Opportunity from flood adversity
Investors should consider buying into discretionary retail stocks as flood-affected communities in Queensland and Victoria seek to refurbish their homes after the floods, according to several investment specialists.
The portfolio manager for Platypus Asset Management, Simon Bonouvrie, suggested retail shares could make significant gains in the market as a result of thousands of homeowners in the two states replacing flood-damaged retail items.
Investors should buy into the retail sector to take advantage of those gains in the short term, Bonouvrie said.
“As the recovery effort gathers pace, people are going to restock their homes with furniture and clothes, building supplies, so you might see a medium term positive effect for the retail industry,” he said.
Investors had been shorting the retail sector in the last six to 12 months, providing an enormous opportunity for new investors, Bonouvrie said.
The Reserve Bank would probably keep interest rates on hold for the next six months, which would increase the amount that consumers could spend on discretionary retail items, said head of asset management for Equity Trustees, Shaun Manuell.
There was likely to be a six-month boost for the retail sector, he said.
However, it was a one-off event and would not have a dramatic affect on the overall market, Manuell said.
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