MARKETS SPECTATOR: A new northern exposure

Credit Suisse says companies with US exposure are now better placed than those reliant on Chinese markets, like miners.

Part of the crowd that is itching to buy mining stocks? Hold off, says Damien Boey, Credit Suisse’s Australia strategist.

Boey says there is still too much uncertainty surrounding the Chinese economy to convince him that buying resource stocks at these levels is a good idea. The analyst expects stocks that garner a lot of their earnings from the US to do well relative to other parts of the market. Boey’s stock recommendations include drug maker CSL, hearing aid implant maker Cochlear, medical equipment maker Resmed and pallet and plastic container provider Brambles.

“The Chinese economy is miles apart from the US economy at the moment,” says Boey. He says there are signs that the US economy may indeed be growing despite austere economic policies. US May retail sales rose more than expected, up 0.6 per cent against estimates 0.4 per cent. More US households purchased cars and other consumer goods.

Boey’s other stock picks include supermarket chain Woolworths, soft drink maker Coca-Cola Amatil, food distributor Metcash, Telstra, gas and electricity distributor AGL and energy company Origin. Boey expects these companies to do better than other stocks because they have firmly held market share that will keep sales and profits ticking over.

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