Why are shares in ASX Ltd (ASX) falling?
We had previously written favourably about the ASX Ltd (ASX) back in March here, adding it to the Hitlist with the conclusion being that the defensive earnings & income were attractive for the Income Portfolio. While we had not pulled the trigger and bought the stock, we were gaining more confidence that the worst could be behind the market operator, which was the clear impression we got from the company’s last update (before yesterday). We were clearly not alone in this view with the stock advancing ~10% in April after the new CEO Helen Lofthouse had talked more favourably about the progress being made across the organisation. This positive tilt seemed to evaporate yesterday as they outlined a big uptick in cost growth and reduced their payout guidance, meaning lower dividends from here.
It reminds MM of what happened at Elders, where the Chairman was talking very favourably about market dynamics, pumping up the tyres of the market, only to disappoint. The reaction to these disappointments is far worse as there is also a loss of credibility that takes time to repair.
- Higher costs, lower payouts, and mixed messages have led us to remove the ASX from our Income Portfolio Hitlist.
