Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market went negative despite positive global lead after it had a reality check with very soft domestic business capex data. By removing the support for the multiple existing manufacturing industries with no new manufacturing coming through, we have left Australia in a manufacturing doom when it’s transitioning from a declining mining boom. RBA will go back to negative bias and likely to cut again for the sake of buffering more negative news over the next 12 months. Government is stuck in election survival mode and have decided to let the economy run on auto pilot. The problem is that we are running out of fuel with our top three export commodities facing falling prices into the next few years with rising supply and falling demand. As an investor in Australian equities, it further supports our view that equities with sustainable high dividend yield (i.e. refer to our SHIELD research page 21) will be the main thematic for the next 12-18 months. (VIEW LINK)