Will the Australian Stock Market Rise in 2013/2014?

The supposed 'death' of resources and energy has raised questions about what the future holdings for the Australian market, but have these been exaggerated?

Tony Young 26 July, 2013 | 12:16PM

I often get asked “where is the market going?” The standard answer is "no idea" or "either up or own". However, one can actually be a bit more scientific in formulating an answer. Stock market movement is simply driven by just two components:

- Movement in the overall market’s price/earnings ratio (P/E ratio)
- Earnings per share (EPS) growth

The S&P/ASX 200 Index is simply the market's EPS multiplied by the market's P/E ratio.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BHP Group PLC1,816.00 GBX-0.49
Rio Tinto PLC4,705.50 GBX-0.99

About Author

Tony Young  is a consultant to Morningstar. He was formerly head of research at a leading investment bank in Australia and was a director of Aspect Huntley prior to its
acquisition by Morningstar.

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