Already a subscriber?Investors are being encouraged to quit big positions in the major banks and miners as superior profit growth emerges from the Australian sharemarket’s mid-sized stocks, and earnings prospects for the top 10 dim.
Those days are numbered: market consensus expects the top 10 to make up 49.3 per cent of ASX 200 earnings growth next financial year and narrow further to 47 per cent in FY26.“Banks have had the benefit over the years of natural deregulation, low interest rates and rising house prices, so certainly relative to the heydays of the ’80s, ’90s and early noughties, they’re not going to offer that sort of growth,” said Damien Boey, chief equity strategist at Barrenjoey.
Meanwhile, the local technology sector has capitalised on the lead of Wall Street, and ASX insurance stocks posted the best earnings growth across the entire sharemarket in percentage terms last year. Citi is anticipating that iron ore prices will rebound to $US120 a tonne over the next three months as China’s steel production increases and the economy heads into peak seasonal construction.Citi’s bullish view partly explains why it forecasts earnings for the ASX’s resources sector will jump 11.2 per cent next financial year, exceeding consensus expectations for growth of just 1.7 per cent growth.