Why discretionary stocks are a contrarian opportunity (and 7 ASX-listed ideas)

Global investors know Australia for three things - our houses (the property investment opportunity), our holes (the massive mining sector), and our beaches (and let's face it, our sharks).  

But the truth is that the Australian economy is driven by a much larger force than the property or mining sectors can muster - the consumer.

Consumer spending makes up about 50% of Australian GDP, according to the OECD, and consumer stocks (discretionary and staples combined) make up about 11% of the ASX 200. After the miners and CBA, consumer stocks are the most closely-watched sector every February and August reporting season. 

On the macro front, the Reserve Bank has consistently called out the resilience of the consumer in its commentary. In particular, the RBA Board likes to say that longer-term inflation expectations remain well-anchored, adding, "It is important this remains the case." 

But the central bank also cannot deny the reality that retail sales are sluggish, noting in its most recent post-meeting statement that "there is a risk that household consumption picks up more slowly than expected."

So is the Australian consumer really that resilient? 

This episode of Signal or Noise will attempt to answer that question and glean some investable insights. Joining me and our resident economist, AMP's Diana Mousina, this week are: 

• Richard Schellbach, Strategist for Australia and New Zealand at UBS
• Ben Clark, Portfolio Manager at TMS Capital

Note: This episode was taped on Wednesday 14 August 2024. You can watch the episode, listen to our podcast, or read the edited summary available here: https://www.livewiremarkets.com/wires/why-discretionary-stocks-are-a-contrarian-opportunity-and-7-asx-listed-ideas