 - 2017> Baillieu Holst (AUS) > Head of Strategy, Quant and Data Analytics 2009 - 2012 > Bell Potter / Southern Cross (AUS) > Head of Quant and Data Analytics 2007 - 2009 > LIM (US) > Global Head of Equities > Built a global data management platform for equities and expanded the business outside US 1995 - 2007 > Citi / County Nat West (AUS/GLOBAL) > Started as Junior Quant Analyst and finished as Director of Global Quant Group and Head of Data Services AUNZ

Sunset Strip > Trading Day Wrap From Blue Ocean 20170912

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market jumped on global relief rally on less than expected hurricane damage and no missile test by NK. Local market had already priced in part of this relief rally upside yesterday as we moved on positive US futures…so we had the catch up session today. Given the China/Russia watered... Show More

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Sunset Strip > Trading Day Wrap From Blue Ocean 20170911

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market delivered the first solid positive day in over a week on the optimism that US Hurricane damage was better than expected. Growth worries drove commodities lower over the weekend. Local market bounced on the open on the back of the banks as global investors increased exposure to cover... Show More

BOEQ Footy Finals 2017

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

BOEQ Footy Finals picks…just for fun!!! NRL and AFL are heading to the final series in September/October. We have attempted to model each team’s response to their potential opposition using the regular season performances. Since the model is based purely on their performance data, it provides a statistical view of... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170907

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market jumped on the open with global bounce and then slid down to flat as overall negative sentiment took hold. Trump administration has kicked the can down the road by a short term debt ceiling deal for 3 months while the US Fed meeting in 2 weeks will be... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170905

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market fell on the open with NK risk and then recovered to close flat with geopolitical uncertainty running wild. US markets will open tonight and play catch up. US administration is going to be calling global leaders tomorrow about NK and risk weighted response is for more sanctions and... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170904

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market fell on the open with NK risk and then recovered part of the loses on the back of the positive commodity outlook. The data out of US remains patchy on the consumer outlook with another weaker than expected non-farm payroll while manufacturing PMI’s were solid. ECB hinted that... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170901

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market bounced on positive global sentiment before running into profit taking ahead of the long weekend in the US. The global market sentiment improved with solid economic data from China, US and Canada while Japan data supports accommodative BOJ stance for the medium term. The non-farm payroll data will... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170831

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market bounced back on positive US and China economic data. The local business capex outlook data was positive but the weak consumer sentiment shows that one has not translated to the other since GFC. The GDP growth rate hit 3% and maintains the recovery pace we have seen in... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170830

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market flip flopped to finish flat after opening positive on US market intraday recovery. North Korea and US seem to have taken a few steps back from recent bravado talk. USD continues the slide against most currencies while the Euro leading the charge. The US Fed outlook will get... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170829

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market fell on the open and then made a slight recovery as North Korean missile test launch through Japanese airspace killed off the weak overnight global market sentiment. North Korean launched another test missile through Japanese airspace according to South Korea…more ammunition for risk off trade to remain in... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170828

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market fell on the open and then traded sideways with weak global sentiment. The commodities remain strong on the back of China optimism…Shanghai index delivered another new high since 2015. Iron Ore continues to baffle analyst by moving higher while the Texas natural disaster playing into Oil optimism. Jackson... Show More

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Sunset Strip > Trading Day Wrap From Blue Ocean 20170825

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market recovered from early losses to finish flat on continued commodity optimism. Shanghai index making a big move higher today….positive China sentiment. Base metals are on fire while Iron Ore and Oil continues to prove bears wrong. Copper leading the charge and we see MLX and MOD as the... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170824

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market recovered from early losses to finish a slightly negative day on continued commodity optimism. Local market continues to be struck in the narrow trading range since May. The manufacturing PMI an new home sales in the US were negative while services PMI positive. US president threatened to shut... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170822

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market climbed back higher gradually on the back of strong metal prices. Local market still struck in the narrow trading range since May. US market and geopolitics remain the macro overhang while reporting season is driving substantial volatility. Growth stories missing guidance or weak outlook statement are facing 15-20%... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170821

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market fell on global sentiment despite bounce in Iron Ore and Oil. US market heads the negative catalyst list. US market risk remains key for local market…(1) VIX looks to break above post election high (2) Russell 2000 (i.e. US domestic facing) has pulled back below 200 day MA... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170818

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market recovered to finish a better than expected negative day after substantially weak lead from US market. Global markets were rattled by the terror attacks in Spain while US market was worried that Gary Cohn may follow the CEO walkout from US president’s leadership groups. Global economies are showing... Show More

Sunset Strip afternoon trading wrap

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market had a slide after flip flopping early in the day. Commodities bounce helped the miners after US Fed, ECB and BOE moved dovish. UK recovery in wages growth and historically low unemployment helps support the economy despite the high inflation and low currency. Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170816

