Rudi Interviewed: Turning Laggards Into Winners

Rudi's View | Feb 17 2025

It has become the 'unofficial' tradition in recent years: an interview with Livewire Markets ahead of yet another corporate reporting season in Australia. Below is a sub-edited transcript from the pre-February results season interview that took place on February 11. The video is available on Livewire and on YouTube.

Sarah Allen: Hello and welcome to one of Livewire's favourite reporting season traditions. Today, I'm joined by Rudi Filapek-Vandyck from FNArena to talk all things reporting season.

Rudi, thank you so much for joining us today. The share market's been at near record highs of late. What are the big opportunities or risks that you're seeing this reporting season?

Rudi Filapek-Vandyck: Each reporting season has its own character and this reporting season has a very particular character, which is probably going to surprise a lot of people.

Recently, I was walking around and I saw a religious statement that said: hope never disappoints.

I don't want to drag this into some religious corner or anything, but I do remember it because I thought that's a very nice summary of what February is going to offer us.

Another way of looking at it is: how do we turn yesterday's laggards and losers into winners?

That's definitely what's on investors' mind right now.  What I mean to say is: we've had a share market now for two years that has, at face value, performed quite well, but it was carried by about 40% of the market.

So there's 60% that hasn't performed over the past two years, at least. What 2025 might bring is that we pull in at least a big part of that 60% to perform this year.

And there are a few reasons why that's on investors' mind. First, we haven't seen any earnings growth in Australia for three years and counting.

The way the share market works, on a very simple comparison of what were you doing last year and what are you doing this year, that means the longer it lasts, the easier the comparison becomes for that 60% that hasn't performed.

All you need is two bad years and now a little bit of a better year, and wow, we're in for growth!

So that's one component, but equally important is there is growing confidence that earnings in Australia have bottomed and that we will see better times ahead.

That's already being reflected in forecasts. Forecasts are on the rise, which hasn't been the case for quite a while.

From the US, we are seeing the earnings base is broadening and the gap between the winners and the laggards is narrowing.

Then, of course, we have one big trigger in Australia: the RBA is going to cut interest rates, and that's going to keep optimism high.

We always tend to look at the numbers, valuations, forecasts, targets, ratings, you name it, but I think market sentiment, investor sentiment, is the all-important factor here.

Those elements I've just summed up, we've seen that in January already, they're already changing the mindset of the average investor.

We're now looking at company reports and market updates with a positive mindset.

If I look at what we've seen so far, reports by Amcor ((AMC)), for example, market updates by Incitec Pivot ((IPL)) and by Seven West Media ((SWNM)): those are not necessarily great reports, but with a positive mindset, they're good enough to get on board.

That's what we see in this reporting season, and I'm assuming we will see a lot more of that in reporting season and outside of it.

Investors are now taking a different view on reports with the aim of: can I get on board or not? Is it worth it?

That's going to be the big difference between August last year and February this year.

Last year August was completely different. There was no confidence. There was no optimism, or very, very little optimism.

We had the usual suspects performing very, very well, and the other 60% a little bit wishy-washy.

Investors had no appetite to go outside of the winner's circle, and that's why the momentum trade last year was so strong.

2024 was a year of momentum trade. If you were on a good ticket, it just kept going. If you weren't there, a lot of investors got frustrated last year.

I suspect that's going to change this year.

Now, how are we going to respond to that as an investor? That's the $64m question, of course.

It's very interesting, I think, because it's not that straightforward. It basically depends on what type of investor you are and what's your strategy? What are you interested in?