• Christopher Hall

Will the Australian Share Market continue under-performing?

US Markets push new high and Emerging Markets run rings around developed nations but Australian shares remain flat. Rudi Filapek-Vandyck, Editor of FNArena, explores why the Australian market lags behind. Filapek-Vandyck notes that the USD has weakened, bond yields have reset at a less subdued level and Emerging Market equities have, for the second time in 2019 after January, managed to outperform developed markets equities in October. In the US, share market indices have surged to (or near) a fresh all-time high while FAANG stocks are not at all-time highs. While the ASX's WAAX shares have also fallen, the rest of the market has not come to the rescue and raise the indices higher. Filapek-Vandyck explains that "Value" portfolios have finally enjoyed a good month of outperformance, and definitely in the US markets. In Australia, it has to be noted, beaten down disappointers including Amaysim Australia, CYBG, Challenger and BlueScope Steel have all sprung to life, mostly on no specific news, while a number of prior outperformers have witnessed the draw back from the switch in funds flows. Smaller cap technology high-flyers in particular have felt the sudden impact from the switch in market sentiment. Apart from the likes of Altium, Appen, WiseTech Global and Afterpay Touch, October has not been kind to names including Pro Medicus, Jumbo Interactive and a queue of smaller cap gold producers. The rotation from Growth to Value is evident elsewhere, but not in Australia and investors are cautioned to avoid chasing the Value Traps on the ASX.

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