Archives: Reports
A strong day out for the index with gains in technology and energy leading the way while Healthcare and Materials were the main laggard, though still managing to eek out gains of ~0.2%. Talk out of Fed meetings in the US was the main topic on investors’ minds today while Evergrande took a back seat. The embattled Chinese developer saw shares rally 10% in Hong Kong today as Government support seems to be on its way.
Wednesday saw the ASX200 rally strongly from early sharp losses after the PBOC (China’s central bank) injected more Yuan than anticipated into its banking system coupled with embattled property group Evergrande announcing it would make an interest payment today – the latter is a small step along a long journey but the action out of Beijing implies the communist party intends to “manage” the situation. The market reaction wasn’t so much one of huge “risk on” as opposed to a strong bounce / sigh of relief after a tough period with the recovery most noticeable in the large cap iron ore names:
The market was down early however news that China’s central bank boosted its daily liquidity injection plus confirmation that Evergrande had reached agreement with bondholders on a repayment due Sept. 23 got the buyers back out of hiatus and the market pushed higher.
MM is adding to OZL in the Flagship Growth Portfolio
The ASX200 staged a strong recovery yesterday after initially taking Septembers sell-off to 343-points / 4.6%, coincidentally testing our 7200 target area in the process. Ultimately Tuesday was a frustrating session for MM as we sat poised to increase risk into the pullback but our targeted purchases all fell short of our ideal levels discussed in recent reports. We must always remember that investing is rarely a perfect science and our main focus running into October will be more around whether MM pays up…
While the market was sharply lower overnight there was no sign of panic in the selling, volatility stayed low, credit spreads hardly moved and equities saw a large reversal in the last 30mins of the session. That positive undertone became obvious in Oz today with the market seeing the worst of it early on, the ASX200 hit key support ~7200 before bouncing +80pts to finish up on the day – a very good effort really and a sign that underlying strength remains alive and well in this market.
The ASX200 was hit hard on Monday falling by more than 2% on very broad based selling. The only pocket of strength coming from the utilities sector which benefited from yet more corporate activity from cashed up foreign investors, this time Canada’s Brookfield took aim at AusNet Services (AST) which is involved in electricity & gas distribution in Victoria elevating the stock by ~20%. There is certainly cash around for critical infrastructure assets that can lock in long term funding at attractive rates.
The ASX was hit ~2% today on concerns largely stemming from China, firstly towards the rout in Iron Ore prices which were down another ~10% today in Singapore if we look at shorter dated contracts (more on this below) while the Evergrande fiasco is also making people nervous. Today (and over the weekend) the linkages to a Lehman Brothers type moment have been everywhere and that’s clearly created some nervousness.
The ASX200 only slipped 3 meagre points last week but if you were overweight the iron ore sector it would have felt very different as Beijing’s ongoing clampdown on steel production, courtesy of their migration towards lower emissions, drove the price of the bulk commodity lower. Come Friday afternoon iron ore had more than halved in just 1-month hammering the likes of Fortescue Metals (FMG), RIO Tinto (RIO) and BHP Group (BHP) in the process. We have a few takeout’s from this seismic repricing over recent weeks:
The ASX200 closed last week little changed but under the hood the market was anything but quiet on both the stock & sector level. The influential banks, healthcare and IT names were firm while the resources and utilities struggled but on the week it was almost impossible to look past the collapse of the markets major iron ore stocks, the more dependent the company is on the bulk commodity price for its revenue the harder it fell
