We maintain a bullish long term view on the Australian equity market to reach 6500 in 2016. Falling growth outlook and the RBA move have made equities the preferred risk/return option for investors wanting better return in an environment where disposable income and standard of living is falling while unemployment is rising. The expected short term profit taking in May pulled the market down to yield weighted fair value market level of 5600. The market darlings (i.e. big banks, big telco and big health care) rebounded in June while small caps saw selling pressure in growth risk, management change and tax loss selling. We expect the yield thematic to continue with growth outlook remaining soft and the RBA remaining on an easing bias. GARY Industrial picks are: small cap (FXL, CWP, AJA and GDI), micro cap (AVJ and HFA). GARY Resource and related picks are: none. (VIEW LINK)



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