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.
ASX shares update; US markets continue to fall
US markets continue to fall, ASX to open lower, rent collections improve, payroll data
The ASX 200 (ASX:XJO) continued its recovery, adding 1.1%, with every sector but Consumer Staples finishing higher.
Healthcare was the highlight once again, CSL Ltd (ASX:CSL) continuing to see support following yesterday’s announcement of production agreements for COVID-19 vaccines, finishing 2.1% higher.
Payroll data has reiterated the issue facing the Australian economy, with Victorian jobs falling 2% in August as the rest of Australia gained 0.1%.
Further pain is likely ahead as businesses await the announcement of a support package from the Victorian Government with retailers facing lockdown until November.
Despite the lockdowns, Westfield shopping centre owner Scentre Group (ASX:SCG) reported that rent collections were 86% in August, well above the lows of 28% in April.
Analysts noted that Vicinity Centres (ASX:VCX) and GPT Group (ASX:GPT) are the most exposed to Victorian retail, with 52% and 38% of their assets located in the state; all but guaranteeing continued weakness in their share prices.
The sector is clearly a potential recovery play, with timing the most important consideration for investors with a high tolerance for risk.
Time to break up with China? First State Super trumps Uniti
The analysts’ predictions are coming thick and fast post reporting season, with Citi updating their GDP forecasts in light of the Victorian ‘roadmap’.
They now expect a third quarter of contraction, down 1%, based on the assumption that restrictions are released as outlined. US giant Jefferies reiterated the point I raised yesterday, that investors need to be wary of indirect exposures to China.
They estimate some 55% of the ASX 200 (ASX:XJO) would be impacted by a continuing weakening of our trade relationship, expanding from wine and grain, into tourism and consumer products like Blackmore’s Ltd (ASX:BKL).
Uniti Group Ltd (ASX:UWL), known as Vocus 2.0 for its strategy of acquiring multiple broadband and wireless businesses, has been trumped by First State Super in their latest target, Opticomm Ltd (ASX:OPC).
First State Super lobbed a $5.85 bid sending the share price up 10.1% for the day. Quite a result for company that installs fibre in new housing estates, I’d suggest UWL will increase their offer.
Nasdaq at a four-week low, valuations in focus
The selling resumed in the US with the NASDAQ falling 4.1%, taking the three day loss to 11%, and the S&P 500 a more conservative 2.8%. It is all about technology, with the sector finally moving to reality after reaching multiple all-time highs in recent weeks.
Telsa Inc. (NASDAQ:TSLA) fell 21% in a single session, Apple Inc. (NASDAQ:AAPL) was down 6.7% and vaccine developer Moderna 13.2% after announcing they would not rush a product to the market without ensuring its safety.
The selloff comes despite a lack of any real news, suggest it is more likely a bout of profit taking as markets had moved ahead of themselves, particularly with the backdrop of spiking COVID-19 cases around the world.
European markets were similarly weak as PM Boris Johnson once again heightened the risk of a ‘no-deal’ Brexit, the energy sector was among the hardest hit, with the lack of any trade agreement a worst-case scenario.
Expect Australia’s oil and gas and IT sectors to perform poorly today.
