Investors shouldn’t mistake market volatility as representing material changes in the value of listed companies, according to Tim Carleton, Auscap Asset Management’s CIO, who says the reality is that the underlying value of certain businesses is far more stable than their share price movements might suggest.
“Developments in artificial intelligence, the outbreak of hostilities in the Middle East, and the perceived impact of the budget on residential property prices and disposable income have dominated short-term share price movements,” he says.
“Such factors affect consumer confidence and the perception around the near-term economic outlook. From a markets perspective, this creates volatility and dislocations as participants respond to the news flow.
“However, on the ground, we are seeing that there is often far more that is in the control of management in terms of the business’ future economic performance and earnings growth than there is outside their control.
