Investors in Asia have changed their mind about Australian equities over the last year and now like the look of what’s happening on the ASX.
One of the key attractions is that Australian shares have the highest dividend yield in the region, according to analysts at Credit Suisse.
“Australia’s gain has come at the expense of Japanese equities and the Chinese A-Shares,” write Hasan Tevfik and Damien Boey in a note to clients.
They tracked the change in sentiment from registrations at the the 19th Credit Suisse Asian Investment Conference last week in Hong Kong where the mood was “short-term bullish but long-term cautious”.
“Chinese stimulus has caused many investors to reassess their near-term outlook,” they write. “But, there remains the considerable overhang of excessive debt and an imbalanced economy.”
Australia is now a preferred market in Asia.
“At the start of each conference participants’ consensus views are registered,” the analysts report.
“Last year investors were cautious on Australia … this year they remain constructive on the Aussie asset class.”
Australian equities are now among the top four most preferred markets in the region.
“While investors are positive on our market but they are not necessarily smitten with the sectors that dominate our index,” writes Tevfik and Boey.
“Two of the least preferred sectors in the region — financials and materials — make up two thirds of our benchmark.
“So if it is not the sector mix of Australia Inc that foreign investors like, then what is it? We think it is a combination of the currency and the high dividend yield.”
The most common question the analysts were asked was the outlook for dividends.
Australian dividend yields, at around 5%, are 100 basis points higher than the next highest markets in the region, Singapore and Taiwan.