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market made a steady recovery after flip flopping for the first few hours. US retail data was string overnight while US markets were undecided. Chinese regulatory moves are beginning to bite while the pullback is aimed to get back to pre 2016 levels. The corporate outlook for US is... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170815

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market followed the global markets higher as US/NK fake war worries subsided. US seems to have moved on…now trying to start a fake trade war with China and threatening to move against Venezuela. North Korea on the other hand has decided to postpone the test missile launch. Locally the... Show More

Sunset Strip > Trading Day Wrap From Blue Ocean 20170814

Mathan Somasundaram
Mathan Somasundaram Blue Ocean Equities

Local market had a relief rally as the “War of Tweets” between US and North Korea started to settle down. The weaker than expected US inflation outlook pushed down USD and pushed up AUDUSD. China data showed that we may be closer to the top in the recent commodity run... Show More

Economists have been forecasting RBA rate rises since 2014. Funny that it may come true when the property market has started to roll over. Sadly I think RBA is stuck and I can't see them moving till they have to...and that could be longer than most expect as US Fed, ECB and BOJ continue to play currency musical chairs.

On Oz Construction Cycle: The Impact Is Now -

In a market where bottom up investors have struggled to deliver outperformance, momentum models (like technical analysis) have allowed investors to better time the entry and exit points. I found that an integrated multi-style approach (i.e. including momentum) seems to smooth out big swings in the market. The macro risk in global trade and Euro issues may be the catalyst that drives the profit taking.

On Technicals - Dow Jones - at same overbought levels as in 2007 and 1999 -

Sure....I think that has played a decent part in their growth. What we are seeing with China is that they realized that they needed to grow the overall growth pie by helping the infrastructure and industrialization boom in all these countries. We are seeing this in large parts of South America and Africa as well as other Asian countries like Singapore, Malaysia, Indonesia, Sri Lanka and even Pakistan of late. The capital investment driven by China is helping these countries to attract more external investment capital to make the next energy, infrastructure and industrialization steps. As we have seen in the past, when these countries make these steps forward, they create bigger middle class which drives more consumption. China's global strategy has moves to growing the pie than taking a bigger slice of a declining pie.

On Sunset Strip | Aussie Afternoon Institutional Market Wrap -

Agree....I like gold in the long term portfolio hedge basis, but on the commodity price perspective, we are likely to see oil outperform gold in the next 6 months.

On Grossly Unintelligent! -

Funnily enough market can get too negative from too positive region after a few sentiment killer articles. Banks are moving mainly on macro factors and they will move as US Fed changes. Banks will come back in favor as the market risk/return mix matches up. If the US Fed flags no rate changes, AUDUSD goes to 80 and RBA cuts rates...then Banks are going to move 10-20% higher. We live in a fickle world where risk and return are a relative measure that can change dramatically within a few days.

On Sunset Strip | Aussie Afternoon Institutional Market Wrap -

I agree. The VIX and the corporate profits are all pointing to market looking for a reason to fall over. FOMC flip flopping seems like a good enough trigger to push this market into another profit taking slide.

On Sunset Strip | Aussie Afternoon Institutional Market Wrap -

That has been a trend globally with demographic change, but the drop in US has been a lot higher than Australia in the same period. Even if we assume that is the case, then that sets up other issues regarding the sustainability of the US economy and debt with lower workforce. These are issues faced my all the major economies, but US as the shining star is pricing in too much optimism. US is growing, but likely to grow slower than what the market is expecting for the next year or two. This will put real pressure on US Fed to stay on the sidelines in 2016.

On Sunset Strip | Aussie Afternoon Institutional Market Wrap -

The PE bands are based on forward long term average PE as well as +/- 1 standard deviation and +/- 2 standard deviation. History tells us that market pre GFC traded just above +1 standard deviation over fair value with high interest rates and high currency. Given the current low rates and low currency, we should get close to +2 standard deviation in the medium to long term.

On Chart of the day -

The EPS Growth decline is a 5 year trend despite better balance sheet, lower cost of borrowing and lower currency. The Earnings Revision and ROE trends point to low growth outlook well into 2016. Yield premium is the trade for 2016....again!!!

On Sunset Strip | Aussie Afternoon Institutional Market Wrap -

The last time CSL traded above $100 (i.e. pre 1 for 3 split) was 17th Oct 2007 (i.e. pre GFC high for the market).

On Bets over - the race to $100 -

The great thing about technological change is that the competition will force the next step even faster. Big global disruptive firms with fancy brands always help to give exposure and drive change even faster. The tide has turned with battery technology and clean energy. Already utilities in Australia are marketing packages with solar and battery very openly. It would be logical to assume the efficiency will improve exponential in the next year or so as we have seen in solar cells. Tesla may or may not be the answer, but they definitely made the world aware of where battery technology is at and how well it can co-exist with clean energy.

