FNArena Talks | Oct 22 2012
This story features RIO TINTO LIMITED. For more info SHARE ANALYSIS: RIO
FNArena Editor Rudi Filapek-Vandyck explained to Peter Switzer why he has described the Australian share market as being in a state of war: investor sentiment has turned positive and many want to see higher share prices and to participate in this rally, but there's one crucial element missing: earnings growth. Australia is yet staring at another fiscal year of low to subdued growth in corporate profits while local bellwethers BHP Billiton ((BHP)) and Rio Tinto ((RIO)) are poised to report negative growth.
What to do? Rudi suspects that if money from the sidelines decides to join the rally, those investors will have to apply the same tactic as was necessary in 2009: dismiss forecasts for FY13 and jump through the hoop and zoom in on FY14 instead.
Of course, this strategy is not risk-free. It's still very early in fiscal 2013 and FY14 is still a long way into the future.
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