Is Australia really a one trick pony

James Marlay

Livewire Markets

Is Australia really a one trick pony? Alex Leyland from Leyland Private Asset Management points out the indiscriminate sell-off that has occurred in Australian equities despite signs that the economy is transitioning away from mining led growth. The past month has seen the ASX200 drop c.6%. In USD terms, our market is off -12.3% versus MSCI World at -1.0%. Given that iron ore dropped -11.6% over the same period, it would appear that our market continues to be viewed as a commodity currency notwithstanding many other key drivers of our economy. The drop in resource shares along with commodity prices displays the lack of pricing power in these businesses. Interestingly, non-mining GDP rose 2.7% in the past quarter, the fastest rise since 2007. In short, value is rising in stocks and sectors subject to a broad sell-off without reference to fundamentals.


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