STOCK PRICE FORECASTING – AUSTRALIA

Santa rally looking strong after ‘great escape’

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Original article by David Rogers
The Australian – Page: 27 : 30-Nov-16

Australia’s S&P/ASX 200 has gained 2.6 per cent so far in November 2016, and it seems poised to achieve its best performance for the month since 2005. Meanwhile, Macquarie Group is upbeat about the outlook for the benchmark index in 2017, forecasting that it will rise by 7.5 per cent to around the 5,875-point level. However, Macquarie notes that the local market could potentially be affected by a number of overseas factors in 2017.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, MACQUARIE GROUP LIMITED – ASX MQG, UNITED STATES. FEDERAL RESERVE BOARD, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Rally in local bank shares won’t last: CLSA

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Original article by David Rogers
The Australian – Page: 30 : 25-Nov-16

The share prices of Australia’s four major banks have risen by an average of nearly seven per cent since Donald Trump’s presidential election win. However, Brian Johnson of CLSA does not expect this to be sustained, noting that local and international banks are facing a number of headwinds. He adds that Australian bank stocks are expensive compared with their overseas peers, while their common-equity tier-one capital must be increased by some $A27bn.

CORPORATES
CLSA AUSTRALIA PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Recovery looks set to stay the course for year

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Original article by David Rogers
The Australian – Page: 31 : 24-Nov-16

Australia’s S&P/ASX 200 has gained 8.6 per cent since Donald Trump won the US presidential election. The market has not staged a similar rally since December 2015, which followed a global equities sell-down prior to the rise in US interest rates. Financial markets have already priced in the next rise in US rates, so there would seem to be few factors that could potentially stall the domestic bourse’s recent rally.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, DEUTSCHE BANK AG, UNITED STATES. FEDERAL RESERVE BOARD, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, AMCOR LIMITED – ASX AMC, MACQUARIE GROUP LIMITED – ASX MQG, ARISTOCRAT LEISURE LIMITED – ASX ALL, INCITEC PIVOT LIMITED – ASX IPL, TELSTRA CORPORATION LIMITED – ASX TLS, SYDNEY AIRPORT – ASX SYD, RESERVE BANK OF AUSTRALIA

Shares to feel the jolt as ‘bondcano’ fires up

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Original article by David Rogers
The Australian – Page: 31 : 17-Nov-16

The yield on 10-year Australian government bonds has retreated from a high of 2.74 per cent in the wake of Donald Trump’s presidential election win. The so-called "bondcano" has seen the yield on 10-year bonds rise by 51 per cent since August 2016, and Credit Suisse estimates that the recent sell-off is the 13th biggest since 1970. Hasan Tevfik of Credit Suisse expects bond yields to keep rising over the long-term, and identifies stocks such as Sydney Airport, APA Group and Healthscope as those most at risk from higher yields.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, SYDNEY AIRPORT – ASX SYD, APA GROUP – ASX APA, HEALTHSCOPE LIMITED – ASX HSO, ASX LIMITED – ASX ASX, BWP TRUST – ASX BWP, TELSTRA CORPORATION LIMITED – ASX TLS, WESTFIELD CORPORATION – ASX WFD, SCENTRE GROUP – ASX SCG, TRANSURBAN GROUP LIMITED – ASX TCL, STANDARD AND POOR’S ASX 200 INDEX, CROWN RESORTS LIMITED – ASX CWN, AUSNET SERVICES LIMITED – ASX AST, VICINITY CENTRES – ASX VCX, CHARTER HALL GROUP – ASX CHC, QANTAS AIRWAYS LIMITED – ASX QAN, NUFARM LIMITED – ASX NUF, MYER HOLDINGS LIMITED – ASX MYR, FORTESCUE METALS GROUP LIMITED – ASX FMG, LEND LEASE GROUP LIMITED – ASX LLC

Buckle up for a day of unusual volatility

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Original article by David Rogers, Andrew White, Paul Garvey
The Australian – Page: 19 & 28 : 9-Nov-16

The US presidential election is set to dominate financial market trading on 9 November 2016. Voting trends will have emerged by the time the Australian sharemarket opens, while market volatility can be expected as exit polls are released over the course of the local trading day. The Chicago Board Options Exchange’s Volatility Index has returned to its long-term average of 19, which suggests that financial markets do not anticipate that Donald Trump will win.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CHICAGO BOARD OPTIONS EXCHANGE VOLATILITY INDEX, STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, VOTECASTR, REPUBLICAN PARTY (UNITED STATES), DEMOCRATIC PARTY (UNITED STATES), RESERVE BANK OF AUSTRALIA, MONASH UNIVERSITY, ECONOMICS SOCIETY OF AUSTRALIA, UNITED STATES. FEDERAL BUREAU OF INVESTIGATION, AUSDRILL LIMITED – ASX ASL

How banks and resources could move in sync

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Original article by David Rogers
The Australian – Page: 31 : 21-Oct-16

The S&P/ASX 200 Materials Index has significantly outperformed the S&P/ASX 200 Banks Index in 2016, with a gain of 29 per cent compared with the latter’s eight per cent fall. Deutsche Bank notes that with the exception of the last four years, the two sectors have both regularly outperformed the broader sharemarket over the last 25 years. In addition, they have often outperformed in tandem. Tim Baker of Deutsche argues that the divergence of the two indices over the last few years suggests that they could be set for a new period of joint outperformance.

