Chart of the week: Are markets attractive after correction?
With the Australian market briefly entering correction territory, has it become more attractive?
This week’s Chart of the Week comes from Market Strategist Lochlan Halloway’s analysis on whether investors should buy the dip.
Last week, the ASX 200 index briefly entered correction territory, defined as a peak-totrough decline of more than 10%. Clearly, the market wasn’t prepared for President Trump’s tariffs—even if they haven’t been as severe as foreshadowed before the election.
However, market drops also open the door for undervalued opportunities. In this case, it has only knocked the froth off the top, and the market is still seen as 11% overvalued.
The below graph looks at the Price to Fair Value of Morningstar’s coverage of the Australian market, and it is market-cap weighted. This is a good reflection for many Australian investors that may have exposure to market cap weighted collective investment vehicles.
You’re able to access Morningstar’s up to date Fair Value Estimate for the Australian market through our Markets Centre. The Morningstar Fair Value Estimate tells investors the bottom-up long-term intrinsic value of a market and helps you see beyond the present market price.
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