Non-negative Budget, consider oversold blue chips

Chief Investment Officer and founder of Aitken Investment Management
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Key points

  • The economic importance of providing support for both consumer and business confidence in the Budget should not be underestimated.
  • With the cash rate at record lows, bond yields coming back down and a non-negative Budget out of the way, along with the big jump in consumer confidence yesterday, the stage is set for a return to outperformance from anything Australian with a reliable fully franked dividend yield.
  • It’s a good time to pick up the oversold major banks and fund managers like AMP, Platinum and Magellan.

 

This time last year we were dealing with a Federal Budget “emergency” that arguably, due to political over-spinning, led to a genuine confidence loss in households and corporates. However, the good news is the Federal Government appears to have learnt from that tactical mistake and this year’s Budget has been positive for the domestic equity market, led by consumer facing equities and high fully franked yield exposures.

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