ALGO Update: Buy Signals For GPT, SYD and TCL

Posted on | by Todd | Leave a Comment on ALGO Update: Buy Signals For GPT, SYD and TCL

Over the last three weeks, shares in local infrastructure and property trusts have really taken a beating.

Some of the yield-sensitive names have lost between 5 and 10% as Australian interest rates in the 2yr to 5yr tenors have followed global interest rates higher.

One of the major aspects of the recent rise in rates has been the consensus amongst G-7 central bankers that the era of low rates and financial stimulus will be coming to an end.

It’s our base case that the market has gotten ahead of itself with the prospects of sustainable higher yields.

With global equity markets still at elevated levels, a material repricing, or “risk-off” period, in the market would increase the demand for “safe haven” government bonds, which would ease rates lower.

The specific stocks that we are following include GPT, TCL and SYD.

The ALGO engine triggered buy signals in these three names at yesterday’s close.

Given the sharp sell off that these names have seen over the last few weeks, we feel the upside potential is an reasonable trade.

GPT

TCL

SYD

QANTAS: Share Price Reaches High Altitude

Posted on | by Todd | Leave a Comment on QANTAS: Share Price Reaches High Altitude

Shares of Qantas reached a 10-year high of $5.90 on Friday as investors respond to several broker valuation upgrades and the rumor of a credit rating upgrade from Moody’s investor services.

One of the reports forecast a target of $7.09 with an expected dividend of 15 cents per share, which would be more than double the 7 cents per share posted in FY 2016.

With internal momentum indicators now in overbought territory, we suggest a price reversion lower over the short-term. We will watch the ALGO engine for new signals and expect initial support in the $5.15 area.

QANTAS

 

Softness For Housing Credit

Posted on | by Leon Hinde | Leave a Comment on Softness For Housing Credit

The Reserve Bank of Australia has released its financial aggregate data. Over the 12 months to May 2017, total credit provided to the private sector increased by 5.0%.

However, for the first time since 2011, the annual growth in dwelling loan approvals turned negative. This has also coincided with a slowdown in loan size growth.

We’re likely to see softer housing credit growth over the next 6 to 18 months.

The major banks  have responded to the lower housing loan growth by  announcing mortgage re-pricing starting with investor & interest only loans.

We believe the net-net impact on bank earnings will result in flat EPS growth over the next 12 – 24 months with the unknown risk being the potential pick-up in bad-debt provisioning.

Chart – MVB

 

 

 

 

 

Chart Update – XJO

Posted on | by Leon Hinde | Leave a Comment on Chart Update – XJO

The ASX200 finished the week up 0.1%. The materials sector was up 2.7% and the the worst performer was the Property Trusts sector, down 4.9% with Stockland down 5%.

The chart below shows a further “lower high” pattern in the index. Thursday’s top at 5820 is now the third counter trend rally that has failed, since the minor downtrend started on the 1st of May, after topping at 5956.

We view 5850 as a key market level and as long as the index trades below this level, caution for downside range extension is advised.

Chart – XJO