Shares in Value Logo
Product Review Img Vertical

Date : 20/05/2022

3 Reasons Why ASX is Not Doomed

untitled design (2)
Did you know that the ASX had fewer corrections compared to the US and European Markets?
In fact, during 2022, the ASX performed better than S&P 500 and Nasdaq correcting by 8%, whilst S&P 500 and Nasdaq have lost 18% and 26.5%, respectively. Painful I know.
(Read: What to Do During an ASX Stock Correction to get insights on how to deal with the market’s strong headwinds.)
pasted image 0
 
The global economy remains uncertain with Ukraine’s ongoing war and the pandemic. This naturally forges fear amongst investors, thus affecting logical financial decisions.
The fear is palpable creating confusion so understanding the facts and being data-driven is key.
Join us as our researchers dissect the facts and assess why the ASX is not doomed.
ASX’s Sectors Can Withstand the Rise in Inflation and Interest Rates  
The top two sectors in the ASX are Mining & Resources and Financials – not tech. These industries have performed way better than high growth stocks whose valuations are projected from expected future earnings. The rising inflation and interest rates have placed these high growth stocks valuations under intense pressure and affected the overall market performance.
Remember how the tech sector experienced a three-day wipe-out, pushing the Nasdaq towards a bear market?
ASX Will Benefit from China’s Projected Fiscal Spending
China is currently in lockdown, which has impacted commodity imports. To improve the economy and increase the demand for consumer goods, Xi who is chasing an unprecedented third term is expected to unleash a fiscal package similar to what was done in the 2008 financial crisis. A fiscal spending was also repeated on a smaller scale in 2016 to revive the property market.
Furthermore, Xi has called for an ‘all-out’ campaign to increase infrastructure, particularly in the transport and energy sectors. In fact, construction of ports and airports should be expected in the coming years. Needless to say, this is great news for Australia’s currency and overall economy. As you would know, the Australian dollar weakened past $0.70, the lowest in nearly two years.
pasted image 0 (1)
ASX 200’s Forward P/E is Below Long-Term Historical Average 
Looking at the market’s overall value, we have recognised that ASX has far fewer risks compared to S&P 500 and Nasdaq.
Recent reports show that the S&P 500’s Forward P/E is 18x from 23x and Nasdaq’s has a Forward P/E of 24x from 35x. On the other hand, the ASX’s 200 Forward P/E is just 15x and lower than the historical average. This reversion to the mean suggests that we are close to the bottom. Buyers are now more eager to enter positions expecting earnings to increase and quality stocks have started to look attractive for both medium and long term investors.
Whilst volatility is inevitable, we have a positive outlook on ASX and the Australian economy in the second half of 2022.
Pro Tip: In the meantime, we urge you to stay away from sectors that are interest-rate sensitive, including technology and real estate. You should know that resources, consumer staples and healthcare are the sectors that can weather the storm.

Are You Looking To Buy The Best Stocks In 2022?

Stay on top of upcoming market trends! Whether you are an SMSF investor or a young investor with your portfolio, we cover a wide range of stocks across all sectors, including mining, financials, industrials, real estate, technology, health and biotech, etc. It will give you an edge to invest and trade ASX listed stocks across large, mid and small caps with an advantage.

Get stock tips with our Market Experts. We help self-directed investors and self-managed super funds (SMSF) make smarter investment decisions and get better returns. Fill in your details and download your free Report instantly for Top 3 Dividend Stocks to buy in 2022!

 

Top 5 ASX Stocks
to Buy for Capital Growth in 2022

asx landing page
The hardest part to finding growth stocks is having an ability to understand the finer details of these companies from their valuations through to first mover advantage and having key factors on hand to make informed investment decisions.

Our experts take the guesswork out.

Download Your Free Report

By downloading this report you agree to the TERMS AND CONDITIONS and our PRIVACY POLICY

Scroll to Top

Login

By submitting this form, I agree to the TERMS AND CONDITIONS and PRIVATE POLICY

Please fill in your details to download the free dividend shares report.

We will send your report instantly. Please put your correct email address and phone number.