Subscribers Questions
Morning All,
We are sorry for today’s late report, we had a coffee spillage on our keyboard!
Thanks again for the volume of subscriber questions; it’s great for Market Matters to receive magnificent subscriber engagment. We actually had more questions this week than during the US election! Such a large response, maybe due to the rising market, but thanks again! The markets are in an exciting position for next few years.
ASX200 Weekly Chart
Question 1.
"Hi, MM I have been watching APA Group (APA) as the yield play unwinds and I would like your thought and when would be a good time time to start averaging on them, or if they have further to fall. Any other comments would be apciated to" - thanks Paul.
Thanks Paul, APA the natural gas operator has fallen 27.6% as the yield play has been sold off aggressively - very similar to Sydney Airport (SYD) and Transurban (TCL). We bought TCL recently, but after its strong 6% bounce; we are more of a seller than a buyer. APA has now bounced back to strong resistance at $8. Technically we are now neutral, but volume over $8.25 would generate buy signals.
Question 2.
"Hi Team, Any thoughts on the Watermark IPO" - King Regards Mic.
Morning Mic, The Watermark Global Funds is a market neutral fund that relies on the stock picking skills by its fund managers. However, due to 1-2% of the valuation being taken up in fees and often these vehicles trade below discount to NTA, we would rather review this after its IPO
Question 3.
"Hi Guys, Any view on Medical Develoment (MVP)." - Thanks Andrew.
Medical Developments International (MVP) develops and manufactures pharmaceutical drugs for the healthcare market. The stock has corrected over 37%, in line with the weaker healthcare sector. Technically we can accumulate at current levels, with stops under $%3.90 - we like healthcare to recover from current weakness.
Medical Developments (MVP) Monthly Chart
Question 4.
"After reading the Market Matters portfolio position email, for the investors looking medium to long term would it be considered prudent to sit on the sidelines for a few months in cash now, given MM is looking to sell out into cash entirely at some point early to mid-2017, and re enter market probably on the dips? The outlook doesn’t look great in the near to medium term if a strong cash position is being considered." - Kind Regards, Phil
Hi Phil, for investors in cash we would not be buying now, but if you’re ‘long’, as we are from decent levels, we prefer selling into strength. It’s not long until we hit the seasonally strong period for stocks. à From mid-December, the ASX200 has rallied ~2% into the end of the year over the last 20-years. We do anticipate having much higher cash levels in January 2017. Hence, we would be geared at today’s levels. Note we are being patient short term, prior to any aggressive selling.
Question 5.
"Question for MM, maybe for next week …The insurance sector … I followed your advice a few weeks back and got some QBE under $10 which at the moment is looking good on a 3 month outlook, though the stock is only consistent in failing to deliver. What about others? AMP, Suncorp (yes $15.50 looks miles away), IAG? I am perhaps overly long financials about 20% QBE, 20% Macquarie and 10% Bank of Queensland. Views on sector allocation?" with - Hugh
Hi Hugh, Thanks for another question. Simple answer - we like QBE, SUN and BOQ at present, but would not be adding AMP and IAG. We believe we have the best exposure to the sector(s) - 50% in financials feels about right at present – boring, but we'd be staying as you are.
Overnight Market Matters Wrap
- A quiet, but positive half day session was experienced in the US share markets last Friday, as investors reeled in the after effects of celebrating Thanks Giving.
- The Dow rallied 69 points higher (+0.4%) to 19,152, while the S&P 500 closed 9 points higher (+0.4%) at 2,213.
- Domestically, the ASX 200 is expected to open with little change this morning, above the 5,500 level. However, with oil down 4% over the weekend, a negative bias is expected to be seen today.
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