International

The global economic cycle has moved into late cycle, moving from increasing to slowing growth. While economies such as the US and Australia have been in similar cycles, other economies are in earlier parts of it, for example, China is looking closer to the bottom of its cycle. In terms of portfolio weights: overweight China, neutral US, underweight Australia domestically focused stocks.

Positives: iShares China Large-Cap ETF (IZZ), Platinum Asset Management Ltd (PTM).

Negatives: US related, Magellan Financial Group Ltd (MFG), iShares S&P 500 ETF (IVV).

Housing

With house prices down 8% since peaks and home loans down 25%, a number of stocks are impacted. With consensus building towards two rate cuts here over the next 12 months, the lower $A is good news for exporters but bad for importers.

Positives: Global leaders benefitting from weaker $A.

Negatives: Housing related stocks, such as Villa World Ltd (VLW), Stockland Corporation Ltd (SGP), Adelaide Brighton Ltd (ABC).

Federal and state elections

Major elections generally have a negative effect on confidence. However, the government is one of the biggest spenders in the economy. During election time, there’s a spike from this sector in spending on advertising, as well as boosts to things such as healthcare and infrastructure spending.

Positives: oOh!Media Ltd (OML), Southern Cross Media Group Ltd (SXL), Nine Entertainment Co Holdings Ltd (NEC), Healius Ltd (HLS), Sonic Healthcare Limited (SHL).

Negatives: Medibank Private Ltd (MPL), NIB Holdings Limited (NHF)

Structural shift from bricks to clicks

Structural shifts provide opportunities and threats. One of the biggest structural shifts has been the consumer trend to spend online rather than in physical stores.

Positives: Temple & Webster Group Ltd (TPW), Goodman Group (GMG).

Negatives: GPT Group (GPT), Scentre Group (SCG), Vicinity Centres Re Ltd (VCX).

Increasing and decreasing shorts in 2019 to date

Tracking the largest decrease in short positions from the beginning of the year, the key stocks are: Hub24 Ltd (HUB), Inghams Group Ltd (ING), Silver Lake Resources Limited (SLR), CSR Limited (CSR), Lynas Corporation (LYC). This means short sellers have been decreasing the bets that these stock prices are going to fall. The largest increase in short positions where traders are increasing bets that stock prices are going to fall are: News Corp (NWS), Galaxy Resources (GXY), Monadelphous Group Limited (MND), BHP Group Ltd (BHP), Nanosonics Ltd (NAN).

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.