Australian Equity Strategy Update

Submitted by Jim Thesiger on 5 June, 2008 - 16:04

Australian Equity Strategy Update provided by Australian stockmarket analyst Macquarie Research Equities.

Model Portfolio Update

Reducing Energy - Preference For Diversifieds:

We remain overweight diversified resources (where valuations appear reasonable), and have moved energy down from benchmark to underweight, as we believe valuations in the sector are looking stretched, as is the oil price in our view.

Accumulating Banks:

With the weakness in global financials Australian banks have eased back to 10.4x 1-year forward consensus EPS compared to a long term trend of 12x. The reporting season was better than expected with little sign of systemic BDD problems. The US investment bank reporting season may perhaps provide a more favourable buying point, but we believe there is enough value in the sector to start accumulating.

Portfolio Additions & Deletions:

We have added Billabong and Lihir Gold and removed News Corporation and Woodside Petroleum.