CORPORATES
STANDARD AND POOR’S ASX 200 MATERIALS INDEX, STANDARD AND POOR’S ASX 200 BANKS INDEX, DEUTSCHE BANK AG

Small-cap party could end in tears when the next crash comes

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Original article by Philip Baker
The Australian Financial Review – Page: 26 : 20-Oct-16

The Dow Jones Industrial Average has gained almost 944 per cent since the Black Monday sharemarket crash of October 1987, while the S&P 500 has risen by 854 per cent. In contrast, Australia’s All Ordinaries Index has increased by nearly 245 per cent. However, analysis by Richard Coppleson of Bell Potter suggests that when dividends are taken into account the All Ordinaries Accumulation Index has only slightly underperformed the S&P 500. Meanwhile, Coppleson warns that the current rally in small-cap stocks is unsustainable and a major fallout is inevitable.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX, STANDARD AND POOR’S ASX ALL ORDINARIES INDEX, BELL POTTER SECURITIES LIMITED, RESERVE BANK OF AUSTRALIA

AFIC warns on bank dividends

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Original article by Simon Evans
The Australian Financial Review – Page: 13 & 25 : 18-Oct-16

Australian Foundation Investment Company MD Ross Barker expects the S&P/ASX 200 to be trading at around its current level in 12 months’ time. However, he expects the 50 largest stocks to outperform small- and medium-capitalisation stocks over the next year. Barker does not anticipate any further easing of monetary policy and says there is potential for a rise in the cash rate before the end of 2017. He adds that the major banks may not be able to sustain their dividend payouts, while large miners could potentially increase their dividends in the next few years.

CORPORATES
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED – ASX AFI, STANDARD AND POOR’S ASX 200 INDEX, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, TRANSURBAN GROUP LIMITED – ASX TCL, SYDNEY AIRPORT – ASX SYD, RESERVE BANK OF AUSTRALIA, WOOLWORTHS LIMITED – ASX WOW

ASX to hit 6000 in ’17, says Credit Suisse

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 25 : 18-Oct-16

Hasan Tevfik of Credit Suisse believes that the Australian sharemarket’s "profits recession" of the last several years has ended, which will be reflected in the market’s outlook. Credit Suisse expects the benchmark S&P/ASX 200 to reach the 6,000-point level by the end of 2017, buoyed by single-digit growth in earnings per share over the next year. Meanwhile, Matthew Sherwood of Perpetual is upbeat about the outlook for the economy, forecasting a rise in GDP growth over the next 12 months.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CREDIT SUISSE (AUSTRALIA) LIMITED, PERPETUAL LIMITED – ASX PPT, ANSELL LIMITED – ASX ANN, BLUESCOPE STEEL LIMITED – ASX BSL, CALTEX AUSTRALIA LIMITED – ASX CTX, COMPUTERSHARE LIMITED – ASX CPU, FORTESCUE METALS GROUP LIMITED – ASX FMG, LEND LEASE GROUP LIMITED – ASX LLC, MAQUILADORA PARTNERSHIP, MYER HOLDINGS LIMITED – ASX MYR

BHP and Rio’s stellar run may be done

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 19 & 25 : 14-Oct-16

Citigroup’s Clarke Wilkins forecasts that the share prices of BHP Billiton and Rio Tinto will fall in coming months. He says a reduction in China’s stimulus program will in turn reduce demand for commodities. George Boubouras of Contango Asset Management adds that there is limited scope for further gains in the price of iron ore and coking coal, which will dampen earnings growth for BHP, Rio Tinto and Fortescue Metals Group. However, Peter O’Connor of Shaw & Partners remains upbeat about the outlook for the resources sector, particularly large-cap mining stocks.

CORPORATES
CITIGROUP PTY LTD, CONTANGO ASSET MANAGEMENT LIMITED – ASX CGA, SHAW AND PARTNERS LIMITED, BHOJA AIRLINES, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, OZ MINERALS LIMITED – ASX OZL, ALUMINA LIMITED – ASX AWC, ILUKA RESOURCES LIMITED – ASX ILU, STANDARD AND POOR’S ASX 200 INDEX, UBS HOLDINGS PTY LTD, SOUTH32 LIMITED – ASX S32, WHITEHAVEN COAL LIMITED – ASX WHC, OIL SEARCH LIMITED – ASX OSH, AWE LIMITED – ASX AWE, TRIBECA INVESTMENT PARTNERS PTY LTD, NEWCREST MINING LIMITED – ASX NCM, UNITED STATES. FEDERAL RESERVE BOARD