Our outlook for the banks remains positive. As we enter a period of RBA rate hikes, margin pressure will likely ease, driving earnings growth over the medium-term. However, risks remain for Aussie banks as rates rise. We delve into the 1H22 results and outline our reasoning for an overweight to the banks.

Last week the RBA hiked rates for the first time in 12 years, raising the cash rate from an all-time low of 0.1% to 0.35%. Several more rate hikes are likely in the next 12 months. Currently, we believe that RBA rate hikes will not be a significant headwind for equities. However, a rate hike environment would likely result in prolonged volatility until the market gets more clarity about the end game.

Since December, risk aversion in equity markets has shifted as inflationary pressures and higher bond yields have placed downside pressure on equity valuations. However, over the last month defensives have started to outperform the market, from healthcare and consumer staples to utilities.

Over the last 2 years the focus list has benefited from stocks where we have identified hidden value. We find this subset of the portfolio can provide great returns that are less correlated to the rest of the market. One such stock that has taken our eye is Tabcorp (TAH).

Similar to global value, Australian value has outperformed significantly since November last year, boosted by elevated commodity prices and rising global and local interest rates. We explore why we are still adding value to Australian equity portfolios.

With the prospect of an RBA interest rate tightening cycle beginning as soon as June this year, we look at how the A-REIT sector performs when interest rates are rising.

This week we share our second quarter outlook for companies within the Wilsons Australian Equity Focus List. We look back on Q1 and share our current positioning for the quarter ahead.

Following a record year in 2021, we recast our M&A screen looking at the M&A landscape for 2022 and the S&P/ASX 100 companies that could look financially attractive to an acquirer.