Rudi's View | Jul 08 2026
This story features PRO MEDICUS LIMITED, and other companies.
For more info SHARE ANALYSIS: PME
The company is included in ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH
Fresh into the new financial year; a closer look into two of the dominant sectors on the ASX, plus A-REITs.
By Rudi Filapek-Vandyck, Editor
It’s early days, but after the tax-loss selling and window-dressing antics in June, it appears the Australian share market is reverting to more normal programming in July.
Expensive defensives no longer look like the natural go-to destination and many stocks that persistently encountered selling pressure in June are visibly springing back to life.
One should refrain from drawing too many conclusions, though. Many share prices had been artificially depressed. Seasonal buyers chasing the upward corrections in July do not automatically signal a more favourable outcome for the weeks and months ahead.
Underneath the surface, the risk of yet another RBA rate hike remains in place, while economic momentum is deteriorating, not least because the always reliable domestic property market is no longer providing solid support, with market updates from Australian businesses more likely to disappoint than otherwise.
Investors might well take guidance from strategists at Morgan Stanley, who predict the upcoming results season in August will likely pull down the average EPS increase to single digits from the 12.9% currently forecast by market consensus.
Morgan Stanley is far from the only one that strongly believes the risk remains to the downside for corporate earnings in Australia. Such a rather large reduction has essentially two major consequences:
- There will be many disappointments before and during August
- Share price volatility is about to spike higher
Within this context, the statistics generated from corporate results delivered post-February look awful, though, granted, they looked worse post-August last year.
Check it out here: https://fnarena.com/index.php/reporting_season/
A-REITs Join The Comeback Trade
As always, it’s the amazing comebacks, such as the 60%-plus rally in Pro Medicus ((PME)) shares in a little over one month, that attract most market watchers’ attention.
But has anyone noticed the comeback from yesteryear’s market laggards equally features strong outperformance from selected A-REITs?
REITs gained 1.7% in June, outperforming the ASX200’s 0.7% gain for the month. Measured over the past three months, only Information Technology, up nearly 17%, and Consumer Discretionary, up 18.7%, have done better than the 11.6% average gain for ASX-listed property trusts.
Apart from much cheaper share prices compared with this time last year, all three sectors are considered beneficiaries of lower bond yields.
I think the underlying message is clear: at least parts of the local investment community are preparing for the next RBA rate-cutting cycle, irrespective of the public debate –one more or done– that is still ongoing among economists.
Could it still be too early? Yes, that remains a risk.
But what about this time next year? Is it fair to assume the RBA might be ready to deliver its first rate cut by then?
I think the answer is ‘yes’.
Sector Preferences
For investors looking to join the trend, it’s good to realise the local REITs sector is not a homogeneous, one-size-fits-all basket of opportunities.
Depending on one’s strategy and specific preferences, available choices vary from AI & data centre exposure and property funds management, to retail shopping malls, office towers, and specialised niche offerings such as child care centres and retirement villages.
Many a REIT is simply a landlord whose attraction moves up and down in line with the bond market. Some have high levels of debt. Others are still battling the headwinds in specific market segments, such as offices.
Which is why it might be apposite to pay attention to views and preferences among analysts who actively cover the sector.
On Monday, Citi analysts lined up Charter Hall ((CHC)), Aspen Group ((APZ)), Scentre Group ((SCG)), Stockland ((SGP)) and GPT Group ((GPT)) as candidates for positive surprises when releasing financial performance in August.
Citi’s highest conviction remains with Goodman Group ((GMG)), which equally remains a favourite in my personal circles. This is high-quality exposure to a $14.5bn data centre development pipeline.
Citi’s conviction also resides with Stockland and Mirvac Group ((MGR)), which are seen as trading too cheaply considering what RBA rate cuts will do to their outlook and valuation.
As also highlighted by UBS, Stockland and Mirvac have been the worst performers in FY26, with share price declines of -19.7% and -17.9%, respectively. In contrast, Charter Hall and Centuria Capital Group ((CNI)) have crowned themselves best performers with gains in excess of 21% each.
Fund managers Charter Hall and GPT Group should benefit from accelerated capital inflows.
Best positioned for a broad sector re-rating are those REITs that can offer growth, not just yield. Citi’s favourites are:
- Goodman Group ((GMG))
- GPT Group ((GPT))
- Charter Hall ((CHC))
- GemLife Communities ((GLF))
- Aspen Group ((APZ))
- Ingenia Communities ((INA))
- Scentre Group ((SCG))
Over at Macquarie, sector analysts equally have a preference for those REITs that can outgrow the cost of capital. Macquarie’s four most favoured exposures are:
Least preferred at Macquarie are:
Clearly, Macquarie is less sanguine about consumer spending in the months ahead than are its colleagues at Citi.
UBS’s sector preferences reside with:
- Goodman Group ((GMG))
- GPT Group ((GPT))
- Charter Hall ((CHC))
- Vicinity Centres ((VCX))
- Region Group ((RGN))
- Arena REIT ((ARF))
- GemLife Communities ((GLF))
- Ingenia Communities ((INA))
Despite share prices already having lifted from their lows, UBS reports the sector is trading on an average -7.7% discount to its valuations, in itself a blending of net asset values and discounted cash flow projections.
Sweet Spot No More For Aussie Banks
Equally remarkable as we leave FY26 behind, analysts are a whole lot less positive about prospects for Australian banks than they are for Materials, Australia’s second largest index weight.
The Financials sector has hardly budged on a net basis from twelve months ago. Share prices are down by circa -15% since early April. In contrast, Materials, including mining, is up nearly 48% over FY26.
Yet sector analysts and strategists continue to favour the latter over the former.
The key question for banks is, of course, what is likely to happen to Australian property prices and how that might impact mortgage lending, the economy at large and lending generally, including corporate credit.
The key focus among investors is now “capital strain”. How large? How long? Will it affect the Big Four’s capacity to continue growing dividends for shareholders?
Thus far, consensus forecasts do not anticipate any problems for CommBank ((CBA)) or Westpac ((WBC)), but any dividend increases from ANZ Bank ((ANZ)) are expected to be minimal, while National Australia Bank’s ((NAB)) annual payout is expected to remain at 170c for the coming few years.
Read between the lines of recent sector updates, however, and it is clear analysts are focused on deteriorating trends and potential negative ramifications.
The key question then becomes: are dividend payout ratios maybe too high?
Current payout policies are:
- ANZ 60%-65%
- NAB and WBC 65%-75%
- CBA 70%-80%
What are the chances Australian banks might have to cut their payouts to shareholders?
The honest answer is we won’t know until much further down the current downtrend. In the meantime, investors should not assume all negative developments have now been accounted for in already downgraded forecasts.
That’s not my personal prediction; that’s one warning that keeps being repeated with almost every fresh sector update that lands inside the FNArena inbox these days.
Commodities & Miners
When it comes to commodities and miners, UBS recently published an interesting viewpoint, arguing that up until recently the sector has behaved as simply one of the beneficiaries of the global AI infrastructure buildout.
That is unlikely to change anytime soon, the analysts believe, yet they do see further divergence between commodities as fundamental outlooks are developing in different directions.
If UBS’s assessment proves correct, the best performing commodities should be copper, lithium and uranium, while the outlook for nickel has improved due to policy changes in Indonesia and the gold bull market is simply taking a break.
This implies less favourable dynamics for aluminium and the bulk commodities coal and iron ore.
See also: https://fnarena.com/index.php/2026/07/02/rudis-view-best-buys-conviction-calls-in-july/
https://fnarena.com/index.php/2026/07/01/rudis-view-the-august-results-test-awaits/
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