• Marcus Bogdan

Monthly Investor Update - January 2021

The Australian economy is rebounding much quicker than expected. Australia’s success in suppressing COVID-19 has resulted in materially better economic outcomes notably in employment, export receipts (iron ore) and housing markets. Indeed, the Reserve Bank (RBA) has reinforced its eagerness to further support risk assets by its forward guidance that a record low 0.1 per cent cash rate will now be maintained to at least 2024.


As the RBA anchors interest rate expectations Australian corporate profits remain well positioned to stage a V-shaped recovery. Earnings for the ASX 200 are forecast to grow by ~20% through the 2021 calendar year. Notwithstanding this, much of the expected good news for an earnings rebound is now reflected in share market valuations, with the ASX 200 trading on a 20 times 12-month forward PE. A more complex path for global vaccine distribution may also weigh on sentiment.


At a portfolio level, we remain resolute in our preference for companies that are industry leaders with demonstrable earnings resilience and balance sheet strength, epitomized by the caliber of CSL, Cleanaway, Wesfarmers, and Woolworths.


We also find valuation support in companies that will benefit as the economy further reopens, such as Ampol (fuel retailing), Qube Holdings (Logistics) Ramsay Health Care (elective surgery), with each sharing the hallmark of being industry leaders in their prospective fields.