Schroders warn of frothy markets despite ASX highs

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Sep 12

August delivered one of the more remarkable months for Australian investors. Despite another season of patchy earnings - including disappointing results from blue-chip stalwarts such as CSL Limited (...

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Despite another season of patchy earnings - including disappointing results from blue-chip stalwarts such as CSL Limited (...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/schroders-warn-of-frothy-markets-despite-asx-highs\">Source Link</a>\n\n</div>\n","source":"livewire_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Schroders warn of frothy markets despite ASX highs</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSchroders warn of frothy markets despite ASX highs\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-09-12 13:40 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/schroders-warn-of-frothy-markets-despite-asx-highs><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>August delivered one of the more remarkable months for Australian investors. Despite another season of patchy earnings - including disappointing results from blue-chip stalwarts such as CSL Limited (...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/schroders-warn-of-frothy-markets-despite-asx-highs\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7501","symbol_name":"新冠治疗股","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/schroders-warn-of-frothy-markets-despite-asx-highs","article_id":"2566928581","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/schroders-warn-of-frothy-markets-despite-asx-highs","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2566928581","pubTimestamp":1757655635,"columns":[],"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"August delivered one of the more remarkable months for Australian investors. Despite another season of patchy earnings - including disappointing results from blue-chip stalwarts such as CSL Limited  and James Hardie  - the ASX smashed through 9,000 points, rising 3% in the month. Small caps performed even better.At first glance, this strength might suggest a market underpinned by robust fundamentals. But as Martin Conlon, Head of Australian Equities at Schroders, and his deputy Andrew Fleming point out, the reality is very different.Momentum investing and quant-driven strategies are dictating short-term price moves, while fundamentals are often relegated to the back seat. For patient investors, this may be unsettling - but it also creates opportunity.In Schroder's webinarBroadcast Australian Equities: It's only a flesh wound, Conlon and Fleming unpack the sharp share price swings seen during reporting season. They separate justified moves from overreactions, highlight opportunities ari","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7501":"新冠治疗股","BK7040":"食品零售","WOW.AU":"WOOLWORTHS GROUP LTD","BK7064":"综合支持服务","RMD.AU":"Resmed DRC","BK7006":"电力公用事业","BK7130":"综合性石油与天然气企业","BK7135":"综合性银行","BK7007":"医疗保健设备","BK7044":"建筑材料","CBA.AU":"COMMONWEALTH BANK OF AUSTRALIA","COL.AU":"COLES GROUP LTD","BK7507":"资源股","BK7082":"大卖场与超市","BK7508":"医药生物股","XAO.AU":"标普/澳交所 普通股指数","XJO.AU":"标普/澳交所 200指数","JHX.AU":"JAMES HARDIE INDUSTRIES-CDI","XKO.AU":"标普/澳交所 300指数","BK7511":"ESG概念","ORG.AU":"ORIGIN ENERGY LTD","CSL.AU":"CSL LIMITED","BXB.AU":"BRAMBLES LTD","BK7067":"生物科技"},"translate_title":"施罗德警告称，尽管澳大利亚证券交易所处于高位，但市场仍存在泡沫","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BXB.AU":1,"CBA.AU":1,"COL.AU":1,"CSL.AU":1,"JHX.AU":1,"ORG.AU":1,"RMD.AU":1,"WOW.AU":1,"XAO.AU":0.75,"XJO.AU":0.75,"XKO.AU":0.75},"content_text":"August delivered one of the more remarkable months for Australian investors. Despite another season of patchy earnings - including disappointing results from blue-chip stalwarts such as CSL Limited (ASX: CSL) and James Hardie (ASX: JHX) - the ASX smashed through 9,000 points, rising 3% in the month. Small caps performed even better. \nAt first glance, this strength might suggest a market underpinned by robust fundamentals. But as Martin Conlon, Head of Australian Equities at Schroders, and his deputy Andrew Fleming point out, the reality is very different. \nMomentum investing and quant-driven strategies are dictating short-term price moves, while fundamentals are often relegated to the back seat. For patient investors, this may be unsettling - but it also creates opportunity. \nIn Schroder's webinar Broadcast Australian Equities: It's only a flesh wound, Conlon and Fleming unpack the sharp share price swings seen during reporting season. They separate justified moves from overreactions, highlight opportunities arising from the volatility, and share their outlook heading into year-end. \nBelow, I summarise the highlights of the webinar. \n\n\n\n\n\n\n\n\n\nASX 200 3-month performance (Source: Market Index)\nMomentum's grip on the market \n\"What's obvious from results season,\" Conlon explains, \"is that price reactions were savage in both directions. Few stocks were flat.