On Sunset Strip | Aussie Afternoon Institutional Market Wrap -

US population compared to Australia is approx 15 times. If we are averaging around 30,000 new jobs for the past few months, on comparable basis that is like US creating around 450,000 new jobs. The reality is that US is creating half that despite it being one of the few countries on the recovery path. I am no statistician, but the relative comparison tells me that there is something wrong when economic growth is below trend, business capex is weak, consumer sentiment is weak, there is no credit growth and we are coming to the end of "once in a lifetime" commodity boom. As a broker I would love to see this kind of job recovery, but it does not add up. I could be wrong :)

On Australian unemployment rate falls -

Just to update our view on TRS: We still maintain a very negative view on the overall retail sector with domestic consumers expected to cut spending even further. We turned negative on retail staples last month as WOW decided to initiate a large scale price war. TRS is basically going to get even more pressure from the K marts, Targets and Big W’s with the race to the bottom. The key risks mentioned before like currency, budget, unemployment, competition and consumer sentiment are all still in play. If I had to pick beaten up retailers…SUL and KMD offer better risk return than TRS.

On This time last year - The Reject Shop -

History tells us that nothing with big margins ever last as the cycle turns. Iron ore cycle has turned and it does look inevitable that we will see even lower prices as Roy Hill supply comes on while smaller players hang on to dear life and burn cash. Miners only care about self interest and not about the overall damage to the business model.

On Sunset Strip | Aussie Afternoon Institutional Market Wrap -

Unemployment is the key to the consumer sentiment. I think if the currency stays above 80 cents in early 2015, we will get a cut. On the flip side if the currency falls below 80 cents then we will not get a rate cut. Retail will struggle even if you cut rates and the currency is 75 or below. If a few retailers start rolling over, then you start adding to the unemployment line and there will be a cabinet switch.

On Stevens slashes rate cut hopes, underpinning Aussie: While the language towards the currency is an escalation of jawboning seen earlier in the year, by... -

We had a sell on JBH around $20 with target price of $15 soon after the budget. Recent update and macro headwinds suggest that JBH will most likely go lower in the short term. You can't fight the macro when you are a cyclical.

On iPhone 6 leaves big mark on retail sales -

I think the uptick was mainly short covering after AGM comments. The weakness since then shows that the market is not willing to buy at these multiples given the headwinds. Even on a relative basis, DSH offers better store rollout growth story in similar space at lower multiple.

On iPhone 6 leaves big mark on retail sales -

The market is trying grapple with the move from yield to growth when there is very little growth. I don't think they are mutually exclusive. You can have good quality stocks on relatively good value with good growth and yield outlook. Once the FOMC short term risk is out of the way, market will start to trend up again. Institutional investors will be taking time off with school holidays next week while retail investors will have a bigger say. I expect we will see majority of the big caps to turn positive by the end of the week.

On Top 10 reasons why you should get back in the market (1) Market pullback has reached our S&P 300 pullback target level of 5400 (2) China has moved to stimulate... -

That is true, it is a bit like being negative on the market. Things all move in cycles, it is a matter of where you are in the cycle. House prices for me are driven by return on investment of the asset and underlying growth in real disposable income to support the asset. Once both branches are over done, I think it is a matter of time before the correction comes. If the argument is that the Chinese are parking their savings, I think US and Europe offering better risk/return than Australia. The question you have to ask is who is positive on house prices and their motives...Brokers, Governments and central banks have to hope that they hold up till the global growth picks up or it could get very messy.

On Sunset Strip | Aussie market delivered a flat day despite the positive global lead -

Quant targets are driven by relative valuation trends and macro thematics. Global growth expected to remain low while travel industry expected to remain stronger with higher currency and consumers looking for experience spending. Downgrade matters if its structural, but cyclical downgrades like this is no reason to change targets. FLT remains a top quality global growth travel stock with solid growth outlook. We expect FLT to hit $55 in the next 12mths and reach over $60 in 24mth assuming the business model and the global macro outlook remains as we expect now.

On Flight Centre (FLT) | Quant BUY ($55) - Published 22nd Nov 2013 - Nothing much has changed in this quality global travel growth story | We have changed our FLT... -

That is correct. Market does not move in straight lines and we have had a positive long term view for a few years. In the short term we see times when profit taking makes sense when return outlook is less than the risk on the back of macro, valuation or even sector switch. The red lines are the time to take profit or reduce market exposure while the green lines are when you add to your exposure.

On Equity Engineer - Jun 2014 | Central banks pushing the markets higher | We turned positive in the short term on May 22nd with China data beating expectations,... -