On the surface it may seem that not all that much is happening in regards to ASX 200 stock prices apart from the significant bounces up and down each other day. Generally speaking the S&P/ASX 200 Index (XJO) has been trading within a fairly narrow range for around the last month, but under the surface there are some interesting stocks that are worth keeping an eye on.
Of particular interest to me is how the Big Four Banks are faring and the chart below shows the Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Australia New Zealand Banking Group (ANZ) and Wespac Banking Corporation stock price movements over the last two years.
CBA, NAB, ANZ, WBC – 2 Year Stock Chart
Clearly all these shares have done fairly well over the last couple of years even after the sell-off in April and into early May 2015. However I reckon that the next couple of years is probably not going to see these shares posting the same sort of gains as they did in the previous two years. Personally (and this is not investment advice) I’m not inclined to be a buyer of the banks at current prices, but since they all pay a fairly good dividend I’m not inclined to be a seller either except to lock in profits whenever that is possible.
It’s probably too early the say that the stock prices for these banks have peaked for now, but I doubt there is too much upside left in them for a while. Having said that if the RBA keeps cutting interest rates then the yield hunters may push these stocks to new highs.
Interestingly the investment bank focused Macquarie Group (ASX:MQG) is on a bit of a roll and it’s share price is close to passing that of the Commonwealth Bank.
Commonwealth Australia Bank & Macquarie Group – 2 Year Stock Chart
I’ve been a long term holder of Macquarie Group (and before that Macquarie Bank) and watched it’s share price close in on $100 before the GFC and then crash back to earth (and under $20) in 2009. Needless to say if MQG shares nudge $100 again it might be time to take some profits just for the sake of my nerves!
Meanwhile two defensive type stocks worth watching are Woolworths Limited (ASX:WOW) and Wesfarmers Ltd. Up until 2014 these two stocks moved fairly much in sync as a pair over the last two years but this year, Woolworths stocks have been sold off whilst Wesfarmers shares have held up fairly well. (despite a slump in coal prices)
Woolworths Limited & Wesfarmers Ltd – 2 Year Stock Price Chart
My view at the moment is that Woolworths (WOW) shares probably have more scope to move higher over the next couple of years than Wesfarmers shares. However I’d like to see the ASX:WOW stock price fall a bit further before I was tempted to take a long term position. (and again this is not investment advice)
Finally with Abenomics making into the news and Japan’s Nikkei 225 (stock market index) trending higher this year let’s have a look at one way investors can gain exposure to the Japanese stock market and that’s via the iShares ETF – IJP (ASX:IJP)
iShares Japan ETF (ASX:IJP) – 2 Year Price Chart
I have been long Japanese equities for many years and at times it has really tested my patience, but finally it’s starting to pay off and from what I can see on the ground here being in business in Japan, there are signs that the economic recovery will continue.
I’m not suggesting anyone invest in Japanese stocks, but it is a market worth watching as are other overseas stock markets as it helps investors diversify away from ASX stocks.
This article was written by Greg Atkinson who is the Managing Director of Ohori Capital. Greg is from originally from Sydney but now works and resides in Japan. He can be followed on twitter via GregAtkinson_jp