Australian Investment Blog

Have the market darlings had their day? One of the major takeout’s of the last week has been the fickle nature of the stock market towards different sectors as it swings from love to hate and back again, often with no apparent reason; this week everyone loves resources after years in the wilderness. The chart below shows how local retail stocks almost became a joke in the market back in 2012 but then they staged a solid unheralded ~65% rally while the ASX200 has struggled to gain just 10%. We can assure you that not many brokers / clients / fund managers liked retail stocks back in 2012. As we often say look beyond today for at least 6-12 months and IGNORE the newspapers. Australian Retail Index Two amazing success stories of the last 18 months have been Bellamy’s (BAL) + Blackmores (BKL). Both have enjoyed the explosion of baby formula & Vitamin sales into China. The ducks have been perfectly aligned for these two solid companies, including the Chinese decision to abolish their one child policy. The one child policy has had (as it was intended to) a big impact on population growth in China as the below chart outlines Chinese Population Growth It also means that the Chinese population has been ageing, fairly dramatically since the 1980s as this chart highlights Chinese working age population – showing aging demographic The abolition of the one child policy will clearly have a large impact on demographic trends in China’s, and ultimately, more babies will be born in the coming years. There have been many stories in the press of Australian living Chinese buying all the baby formula stock from local supermarkets and then on selling through eBay or sending directly to China - certainly reinforcing the demand aspect for their products. However it also echoes of panic buying that often accompanies tops in stocks.
Show more...