Treasure Chest: Downgrade Ahead For ASX?

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By Greg Peel

Earlier this month the analysts at Morgan Stanley decided there was around 9% downside risk to their FY13 earnings forecasts for the Australian Securities Exchange ((ASX)) based on ongoing weak trading activity. September has indeed seen further weakness, hence Morgan has elected to cut forecasts by 6%. The reason the full 9% has not been factored in is because the analysts see a better than usual improvement in activity in the remainder of the year.

However, the downgrade takes the Morgan Stanley numbers to 3% below consensus, which the broker believes is too high. 

ASX management did not provide a formal trading update on the release of its FY12 result, suggesting it is unlikely to offer any first quarter numbers. An informal trading update is likely at the October 5 annual general meeting, the analysts suggest, at least to acknowledge weaker activity. At that point consensus estimates will appear too optimistic.

In other news, BA-Merrill Lynch has updated its Asia-Pacific Focus List which is a list of those stocks in the Asia-Pacific region for which a panel of Merrills analysts has a strong conviction on their Buy recommendations.

There are no changes to the Australian-listed components of the list, which are Rio Tinto ((RIO)), ANZ Bank ((ANZ)), Treasury Wine Estate ((TWE)), Regis Resources ((RRL)), and Westfield Group ((WDC)). 

 
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