From the AFR:
It’s worth noting that Australian equities have lagged behind the US and European bourses in recent years, due to the end of the mining boom – a large portion of the ASX200 index is made up of mining stocks.
However, a lot of that bad news is now priced in, and we see plenty of catch-up potential on the back of an improving macro environment in 2015 – lower interest rates, energy prices, and AUD are all providing a tailwind to the miners and many other ASX-listed stocks.
Our two largest export markets (China and Japan) are also on the mend.
We can make plenty of fundamental arguments for Australian equities right now, but the only argument that actually matters is price, and price is telling us to be long the ASX200.
I expect the index to at least reach the first two targets of 6000 and 6400 (T1, T2) before the end of the year, and will be watching price action and volume closely at those levels.
That’s what we macro specialists like to call poppycock. $50 and below iron ore is not priced in. The fundamental arguments for an Australian stock bull market lie somewhere between are zero and none.
But, as we know, as the liquidity flows, stocks go up. Or, put another way, as the yield deck falls, the price of equity rises.
The targets look achievable to me but make no mistake, there is nothing underpinning it.
