CHART: HSBC thinks Australian stocks are undervalued

It’s the start of the new financial year in Australia, a time for reflection on what assets performed well last year, and, more importantly, how to position for the year ahead.

If there’s one thing that Australians like to invest in other than property, it’s shares.

After a strong performance in FY2017, many are wondering if that form can continue in the year ahead.

While no one knows that answer for sure, HSBC’s global equity strategy team thinks Australia’s stock market is looking more attractive than most.

As seen in the chart below, it thinks that while the Australian market has positive factors working for it, many investors remain downbeat, leading it to deem the local market “undervalued” compared to many other regions at present.

Source: HSBC

In HSBC’s opinion, Australia, along with emerging markets in Asia and Latin America, are currently undervalued compared to those in the eurozone, UK and US which it deems to be expensive.

While it sees Aussie stocks as undervalued, HSBC still retains a neutral stance towards the market, forecasting that the benchmark ASX 200 index will finish the year at 6,000 points.

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