Markets trading around 'fair value'

Don Williams, Chief Investment Officer at Platypus Asset Management, says the recent downturn has brought the valuation of the local index closer to a ‘fair value’ based on the current earnings outlook. Williams says the highs seen earlier this year were driven by typical investor behaviour where offshore markets influence the direction of the local bourse. Williams says this behaviour is not A - typical but highlights that earnings growth and upgrades is what he is looking for as a catalyst to drive the market higher. “Australia rarely goes its own way in terms of the market direction. So we get dragged up by Wall St and we get pummelled when Wall St goes down… What we are looking for is some of the better quality companies to have earnings upgrades and that will be the signal to us that things are improving. So if the two large supermarket chains started to post better like for like sales, that would be an indicator to us that things are improving.”