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Positive
Sentiment Returns
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Though
market sentiment will continue to be tempered by the economic
outlook, the above chart indicates what can cautiously be described
as bullish trading on the All Ordinaries over the past month.
Our long held view that Australia's share market represents
reasonable value was confirmed last week when the benchmark
index rose to 3326 points - just four points short of its all-time
record high close.
With the exception of Media and Telecommunications, all key
sectors enjoyed healthy rises. Banks were the standout, with
the sector rising by more than 3%. A record interim profit for
the National Australia Bank was the main catalyst. St George
Bank also reported, at the upper end of expectations, confirming
market confidence in the sector. Both these results are covered
in this week's stock features section. Now that all the major
banks have reported interim results, a key feature has been
the moderate rises in bad debts. None of the banks has recorded
serious deterioration in asset quality. This tends to suggest
that, while tight, the overall business environment is not pointing
towards recession.
As pointed out last week, recent export and retail sales figures
suggest the economy will not dip into recession. Further positive
data was released yesterday, with a 10% rise on home loan approvals
in March. Approvals for newly-constructed dwellings rose by
18%, showing that the government's extended first home owner
grant scheme, and lower interest rates, are having the desired
effect.
For more information see our full subscriber newsletter
"The Bottom Line" at http://www.shareanalysis.com
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* The
highlight last week was the semi annual statement to Parliament
by the Reserve Bank Governor. In his opening remarks Ian Macfarlane
sent a strong signal that the central bank believed the current
stance of monetary policy was sufficiently accommodative and
did not warrant further cuts.
* Macfarlane said: "Interest rates are close to the low
points reached in the two most recent episodes of monetary policy
easing. Given that fact, and given that we see some promising
in the economy and financial markets, there is a reasonable
chance that the current stance of policy will turn out to be
easy enough to achieve the desired results".
For more information see our full subscriber newsletter
"The Bottom Line" at http://www.shareanalysis.com
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We
have recommendation changes on the following stocks in the past
week:
* St George Bank Limited (SGB)
* Macquarie Infrastructure (MIG)
* Pacifica Group (PBB)
* Pacific Hydro (PHY)
* Cable & Wireless Optus Limited (CWO)
For more information see our full subscriber newsletter
"The Bottom Line" at http://www.shareanalysis.com
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Our
10-15 page pdf file is sent every week to our subscribers. You
can now access just the newsletter (NOT including website access)
for just $12 per month or $125 per year.
Naturally, all paying users will receive this email as part
of their Investor or Advanced Investor package. To subscribe
to the FULL web site and Newsletter, click here.
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We
have recently initiated coverage of the following stocks
* Homeloans Limited (HOM) $1.20 - BUY. Homeloans Ltd (ASX
Code HOM), is a recently listed non-bank originator and manager
of home loan mortgages with an already strong presence in Western
Australia. The company is currently moving to significantly
expand its eastern seaboard presence
* Pracom Limited (PCO) $0.95 - SPEC BUY. PCO provides a
range of niche or specialist management services to the telecommunications
industry in Australia, New Zealand and Asia. The company has
also developed a platform to allow customers to make calls on
a pre-paid basis from mobile and fixed-line phones.
For more information see our full subscriber newsletter
"The Bottom Line" at http://www.shareanalysis.com
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National
Australia Bank posted a record interim profit and St George
also came in with a solid result, pushing up most bank stocks.
We review both those results in this week's features. We also
look at the third quarter result of our biggest company, News
Corporation.
James Hardie has plans to sell its US gypsum business and we
think it's a major positive. There are few positives on the
horizon for MYOB as the accounting software company struggles
in the post-GST market. Finally we review some smaller cap stocks
in Western Metals, ARB and Petaluma wines.
* All Prices as at Monday 14 May 2001 unless otherwise stated.
For more information see our full subscriber newsletter
"The Bottom Line" at http://www.shareanalysis.com
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