Is This Australia's Uncomfortable Truth?
Morgan Stanley strategists spelled it out last week: if you want outperformance in your equities portfolio, it's probably best to concentrate on the 55% of the index (ASX200) that is not made up by either the Big Four Banks or by resources stocks. This, obviously, raises the all-important question for Australian investors: is this the country's uncomfortable truth? Have resources and Australia's Big Four Banks lost their mojo? Are they destined to remain a valuation trap for much longer? It's hard not to draw a direct connection between the Australian share market's disappointing performance over the past two years and the large index weighting of banks and resources. Plus it can hardly be denied the attractive, unblemished growth stories on the ASX are situated among smaller cap industrials, not among Australia's so-called Blue Chips. Most strategists elsewhere are not 100% on the same page as Morgan Stanley, but they are reading from the same song sheet. Defensive strategies rule as 2016 beckons... (VIEW LINK)