merrill lynch likes oz

SYDNEY, Feb 10 AAP - Investment house Merrill Lynch today
described the Australian stockmarket as an oasis of relative
tranquility.
In a bulletin from its Hong Kong branch Merrill Lynch team said
it remains overweight Australia and believes investors will earn
superior US dollar adjusted returns in the order of 15 per cent.
The key elements will be dividend yield and currency
appreciation.
"Australian stocks yield an average 3.8 per cent and our
year-end currency target is 65 US cents, implying a 10 per cent
appreciation in US dollar terms," head of regional equity Spencer
White said.
"To this you can add modest earnings growth in the region of
three to five per cent for financial year 2003."
He said a loss of momentum in the economy was inevitable but of
more importance was Australia's comparative insulation from the
geopolitical risks that plague much of the rest of Asia.
"At a stock level we are focused on top line growth, avoiding
too many turn-around stories," he said.
He said emphasis was being given to earnings momentum, improving
return on investment capital, low price/earnings ratios and high
yield.
Woolworths has been removed from the Merrill Lynch model
portfolio, BHP has been pared back and two new stocks Lion Nathan
and John Fairfax have been introduced