Survey finds ASX firms in poor health
More than 60 per cent of ASX-listed companies currently have ‘marginal’ or ‘distressed’ financial health, according to researcher Lincoln.
In its latest Health of the Market (HOTM) report, Lincoln said that despite a strong economy, many Australian companies wore the brunt of difficult global conditions in financial markets.
It cautioned that intelligent stock selection was critical in the current environment, although investors “should be alert for pockets of strong value”.
Managing director Tim Lincoln said the research showed many ASX-listed companies were equipped to absorb the recent (sub-prime) shocks — in turn delivering relatively strong buying opportunities to long-term investors.
The HOTM report revealed deterioration in the overall health of the Australian share market in the last six months to the end of December 2007.
The Australian retail sector was one of the few sectors to improve its health ranking over the period, and is a “surprise performer” with 76 per cent of companies in either a ‘strong’ or ‘satisfactory’ position.
On the other hand, 55 per cent of financial companies (the largest sector in terms of market capitalisation) are in a ‘strong’ or ‘satisfactory’ position, down from 68 per cent in the previous period.
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