Equity Engineer – May 2015 | Clowns to the left, Jokers to the right, RBA stuck in the middle with you

Market View: We maintain a bullish, long term view on the Australian equity market to reach 6500 in 2016. The RBA moves in February and May now show equities as the preferred risk/return option for investors wanting more than 3% return in a rising cost environment. We expect global investors to come back in to the Australian equity market when the currency gets down to low 70s. Recent profit taking has brought the market down close to the level we expected since early March with yield trade getting squeezed by rising bond yields. Long term investors should start to accumulate good quality growth/yield stocks while the risk averse will be better served to wait till the back end of this week to ride out the Greece risk, budget risk and the risk of banks trading post dividend. (VIEW LINK)