Morgan Stanley, the most bearish Wall Street firm on Australia’s currency, sees the economy struggling and the stock market falling. It’s not all bad news, though, with strategists at the top-ranked brokerage saying there are a number of winners that can profit amid the gloom. The key is avoiding companies that are most at risk as sagging earnings momentum weighs down growth and consumers rein in spending as incomes decline.
Australians will need to use their savings to fund purchases as income growth falls, Morgan Stanley predicts. They expect the local dollar to slide more than 15 percent to 64 U.S. cents by the end of next year, the weakest level among analysts surveyed by Bloomberg. The narrowing between policy rates in the U.S. and Australia as hikes continue in America is seen as the main driver for the Aussie.
These stocks will do well in an environment where the Aussie weakens, according to Morgan Stanley: Ansell Ltd., Cochlear Ltd., Sonic Healthcare Ltd., Ramsay Health Care Ltd., CSL Ltd., BlueScope Steel Ltd.
And these shares have less sensitivity to currency fluctuations while still being rated overweight: Orora Ltd., Treasury Wine Estates Ltd., LendLease Group and Corporate Travel Management Ltd.
Source: Bloomberg Pro Terminal
Jr Trader Ivan Ivanov
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