Richard Coppleson thinks the world is becoming increasingly risky and says it's time to sell Australian stocks

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  • Closely-followed Australian equity strategist Richard Coppleson says “the market looks like a sell”.
  • He sees a build-up of risks from global problems including tumbling commodity prices, trade tensions, problems in Turkey and thinks the market looks set for a fall in the coming two months.
  • The ASX hit a decade high this week. But Coppleson is not alone in getting nervous.

One of Australia’s most closely-followed stock market analysts thinks it’s time to sell.

Richard Coppleson, director of institutional sales and trading at Bell Potter securities and author of “The Coppo Report”, a giant daily analysis of the daily trading action on the ASX, thinks the build-up of risks globally means Australian stocks could tumble at least 5% in the coming months.

It’s earnings season on the ASX and the index hit decade highs this week.

“The market looks like a SELL to me,” he wrote in the Coppo Report at the close of trade on Thursday, listing a string of global risks — from the US political cycle and trade tensions to China’s growth slowdown, tumbling global commodity prices and Turkey’s currency problems — as potential triggers for a sell-off.

He thinks the recent rally in banking stocks is over and commodity prices seem to be “in free fall” which will hurt resources stocks.

Investing.comASX one-day chart, back to last November.

“I will note that in the last 20 odd years – I tend to sometimes be a bit ‘early’ in these calls,” he said.

It’s an unusual position from Coppleson, a former executive director at Goldman Sachs who is known for precise and often highly accurate predictions on individual stocks, and not given to bearishness on equities.

“I’ve been very positive on markets for a long time – but for the first time in a while – I’m going very cautious on markets over the next two months and I’d be raising some cash as insurance against a possible selloff that could begin very soon & extend through into late September / early October (when one of the best buying opportunists of the year will be triggered),” he said.

Coppleson is not the only widely-followed strategist who thinks the market’s about to fall. Henry Jennings, a strategist writing for the popular market newsletter from Marcus Padley, told clients yesterday: “Commodities have been … afflicted and copper officially entered a bear market and now oil has fallen in a heap. Global growth is being questioned and the USD is moving higher amidst a strong economy and rising rates. I have to say I have become nervous.”

Jennings said the small-cap fund he manages was currently 25% cash and he would be moving this to 40% over the coming weeks by selling.

Coppleson said there was “negative momentum building” in US stocks and noted that while the American market would typically be low-activity at this time of year (the northern summer) there was a spike of more than 20 per cent in volumes traded on Wednesday and “80% of that volume was weighted to the ‘downside'” as de-risking took hold in markets.

“I may well be wrong – but to me the risk/reward of being overweight the market, means that if I’m wrong [the market] may be marginally higher or flat in two months. But if I’m correct we’ll see ASX 200 back below 6,000 (a -5% to -7.5% drop possibly) and some great buying opportunities will emerge.”

Here’s his list of potential triggers Coppleson listed for a sharp selloff in markets:

  • US mid term elections (on Melb cup day) may cause some nervousness as they approach
  • Emerging Markets being sold off
  • Tariff uncertainties continue to build (slowly)
  • The declines in the Turkish Lira (-22% in a few days) still has some concerned about banking contagion that was about to spread across the emerging mkt countries and then Southern Europe
  • Turkey – which last night was in focus after they country tariffs on some U.S. imports — including cars, alcohol, and tobacco…. booze +140%, cars +120%, tobacco +60%, with tariffs on coal, rice and cosmetics to increase by +50% – this is now seeing US business groups starting sounding the alarm bells, using words like ‘Economic Warfare’
  • Commodity prices look to be in free fall & that will see resources under intense pressure
  • The CRB index [of global commodity prices] – 8% off of the June 2018 highs, this goes to the outlook for the global economy (weakening) and now the latest crisis in Turkey which could cause other Emerging markets to come under pressure.
  • Oil is in its seasonally “weak” period that goes for another few months, has “broken down” (technically) going through 50 day & 100 day moving averages.
  • Some US Tech stocks are still rolling over
  • China’s GDP 6.5% down for 7% a year ago – may get more focus
  • plus ….any of your own I may have not mentioned

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