About the author:
- Author name:
- By Tom Sartor
- Job title:
- Senior Analyst
- Date posted:
- 28 June 2021, 2:30 PM
- Sectors Covered:
- Junior (Emerging) Resources, Bulk Materials
Equity valuations have traded ahead of traditional value fundamentals for some time. A flood of financial system liquidity is a clear driver, with momentum also perpetuated by the rise of ETFs (where value judgments don’t apply) and perceptions of a “whatever it takes” attitude by Central Banks to support asset values.
It’s easy to argue the market is increasingly pricing equities on relative basis, heavily influenced by momentum. Below we’ve run simple momentum screens to try to identify potential areas of risk and opportunity amid the current market, and coming into EOFY.
Figure 1: Segment momentum trends
- Cyclicals of interest: Energy, Transport, Travel, Packaging, Transport Infra, Coal, A2 Milk
- Other: Gold, Retail REITs, Mining services, “ESG” stocks
- Vulnerable short term: Online, Retail, Metals & Mining, Housing
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