Ten Cap Alpha Plus is confident domestic economic conditions will strengthen into the second half of 2025, supported by monetary easing, resilient employment and rising household incomes.
In its Alpha Plus Monthly Update – August 2025, the investment manager said it remains positive on Australian equities despite September often being a seasonally weaker period as markets consolidate from strong gains over July and August.
“While August proved a hard month to navigate, we are confident that the domestic backdrop will improve into 2H25, supported by rate cuts, a solid labour market and rising real consumer incomes,” lead portfolio manager Jun Bei Liu said.
The report noted that these factors should provide a stronger tailwind for cyclical and rate-sensitive areas that have been under pressure from high inflation and a decline in real income growth in recent years.
It added that the Reserve Bank of Australia’s (RBA) ongoing easing cycle is a key driver of improved sentiment, lowering funding costs and helping to stabilise consumer spending after several years of elevated inflationary pressures.
Moreover, signs of stabilisation in China are also highlighted as a potential catalyst for resource companies.
“We think there are signs of some green shoots coming from China which should add a tailwind to more sustained resource performance,” Liu said.
While the firm described the August reporting season as the most volatile on record, it stressed that the results were broadly consistent with expectations for an economy moving through a rate cut cycle and growth at trough levels.
“While it was a lot to digest, we saw nothing that threatened our bullish market view and/or that would mark an end to the bull market,” Liu added.
The update further noted that corporates have shifted into “protection” mode, using margin gains to offset softer sales and project earnings, while also pointing to a willingness among investors to rotate out of expensive defensives into cheaper names, potentially broadening the equity rally.
Looking ahead, the firm stated that September could bring short-term weaknesses as investors take profits and rebalance positions.
However, Liu added: “Any pullback in September is likely to be tactical rather than structural, given the supportive backdrop of rate cuts, improving real incomes, and early signs of stabilisation in China.”
Ten Cap asserted that this environment could provide attractive entry points for investors, particularly across domestic cyclicals, structural growth names and high-quality resources.
“Our playbook remains unchanged: buy into weakness, maintain valuation discipline, and stay focused on earnings visibility and catalysts into FY26,” Liu said.
Along with its macro assessment, Ten Cap recorded a strong month of returns.
The Alpha Plus Fund rose 4.01 per cent in August, outperforming the ASX 200 Accumulation index by 91 basis points. Over the first two months of the financial year, the portfolio has gained 6.90 per cent.
