There is value - if you believe the numbers...

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Marcus Padley thinks there’s value to be found in the Australian market at current levels. The yield gap currently favours equities by about 2.5%, which is the biggest gap since the GFC. “We’re at a sentiment point, rather than a scary point,” he says, as there was a bounce in the market from there during the GFC. What has him concerned is that people aren’t buying the banks and Telstra at current prices, he thinks this reflects a level of distrust in their dividends. “The biggest fear factor is that the banks are sitting on loans to energy companies which are going to damage them.” He thinks these fears are misplaced, as CBA, for example, has only 2.5% of their loan book exposed to energy & resources companies. “It’s largely immaterial to them, but that doesn’t stop people selling them.” Watch the full interview below.

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