Kate Howitt, Portfolio Manager for the Fidelity Australian Opportunities Fund and Oscar Hutchinson, Mining Analyst debate the outlook for banks and miners, with a particular focus on yield. What are the key industry drivers to watch and which stock-specific factors do we need to pay attention to?
In 2020 the world has changed by an unimaginable global pandemic. Business models have been transformed driven by supply and demand disruption, changing consumer behaviour, work habits and an even greater social conscience. The factors driving a company’s future success are going to look very different to the past.
American economist Ben Graham famously said "in the short run, the market is a voting machine but in the long run, it is a weighing machine" The message is simple, short term the market moves on sentiment or herd mentality, whereas long term fundamentals and valuations drive share price, something which investors have become all too used to during the COVID-economy. But when will markets switch back from voting machines to weighing machines?
Australia has always been considered the lucky country, and it appears our luck has not yet run out. Public health measures in Australia have begun to flatten the curve and physically disrupt the spread of the virus. But as we now start to settle into the corona-economy, will Australia follow the worldwide trend of firms being called on to cut dividends and cease capital raisings?
The fiscal response to a deep freeze - is it enough and what will this mean for investors over the longer term?
Globally we are seeing some signs of slowdown of the spread of the pandemic giving hope that while in lockdown, the pandemic has peaked in some of the key epicentres. But with over 3 billion people worldwide in lockdown, how long can governments enforce social freezing, will the fiscal stimulus be enough and where will we see permanent damage?