Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market started the belly of the reporting season on a positive note and remained there albeit with higher volatility. The market is getting past China devaluation, local growth slow down and now concentrating on stock specific factors. We do expect Yuan devaluation to continue and reach over 10% in the next few months as US Fed moves up the interest rates. The rate cut cycle in Australia is over after the recent currency move and asset bubble worries. We are going into another 12-18mth of flat interest rates. Even if we do get a cut, that will be absorbed by the banks for capital requirement and rising funding costs. China move will make USD even stronger and make US Fed think twice about putting up rates faster and higher. The market is now showing value and the risk return points to buying time…quality yield stocks in low growth outlook will deliver over time…stay nimble and think long term!!! (VIEW LINK)