Viewpoint: Bullish
This $42bn goliath of the sector has created a very appealing integrated commercial and industrial property business that’s top of most analysts pick for the sector – we agree and have been looking for good risk / reward entry opportunities. The stock looks great and we can see another 10% upside into Christmas / 2022.
While Chinese property developer Evergrande captures the headlines around the world, in both the financial & everyday press, the global real estate index has only slipped a few percent from its all time high. The Chinese giant may have 1 million unfinished homes making it a very real and large problem for Beijing, and companies linked to the construction industry…
Longer dated US bond yields have been drifting since late March, but we believe the longer dated US 10 & 30-years are “looking for a low” and should turn up shortly which should coincide with outperformance by the value sector over the growth names.
US stocks recovered some of their recent 5-6% correction overnight, we remain bullish moving forward but believe the aggressive rally from the March 2020 is maturing and we could be set for some classic “3 steps forward 2 back” price action.
The Insurance Sector has been struggling of late with Melbourne’s earthquake compounding matters. MM is long IAG but we’re not looking to increase our exposure into the current weakness.
Lithium producer PLS continues to follow our roadmap so perfectly that we felt compelled to again outline our view moving forward, especially due to its high correlation to IGO:
Yesterday MM elected to increase our exposure to OZ Minerals (OZL) in a coin toss between the copper miner and nickel producer / battery storage company IGO. We remain a keen buyer of IGO into further sector weakness down towards $8.50 but just in case we’ve seen the worst of the Evergrande effect we tweaked our Flagship Growth Porfolio up the risk curve.
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..
At this stage we’re comfortable with our positioning but if we are correct into 2022 subscribers should expect a noticeable migration down the risk curve into strength e.g. less resources and more healthcare.
Glencore (GLEN LN) – we have been flagging Glencore over recent weeks, we are keen buyers of this diversified miner below GBP300.
