If forced to trim my holdings, I would lighten up my positions in B: Property shares first, closely followed by A: Tech stocks. I would also increase my exposure to D: Bank stocks.
When interest rates tick higher, the real estate sector gets hit by a double whammy of structural pain:
1: The capital value of commercial property portfolio falls.
2: The big debt service obligations spike instantly, eating into dividends.
Tech stocks: High tech names like WiseTech makes it a target for profit taking.
I would rotate into Australian bank stocks. My top pick is $COMMONWEALTH BANK OF AUSTRALIA(CBA.AU)$ . It is the largest Australian bank with huge deposit base & net interest margin expansion.
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- EvanHoltΒ·08-28 17:22TOPBanks are the cleaner rotate here. For CBA, the deposit base and dividend consistency matter more than the macro nerves lol1Report
- Ah_MengΒ·11:40TOPProperty prices in most parts of Australia are undergoing correction. It is not just inflation triggered interest rate hikes, the new federal governmentβs policy of removing negative gearing is having a big effect on reducing investorβs appetite. The result is a withdrawal of property investment. This left only first time buyers in the market. Sellers obviously donβt want to sell to this group as they donβt have the money to pay the asking prices. Sales collapse. Inflation from oil prices hike and removal of government fuel prices subsides is not helping. Central bank might have no choice but to raise interest rate again. Australian inflation has stayed stubbornly high compared to those seen in Singapore. Banks are no doubt benefiting from rates hikes however with less property transactions taking place, they are getting less attractive as well. Precious metals are perhaps the better place to be, with fiat currencies increasingly weakening over time. Utilities might be another option.LikeReport
- zumaΒ·08-29 07:42thx1Report