Little more than a year ago, the Schroders Australian Equities team were struck by how far material stocks had fallen as a proportion of the ASX's market cap. Even allowing for the fact that commodity prices and, in turn, minerals producers’ earnings oscillate, they thought valuation support justified a significant overweight to materials even when commodity prices were at dire levels. A year on and resources stocks have rallied 61%, while industrial stocks have only edged up 6%. Materials have risen from 12% of the S&P/ASX 200 Index to 17%, a move that only reflects earnings changes through that time. In contrast, the big losers as a proportion of the market have been financial stocks (including REITs). Within that context, Andrew Fleming, the Deputy Head of Australian Equities, makes four points on where the team sees value today. One revolves around the impact US President Donald Trump is expected to have on ASX sectors. (VIEW LINK)
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