Equity Strategy
A Rising A$ and Company Earnings
Thu 20th August, 2020

The proportion of market earnings sourced offshore for Australian companies has risen in recent years, with around 25% of the S&P/ASX 100 earnings – ex-resources – exposed to offshore earnings.

We outline the potential impact of a resurging Australian dollar on many Australian companies. While the Australian Equity Focus List has a greater exposure to offshore earnings vs. the market, a number of natural offsets coupled with our overweight materials exposure will dampen its sensitivity to a potentially higher $A.

We also explain why the resources sector is an outlier, and detail our investment case for the Australian Equities Focus List despite its higher exposure to offshore earnings vs. the market.

Disclaimer and disclosures

Recommendation structure, definitions and the Financial Services Guide (“FSG”) can be found at www.wilsonsadvisory.com.au/disclosures.

Disclaimer

This document has been prepared by Wilsons Advisory and Stockbroking Limited (AFSL 238375, ABN 68 010 529 665) (“Wilsons”) and its authors without consultation with any third parties, nor is Wilsons authorised to provide any information or make any representation or warranty on behalf of such parties. Any opinions contained in this document are subject to change and do not necessarily reflect the views of Wilsons. This document has not been prepared or reviewed by Wilsons' Research Department and does not constitute investment research. Wilsons makes no representation or warranty, express or implied, as to the accuracy or completeness of the information and opinions contained therein, and no reliance should be placed on this document in making any investment decision. Any projections contained in this communication are estimates only. Such projections are subject to market influences and contingent upon matters outside the control of Wilsons and therefore may not be realised in the future. Past performance is not an indication of future performance.

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Written by

John Lockton, Australian Equities

John is a leading investment strategist with 20 years experience.

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