Monthly Agenda August 2020 – Australian Equities
Forward EPS revisions have varied across the sectors of the Australian market this month, with estimates revised following companies reporting annual results. Industrials, communications and utilities have fared the worst in terms of negative revisions, which have a drag on the broader ASX 200 Index. At the other end of the spectrum, consumer discretionary stocks have reported better than expected results, while materials have been boosted by robust commodity prices.
Chart 1: ASX 200: Sector EPS revisionsEnlarge Source: Bloomberg
While the ASX 200 Accumulation Index has tracked higher through August, which has resulted in the fifth consecutive month of gains in the current recovery period, the returns have lagged that of overseas equities. Despite commodity price strength supporting the resources sector, a sub-par reporting season has contributed to the underperformance.
Chart 2: MSCI AC World and ASX 200 AccumulationEnlarge Source: Bloomberg
Dividends were always going to be a key focus of companies in this reporting period and even the largest companies listed on the ASX couldn't escape the significant hit to distributions. Of ASX 20 stocks, only three increased their dividend, while a further two were able to declare an unchanged dividend. Meanwhile, four companies - Westpac, Aristocrat Leisure, IAG and Scentre Group - all opted for a conservative approach by not declaring a dividend in this period.
Chart 3: ASX 20: Dividend change year on yearEnlarge Source: IRESS