My assessment that this year's February reporting season in Australia has been noticeably better than prior periods has been backed up by Deutsche Bank and...

My assessment that this year's February reporting season in Australia has been noticeably better than prior periods has been backed up by Deutsche Bank and Macquarie, among others. However, their peers at BA-Merrill Lynch and JP Morgan point out it has been all about lowering costs, lower tax rates, less spending, low interest rates and a weaker Australian dollar. In other words: low quality improvements are dominating the picture and it's not like the Australian economy is about to accelerate. Unmistakably, confidence in corporate profits for the six months, has grown, but there is enough doubt and uncertainty for SMSF operators and professional funds managers to stick with the same lower-risk approaches that have characterised this upswing from mid-2012 lows. In terms of further growth in profits, JP Morgan strategists suggest that investor portfolios should focus on: Non-AUD operators, free cash flow improvers and exposure to improving market structure.


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