\" \nThe culprit, he argues, is that fundamental managers are no longer setting prices. Instead, computers and momentum funds are dictating the action, and even long-term investors are tempted to mimic their short-termism. \nThis distortion is not confined to trading. Fleming notes that companies themselves are succumbing to short-term incentives, with management using price hikes and buybacks to appease momentum-focused markets. \n\"The prevalence of underlying EBITDA metrics in remuneration is impacting allocation decisions,\" he says. \"The losers we saw this reporting season, like CSL and James Hardie, reflect years of capital misallocation.\" \nA risky backdrop\nIf the market looks frothy, that's because it is. Bond yields are climbing as deficits balloon, yet equities remain near record highs. \n\"Bond investors have a more pessimistic outlook compared with equity investors. This is usually a signal to be cautious,\" Conlon observes. \nFleming agrees: \"Much future capital growth is already imputed into prices. The odds are probably stacked against you as an investor today.\" \nFor Schroders, the test is simple: if the market shut for five years, would they still want to own their current holdings? \"It’s doubtful speculators would feel relaxed,\" says Conlon.\nHealthcare scars but long-term value\nHealthcare was one of the reporting season's bloodied sectors. Ramsay Health Care and Sonic Healthcare sold off heavily, while ResMed (ASX: RMD) bucked the trend with strong earnings. Fleming and Conlon remain constructive. \nFleming noted, \"They're good examples of companies possessing hidden assets. In the case of Ramsey, some of\nthe best private hospital assets in all of Australia with very high land values\nattached to them and currently pretty low returns on those land values with a\nsystem where demand is only going to increase.\" \nConlon added: \"Margins on private \nhospitals and pathology are low because the government \nhas squeezed the health industry. If you focus on \nearnings momentum, you would avoid these stocks. Our \nlonger-term view says otherwise. There is no notable \ninvestment heading into the health industry. That means health companies will soon enough have the market \npower to raise prices for users, if the government won’t pay appropriate prices. This means longer-term \nmargins will recover.\"\nOptimism in pockets\nNot every earnings season tale was bleak. The team sees opportunities where the market has gone too far in rewarding \"momentum winners\". \nSchroders highlighted several bright spots:\n\n\nOrigin Energy (ASX: ORG) - its three earnings streams, including UK-based Octopus Energy, are firing. \"Management's capital allocation has been excellent,\" Fleming notes. \n\n\nColes (ASX: COL) vs Woolworths (ASX: WOW) - the market rewards Coles' momentum, but Conlon argues Woolworths' larger scale and profit base make it the better long-term bet. \n\n\nBrambles (ASX: BXB) - an example of latent pricing power. \"Volumes may fall, but margins rise,\" Fleming explains, though he cautions that over-reliance on price hikes can backfire as seen with Qantas. \n\nCommodities - momentum and mispricing\nThe momentum distortion is most visible in resources. Rare earths and lithium stocks soared on tiny shifts in sentiment and policy support, with valuations quickly factoring in prices well above long-term sustainable levels. \n\"By definition, commodities have no pricing power,\" Conlon says. \"As soon as price trajectory (lithium) starts to rise in an earnings momentum-driven market, all people care about is the direction of earnings\". \nThe team prefers exposure to alumina and aluminium, where prices are depressed and fundamentals are better aligned with China's investment trends. They remain wary of iron ore, where new West African supply looms, and are cautious on pure-play miners. \nAI - promise or productivity mirage?\nIf resources are overhyped, so too is artificial intelligence. \"The conversation has shifted to ROAI - return on AI,\" says Fleming. \"For all the spending, there's little evidence of productivity gains.\"\nConlon is blunt: \"Companies may save some labour, but the benefits often flow straight to US tech giants via expensive contracts. Many are stuck in deals that raise costs without boosting efficiency.\"\nGold and behavioural assets\nGold's surge above US$1,500/oz reflects not fundamentals but fear. Conlon calls it a \"human-behavioural asset,\" noting that central banks, wary of US sanctions and debt levels, are diversifying reserves. While Schroders won't rule out further gains, they admit their comfort lies in commodities with clearer fundamentals. \nCSL, CBA, and the limits of pricing power\nCSL remains a quality business but faces headwinds. \"It's no longer the lowest-cost producer,\" Fleming points out. \"Losing that edge makes it vulnerable,\" Conlon adds that while management acknowledges bureaucracy and missteps, only operational improvement - not spin-offs - can restore pricing power. \nOn banks, Schroders is underweight, with the Commonwealth Bank (ASX: CBA) its largest underweight. \"It's an exceptional business with outstanding management,\" Fleming concedes. \"Since the stock is expensive, the bank is not an attractive investment.\" Competition from Macquarie and limited earnings growth compound the challenge. \n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}