Global reporting season was pretty decent at a headline level – there are lots of more interesting things happening at a sector and stock level, but I’ll get into that later on in the week.
Source: Factset, Nucleus Wealth
Another way to look at the same data is year by year – the last 5 years have seen persistent and significant declines in forecasts. But that trend is changing:
Source: Factset, Nucleus Wealth
Source: Factset, Nucleus Wealth
Source: Factset, Nucleus Wealth
Source: Factset, Nucleus Wealth
Source: Factset, Nucleus Wealth
Where does that leave us?
There are two important things to remember:
- These are only aggregates – they give an indication of which markets the tides are rising and falling in, but the detail is important for individual stocks. Especially in a market like Australia, where the domination of banks and resources overshadows other sectors.
- There is no mention of price. We want exposure to the best growth markets, but not at any price. In our international portfolios we are looking for stocks with US exposure that are listed in other markets as we find they are generally a lot cheaper than their US counterparts.
Don’t sleep on the currency effects either. The Euro continued to rise over the last six months, which will slow the earnings growth.
Euro Nominal Effective Exchange Rate
Source: Factset, Nucleus Wealth
If this trend continues we will probably continue to wind back our exposure to Europe.
Damien Klassen is Head of Investments at Nucleus Wealth.
The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Damien Klassen is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.
