Market Matters Afternoon Report Friday 29th July 2016

Afternoon Report 29/07/2016

Market Matters Afternoon Report Friday 29th July 2016

Good Afternoon everyone

Market Data

What Mattered Today

Apart from individual stocks moves that we’ll discuss shortly, the Bank of Japan was the main game in town today and although they expanded monetary stimulus through a modest increase in purchases of ETFs, they didn’t expand their base monetary target, nor did they speed up the pace of purchases for other assets, like bonds. The market was pricing a BIG measure and seemed to be a case of buy the rumour / sell the fact. When such plans are known knowns, it takes a big beat / surprise to get the market excited. We didn’t see that today…

On the ASX, we had a range of +/-35pts. 5536 low, 5570 high and a close at 5562; up +6pts or +0.1%. One of our holdings – Henderson Group (HGG) reported in London overnight and although they missed on the net profit line, other parts of the result were pleasing. The stocks rallied $0.05 to close the session at $4.09.

ASX 200 Intra-day chart

As we wrote this morning….Henderson reported overnight, and the result regarding earnings was lower than expectations – largely a result of weaker than expected management fees and performance fees, however, these were largely offset by lower costs. Interestingly + pleasingly, 2Q institutional flows were positive, and the CEO made some reasonable commentary, saying ‘the impact of the surprise BREXIT will only last a few quarters.' The result concerning profit was a miss, but not huge and the stock has been sold down a long way since BREXIT.

Henderson Group (HGG) Daily Chart

Most analysts today have left current earnings numbers unchanged. However, we see some upgrades to FY17 & 18.

Below is the table we’ve tracked for some time now. HGG, MQG, and CSL the three stocks in our portfolio that were impacted by BREXIT. HGG and MQG we owned prior, however, averaged in on the panic selling while CSL was bought on the BREXIT imposed weakness. Interesting to think about the recovery that we’ve seen and the concept of buying panic. We tend to do it, go against the grain, and it generally pays dividends….BIG moves from the lows as shown in the table below (as @ 2.29 this afternoon)

Origin Energy (ORG)

Delivered a soft set of production numbers today in aggregate. However, it's more about the prices achieved than the actual production and sales volumes…Here’s the overview from today’s release;

…..and here’s current consensus on the stock….$6.28 the average consensus target v the stock trading around $5.45

Origin Energy (ORG) Daily Chart

Sectors

Source; Bloomberg

ASX 200 Movers

Reporting this week

Reporting season kicks up a notch next week with Suncorp (SUN) on the 4th of most interest

NPAT = net profit after tax (consensus numbers)
EPS = earnings per share (consensus numbers)
DPS = dividend per share (consensus numbers)

Select Economic Data; Stuff that really Matters in Green

What Matters Overseas

Look out for the Weekend Report out Sunday morning

Regards,

The Market Matters Team

Level 12 28-34 O'Connell St

Sydney NSW 2000

All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 29/07/2016. 5:00PM.

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