10 key themes and 29 ways to play them

Morgans Financial Limited

Equity markets remain at the mercy of abnormal macroeconomic conditions such as unconventional central bank interest rate settings and heightened political uncertainty. Making bold portfolio decisions amid such uncertain conditions is a difficult and potentially hazardous exercise; hence our cautious Asset Allocation settings. Despite these challenges, we think that enduring investment themes are worth following in the year ahead. These themes help frame our Asset Allocation strategy, and we highlight these, with the best stocks to leverage them:

A US cyclical recovery drives interest rates upwards – QBE Insurance Group (QBE), Computershare (CPU);

Rising domestic energy prices – AGL Energy (AGL), Infigen Energy (IFN), Senex Energy (SXY);

Resources cashflow resurgence – BHP Billiton (BHP), Rio Tinto (RIO), South32 (S32), Oil Search (OSH);

Diversify internationally – our recommended LICs and ETFs

Inbound tourism – Sydney Airport (SYD), Mantra Group (MTR), Helloworld (HLO), Apollo Tourism and Leisure (ATL), The Star Entertainment Group (SGR);

Rise of the Chinese consumer – Treasury Wine Estates (TWE), Blackmores (BKL), Bellamy's Australia (BAL), The A2 Milk Company (A2M), Capilano Honey (CZZ);

Smarter healthcare and the empowered consumer – ResMed Inc (RMD) and Volpara Health Technologies (VHT);

Retail disruption and the Amazon threat – Beacon Lighting (BLX), Lovisa Holdings (LOV), Bapcor (BAP), Qube Logistics (QUB);

The push for financial deregulation – Westpac Banking Corporation (WBC), US Banks (ASX: BNKS);

The digital marketplace – NEXTDC (NXT), Vita Group (VTG), Megaport (MP1).

Contributed by Andrew Tang: Analyst - Equity Strategy and Quant. Original blog here: (VIEW LINK)


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