Already a subscriber?Investment chiefs say the rally in Australia’s sharemarket seems too good to be true, and that valuations are starting to look expensive given the very uncertain economic backdrop.
“Everything is a little too good to be true,” the fund manager said, who is responsible for about $9.5 billion in assets. “There’s a lot built into expectations in the stock prices, so we ought to remain on the cautious side.”in early April, buoyed by bets that central banks would soon pivot to rate cuts. Although the gauge erased about 100 points as traders readjusted expectations, it was up as much as 1 per cent this week despite the Reserve Bank leaving the cash rate at a 12-year high.
“Oil stocks have lagged quite a bit globally even as oil prices have actually held up reasonably well,” he said. “Woodside has come a long way.”Jason Teh, chief investment officer of Vertium Asset Management, also said the sharemarket looked too expensive, with the earnings of big four banks yet to “pick up” and reflect their expensive price tags., had benefited from a flow of money from investors expecting rate cuts, which would ensure bad debts remained low. The stock is up 5.
This week, the Macquarie Australia investor conference kicked off the unofficial reporting season over May and June for some of the country’s biggest companies. In a high-inflation cycle, not all listed companies have been able to pass through price increases, and hence investors have been ascribing a higher premium to those that can, such as insurers.