Stock pickers listen up: Australian equities are looking reasonably priced and they're likely not going to move in unison any more, Deutsche Bank says.
According to a note by the bank, the stockmarket's large correction this year has resulted in price-earnings ratios falling beneath historical levels.
And the sharemarket's current price-earnings ratio of 15 is around 5 per cent below Deutsche's estimate of fair value.
The "fair value" PE ratio was in fact at its highest in a decade, reflecting the lower Australian dollar, below trend earnings and "reasonable" earnings revisions, the bank said.
But there are three other reasons why the market is currently a good buy, said the bank:
- Over decades of history, 15 per cent corrections have resulted in a market bounce in the following six to 12 months provided no recession ensues.
- Inflows from superannuation funds should continue to support the market.
- Policy uncertainty in China and the US has dropped, said the bank, "which should help equity valuations".
Add to My Watchlist
What is My Watchlist?
 (20min delay)
|
|||||
|
Last
8,745.2 |
Change
-73.300(0.83%) |
Mkt cap ! n/a | |||
| Open | High | Low |
| 8,818.5 | 8,818.5 | 8,737.5 |
| XJO (ASX) Chart |