Another weak session for the ASX…Telstra & Oz Minerals in focus
Another day of selling for the ASX with the market now down -121pts from the 1st May high of 5956 to close today at 5836 – a drop of around 2% but hardly cause for concern just yet. We had a range today of +/- 58 points, a high of 5885, a low of 5827 and a close of 5836, down -40pts or -0.68%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Brace yourself however it was the Telco sector that was best on ground today courtesy of the ACCC decision that TLS does not have to share its rural network with rivals. According to the release, Vodafone had pushed for the network to be declared because Telstra has the widest network coverage in Australia, which allows its customers to stay connected across most of the country. Having the network declared would have allowed the customers of rival operators to maintain reception beyond their provider's network. The decision is a major win for Telstra, and rightly so given they’ve toiled away to build the network over time …we’re long Telstra (TLS) and happy with today’s decision.
Telstra (TLS) Daily Chart
On the other end of the spectrum, Oz Minerals (OZL) was weak, down by ~6% on the session as it was caught up in the downdraft of a global ‘growth’ sell off. The questions is, do we hold, sell or increase our current exposure? Given our 17.5% holding in the sector we don’t really see merit in upweighting in the sector, however on the same note, we’re very reluctant to cut a stock that is extremely cheap and one we would step up and buy now if we didn’t already have exposure. It’s obviously easier said than done, however the best investment outcomes prevail when you look at the merits or otherwise of the underlying investment, rather than the P & L of a position. Worth doing now for OZL!
The very good Resource Analyst at Shaw and Partners put out a report this morning that is worth ‘stealing’ a few charts from this afternoon.
….and here we have price versus NPV (or underlying value) which highlights the value in OZL….
Have a great weekend and watch out for the MM report on Sunday,
The Market Matters Team
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Market Matters Afternoon Report 4th May 2017
