From the SMH blog, here come some breaks from consensus around shares and the dollar:
Global capital flight into safe havens and developed markets has exposed in emerging markets “underlying fragilities from deteriorating trade, high inflation and high debt burdens,” writes CommSec’s equity strategist, Tim Rocks, in a note to clients.
So, now after setting that rather grim scene, Rocks has identified the stocks most vulnerable to EM troubles and weakening China:
- Iron ore companies – exposed to credit tightening in China.
- Industrials with direct exposure to EM – including Amcor, Ansell, Brambles, Coca-Cola Amatil, SingTel, Toll Holdings, ANZ and Treasury Wine Estates.
- Banks – EM turmoil usually coincides with higher funding costs.
On the other side of the ledger, here are his stocks that stand to gain:
- Offshore industrials exposed to developed countries – lower Aussie dollar and improving US economy should help along Resmed, CSL, and 21st Century Fox.
- Yield plays – periods of flight to quality tend to see bond yields move lower. Stocks to benefit are Transurban, Sydney Airport, Spark Infrastructure and Duet Group.
