Australia Ripe for Yield Chasers

Australia faces a double-whammy from record-low interest rates and commodity-price drops, but the selloff may have left its market surprisingly attractive to yield chasers.

“The economy overall in Australia is going to have a tough time,” said Stuart Rae, chief investment officer for Pacific Basin equities at AllianceBernstein, citing a house growth forecast of less than 2 percent for this year. But in the firm’s equity income portfolio, “we’re very overweight Australia and we’re comfortable sticking with that.”

The downtrend in commodity prices has taken its toll on Australia’s stock market. The S&P/ASX 200 index, which has an around 22.6 percent weighting in basic materials and energy, eked out a 1.6 percent gain in 2014, but it’s currently trading around 3.6 percent below its mid-2014 peak.

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