disallowed/business/markets/futures-pointing-to-weak-...

disallowed/business/markets/futures-pointing-to-weak-start-on-asx-20200422-p54m2d.html

Australian shares still expensive, says Macquarie

By David Scutt

Macquarie Research has warned that Australian shares are looking expensive given the
looming economic downturn and uncertainty towards corporate profits ahead.

“The S&P/ASX 200 price to earnings (PE) multiple is more than one standard deviation
above average and higher than 96 per cent of month-end PEs since 2002,”
Macquarie said in a note released this week.

“These are not cheap valuations for a contracting economy where over one-third of the
largest ASX companies have withdrawn guidance.”

Macquarie says such rich valuations will constrain further upside over the short-to-
medium term, noting that consensus earnings per share (EPS) downgrades are still
roughly half the level seen during the GFC.

While it is warning about the prospects of near-term upside ahead, Macquarie also offered
some advice when it may an opportune time to buy back in.

“You will know the outlook is improving when companies reinstate guidance,” it said.