The Australian equity market continues to deliver strong monthly returns as we recover from COVID-19 and governments and central banks provide strong economic support. Consensus earnings revisions continue to be positive (source: UBS) and market expectations for double digit industrials earnings growth over the next two years is reasonable, in our view. While in some markets (cypto, SPACS, US Tech, meme stocks) there are clearly excesses, driven by liquidity and loose monetary conditions, there is still moderation and appealing valuations in selected areas of equity markets. For instance in the US it has been a small number of large Tech stocks leading the market’s gains while returns in general industrials have been more modest. The NASDAQ has outperformed the Dow Jones Industrials by around 98% over the last five years, with much of the excess gain occurring over the last twelve months. Australian equities (which have also underperformed the NASDAQ by an even greater margin) valuations’ appear reasonable in our view which places the Australian market in a relative better position should some of the global excesses unwind – Full commentary in the attached including why we like BLUESCOPE, QANTAS, GRAINCORP, MACQUARIE, IAG and WESTPAC at the current time.
ESG AND ENGAGEMENT UPDATE
Ethical Partners is proud to be part of over 40 collaborations across the investment industry and with civil society. We believe it is crucial for investors to collaborate, as we see collaboration as both a powerful way to compel companies and policy makers to address issues and a way to advance conversations on these issues.
Full Report attached
Ethical Partners are pleased to see Australia take the next steps to implement mandatory climate reporting with the release of draft climate standards, which we provided feedback on.
Ethical Partners have continuously called for the provision of high quality, comparable data on company’s climate governance and carbon metrics, which we believe is imperative for investors to fulfil the potential of responsible investment.
Ethical Partners have been proud to have been active supporters of the TNFD Forum over the past few years, and to provide regular feedback on the development of the official TNFD recommendations, which were launched in December, as well as to be active members of the RIAA Natural Capital Working Group.