Investment bank Goldman Sachs is tipping overall earnings growth in this reporting season of just 3.9 percent, the lowest since the Global Financial Crisis. It is also predicting many companies will cut their forecasts for future years. And there are those who think even results that surprise on the upside could be deceptive. Four of Australia's five biggest companies are the big banks. They are a proxy for the health of the economy and also heavily exposed to the ailing resources sector. Head of investment strategy at Wilson Asset Management, Chris Stott, says the banks' earnings could surprise on the downside moving forward over the next six to 12 months. "Certainly we've seen pressure coming from bad and doubtful debts increasing pressure for dividends to be either reduced or payout ratios to come back," Mr Stott said. (VIEW LINK)
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