Sellers too hasty

Published in the Herald Sun, March 2011 by Antonia Magee

A raft of Australian stocks have been oversold in the panic unleashed by Japan's nuclear crisis, market experts say.

And they predict the Japanese disaster is likely to have less impact on the global economy than many fear.

After the midweek rout on global markets, Australia's key ASX200 share index bounced yesterday to finish only 18 points - or just 0.4 per cent - down on its close the previous Friday, which was just 30 minutes before the Japanese disaster.

Yesterday's rally helped ease fears the devastation would echo through share markets and undermine global economic stability.

Wall Street futures last night were pointing to a positive opening - about 1 per higher - in New York, while European markets began strongly.

Bell Potter head of research Peter Quinton said the initial shock to share markets would have minimal impact on global economic growth.

"When you look at the broader economic picture, there's been very little damage done to world economic growth, but a lot of damage done to share markets," Mr Quinton said.

"World economic growth (for this year) has been downgraded from 3.9 per cent to 3.8 per cent.

"In other words, the adverse economic impact of the Japanese earthquake, the higher oil prices and everything else you'd like to chuck in the bucket is almost negligible in terms of world economic activity."

Shaw Stockbroking analyst Scott Marshall said the Japanese disaster had seen some Australian stocks unnecessarily sold down.

"We have identified several stocks that we think have been unfairly downgraded," Mr Marshall said.

"Wesfarmers has coal and Japanese exposure, but we think that the exposure is not significant and we have upgraded the stock."

Mr Marshall said Myer also looked good.

Despite posting an 8.8 per cent decline in half-year profit this week, Myer's share price surged another 4 per cent yesterday to close the week up 6.65 per cent.

The nuclear woes in Japan saw uranium shares tumble.

Despite rallying yesterday, Energy Resources of Australia was down 14.89 per cent for the week while Paladin was 23.89 per cent lower.

Fund manager Dale Gillham said uranium stocks faced a long road back.

"Some of the notable Australian uranium miners ... like ERA and particularly Paladin have been sold down heavily and are likely to remain out of favour with investors for some time," Mr Gillham said.

Austock's Michael Heffernan said resource stocks like BHP Billiton, Rio Tinto and Woodside were looking good value.