The alternatives sector is unique in that it’s largely defined by what it’s not. Accordingly, how you fit alternatives within your existing asset class structure will depend on relativity, and how the investments interact with the other asset classes according to Atchison’s Kev Toohey.
The private markets juggernaut is one that has also thrown up a wealth of data that other players can use to sharpen up due diligence when making their own investment decisions – especially in the growing secondaries market.
Financial Planner’s morning report – Tuesday
It’s heating up……
The ASX 200 (ASX:XJO) closed above 6,000 points for the third straight day, despite falling 0.7% for the session. Technology was the only positive sector with the major miners the biggest detractors, BHP Group Ltd (ASX:BHP) and Rio Tinto Ltd (ASX:RIO) down 1.7% and 1.0% respectively, amid signs of a rebound in Brazilian exports reported by Vale S.A (BVMF:VALE3).
Chinese shares added to last week’s 7% gain, with the Shanghai Composite up 5.7% on Monday, as an influential newspaper suggested the Communist Party valued a strong bull market for equities; is the People’s Bank of China, following the Bank of Japan’s lead?
The unstoppable march of the technology sector continued with the Nasdaq adding 2.3%, the S&P 500 1.4% and both Amazon Inc. (NASDAQ:AMZN) and Netflix Inc. (NASDAQ:NFLX) hitting new all-time highs. Digital payments process, Square Inc. (NASDAQ:SQ) rallied 10% on the back of expectations it can grow to dominant the direct deposit market; anyone who has used the hardware would know user friendly it is.
The markets are clearly focusing on any good news, like German manufacturing orders recovering 10.4% in May, yet still 29.3% down on February’s level; in my view this should be of concern to all investors and now is the time to ensure your portfolio is well diversified.
It’s not over yet
Creditors of Virgin Airline Holdings Ltd (ASX:VAH) are said to be considering their options with the Takeover’s Panel in an effort to recover more than the 10-20 cents in the dollar valuation under Bain Capital’s winning bid; once again reiterating that debt holders are the real owners of any business.
Regenerative medicine group Mesoblast Ltd (ASX:MSB) jumped another 11.3% after receiving approval to expand its Remestemcel tests to children. Event Hospitality & Entertainment Ltd (ASX:EVT) which owns a network of cinemas and both the Rydges and QT hotel chains, announced its dividend would be cut but they had successfully accessed a further $205 million in debt; it’s clear the company is facing an existential crisis with more debt not necessarily the best course of action.
The total capital, not debt, raised in June was $26 billion with Qantas Airways Ltd (ASX:QAN) leading the way. After a quiet crisis Berkshire Hathaway Inc. (NYSE:BRK.A) announced the acquisition of Dominion Energy Inc. (NYSE:D) for $9.7 billion making a move into the storage and transmission of natural gas.
The good before the bad
Eurozone retail sales surged 17.8% in April, but are still below February’s numbers. The positive news was enough to send the Eurostoxx 50 1.7% higher, with only one constituent falling. The leaders were once again the major banks, including ING Groep NV (AMS:INGA), and the manufacturer of Mercedes cars, Daimler AG (ETR:DAI), on hopes of improving exports to Asia.
Australian Super announced that their aggressive Balanced option had finished the year in positive territory, delivering a financial year return of 0.52%. Given the quick turnaround from 30 June I’d suggest that the funds massive unlisted property, infrastructure and utility assets have not been fully repriced yet.
On the positive side, ANZ reported that job advertisements were up a further 42% in June, albeit some 41% lower than February; this should be a positive for the likes of Seek Ltd (ASX:SEK) and McMillan Shakespeare Ltd (ASX:MMS). Finally, the New York stock exchange welcomed its latest unicorn, with rental property insurer, Lemonade Inc. (NYSE:LMND) up 140% on debut.
The daily report is written by Drew Meredith, Financial Adviser and Director of Wattle Partners.
