Market Trends and Leaders to December 2019
The top themes emerging this month have been:
1) Health Care
Health Care is known for the bio-tech companies with extraordinary growth potential, if the patent is approved or the catalyst is achieved. However, this cycle has mostly rewarded the industrial-like health care companies. This, with consistent earnings, defendable business practices or high barriers to entry with strong, long-term contracts and market positions, is what makes them very difficult to replace.
2) UK Exposure
Together, the companies exposed to UK and Brexit were the most heavily represented in the leading companies this month. No other group had as high a percentage of the UK Exposures.
This could imply that the worst has been 'priced in' and any moves from here are bound to be positive, or embedded into the currency and foreign exchange moves. Either imply that there is light at the end of the tunnel for the UK.
The other themes that continue are:
3) International Earning
Companies with earnings overseas and domestic operations. When the AUD falls, they receive a handy tailwind.
Stable rent collectors and exposure to the renewed property cycle have once again been favoured by yield-hunting investors.
5) Industrials with a combination of international earning
Consistent and defendable market positions and positive exposure to low interest rates such as either retail markets or asset price inflation.
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