The yield-play/carry-trade is unwinding hard as predicted, do we panic or buy? The $A has fallen almost 5% this month and the US interest rates are rising. To an overseas investor its simple, sell Australia, but the scary factor is I think both of these driving factors have much further to go. The obvious conclusion is that our yield play, led by the banks, has further to fall and as this represents over 50% of the ASX200, so does our market. Remember, overseas investors / traders do not benefit from franking credits and lose with a falling $A, hence they sell on mass as we are currently witnessing. This will create an excellent opportunity at some stage, probably when local investors start focusing on future dividend payments in November. see full report (VIEW LINK)
Good reading this morning Shawn, thanks for sharing with Livewire. The note re bank dividends later in the year is particular interesting.