"The Monthly" – July Catch Up

Research evidence excerpt

"The Monthly" – July Catch Up

gher, while the age of estimates remains elevated, Source: RIMES, MSCI, Morgan Stanley Research

suggesting forecasts may be increasingly vulnerable to revision. We see growing

Exhibit 2 : Reporting Season - From August

downside risk to earnings and management outlooks across Banks, Housing-related

17-27, 80% of companies will report

names and Consumer-facing sectors in particular. Reporting season will also be

highly concentrated, with the bulk of results due from 12 August onwards and 500 Number of Companies Reporting vs Total Market Cap by Date 25

around 80% of companies reporting between 17 and 27 August. 400 20

300 15

Keeping score: While Health Care extended its recovery from 12-month lows, July's 200 10

market gains remained highly concentrated. Financials dominated index attribution 100 5

0 0

(+196.3bps), with Energy (+49.9bps) a distant second, while Materials (-21.5bps) and 29-Jul 30-Jul 04-Aug 05-Aug 06-Aug 07-Aug 10-Aug 11-Aug 12-Aug 13-Aug 14-Aug 17-Aug 18-Aug 19-Aug 20-Aug 21-Aug 24-Aug 25-Aug 26-Aug 27-Aug 28-Aug 31-Aug

Industrials (-10.1bps) detracted. CBA (+81.5bps) was the largest contributor, ahead Sum of Total Mkt Cap Cap (A$bn) No of Companies Reporting (lhs)

of NAB, WBC, WDS and ANZ. Health Care gains were largely driven by CSL Source: Factset, Morgan Stanley Research

(+15.0bps), underscoring the stock-specific nature of sector performance. LYC (-

13.9bps) was the largest detractor, followed by GMG, PLS, PME and LTR.

Valuations and Earnings Setup: The market multiple expanded by 0.85 P/E turns Morgan Stanley does and seeks to do business with

during July to 17.5x forward P/E, supported by price appreciation despite weaker companies covered in Morgan Stanley Research. As a result,