Stockbrokers See Value Emerging

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By Rudi Filapek-Vandyck

More than one week of relentless selling pressure has now pushed the Australian share market into cheap territory, argue market strategists at Credit Suisse. On a comparison with Australian bonds, equities are now one standard deviation (17%) too cheaply priced, the strategists argue, plus Credit Suisse's proprietary global risk appetite indicator signals market sentiment is once again close to "Panic".

While the global economy continues to suffer from an overall lack of savings, CS strategists believe ample liquidity remains one of the main offsetting characteristics. The combination still makes for a net positive result and as such the strategists have turned themselves into accumulators of stocks post the Greece-sovereign debt related sell-offs.

Stocks to buy include discretionary retailers and resources stocks, say the strategists, also known as high beta sectors. Defensives are expected to underperform when the market bounces back.

It is interesting to note that Credit Suisse's gauge for global risk appetite did not return back into the "Euphoria" zone in April, this contrary to other similar measurements elsewhere, such as at UBS.

Meanwhile, the team of small caps specialists at the stockbroker (CS, not UBS) have used their weekly update to -again- highlight their absolute preference for Campbell Bros ((CPB)). The top five of most highly rated stocks (with highest projected returns for the year ahead) further includes Tower Australia ((TAL)), Virgin Blue ((VBA)), Pacific Brands ((PBG)) and Emeco ((EHL)).

Continued weakness for equities has also led to a change in GSJB Were's Conviction List, with Intoll Group ((ITO)) now removed from the stockbroker's Sell-with-a-Conviction list. The Sell list is now empty with the strategists arguing the predicted de-rating of Intoll shares is now probably behind us.

Stocks remaining on the Buy-with-Conviction list are Aquarius Platinum ((AQP)), Asciano Group ((AIO)), Bradken ((BKN)), Equinox ((EQN)), News Corp ((NWS)), Pacific Brands ((PBG)), PanAust ((PNA)), Ten Network ((TEN)) and Wesfarmers ((WES)).

On Friday, market strategists at Macquarie updated their so-called Marquee Idees, which translated into day-to-day lingo becomes Stocks Rated Buy With A High Conviction. Macquarie added QBE ((QBE)) to the list which further includes Boart Longyear ((BLY)), CommBank ((CBA)), News Corp ((NWS)), Qantas ((QAN)) and Rio Tinto ((RIO)).

Westpac ((WBC)) is only rated Neutral by Macquarie's banking analysts, but that hasn't stopped the strategists from including the shares in their list.

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