Do you think the sell-off in bank stocks following the RBA’s June rate rise has been overdone?has been due to increased concern that higher interest rates will see a sharp property downturn. We believe house prices are set to decline. However, given the amount of savings held by consumers, we are unlikely to see the sharp increase in defaults that would be needed to offset the positive impact that higher variable rates have on bank earnings.
At its core, the world’s inflation pressures are coming from higher commodity and input prices. Furthermore, global energy and mining companies have significantly cut their expenditure over the past decade, setting the scene for the next commodity bull market. We see a sharp recovery in domestic and international airline travel, as pent-up savings are spent on experiences rather than home furnishings.
from our portfolios. We believe it is prudent to continue to avoid consumer names at present. However, the list of attractively priced, quality Australian companies is getting larger, and we look to the current period of volatility to buy these companies at a discount to our view of intrinsic value.We see strong value in a number of Australian companies.