Tight-Fisted Shopping Habits To Weigh On Consumer Discretionary Equities

Our near-term fundamental outlook favours consumer staple equities over consumer discretionary stocks in Australia. As the consumer and mortgage debt burden grinds higher amid tighter credit conditions, Australian consumers are inevitably facing a greater strain on their purchasing power. The debt service burden for the average household has been intensifying in recent quarters. Home loan interest payments alone took up 9.6% of household disposable income in March (the latest available data), a sharp rise from the 8.7% figure registered in the same month a year ago.

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