Every year Hong Kong-based investment house CLSA surveys what it calls “Mr and Mrs Australia”.
By analysing this feedback, an in-depth survey of 1,400 Australian consumers and their sentiment by market research firm TNS, it determines which stocks will be in demand.
The fourth Mr and Mrs Australia survey finds consumers more optimistic about spending than at any time since the survey began in 2011.
Concerns are moderating due to lower interest rates and fuel prices. Savings rates are strong, and retirement concerns are subsiding. Stress around debt levels and employment still exist and consumers remain critical of government economic policy.
Overall, CLSA has increased its conviction on investing in Australia.
And key drivers are New South Wales, with more than 30% of national GDP, and an Australian dollar below $US0.80.
From the results, CLSA has picked the likely winning companies. Here they are:
CLSA says households are more comfortable with their finances but remain concerned about debt.
“Credit growth is likely to remain subdued,” CLSA says in a report to clients. “We will monitor the impact of the Australian Prudential Regulation Authority’s (APRA) changes on investor lending. Interest rates and unemployment are key risks to the housing market given imbalance between mortgages and savings.”
CLSA says the top buy is the NAB with a total shareholder return (TSR) of 25%.
As the bank exits the Clydesdale business in the UK, a shrunken NAB will emerge with higher ROE (Return on Investment).
In the survey, 60% see house prices rising over 12 months, up from 54% in 2013. Only 6% anticipate a price decline, down from 9% in 2013.