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 overcomes NAB weakness, financials slump, gold miners surge again
The financial sector was the biggest detractor on Thursday, falling 2.5 per cent on the back of a weaker than expected profit result from the National Australia Bank (ASX:NAB). Despite the weakness, the S&P/ASX200 managed to fall just 0.1 per cent, with almost every other sector finishing higher, led by property which gained 2 per cent on a further weakening of bond yields. The standout by far was the gold mining sector, with Evolution (ASX:EVN) gaining 7.2 per cent amid a further improvement in the price of gold bullion as it appears rate hikes are set to end. Returning to NAB, shares finished 6.4 per cent lower after management delivered a cash profit increase of 17 per cent, but flagged dual challenges of higher competition in lending along with increasing funding costs. The net interest margin appears to have peaked in December 2022, as the US banking crisis sends bank funding costs higher. The dividend was increased to 83 cents per share but remains below pre-COVID levels.
China production slows, Healius rebuffs ACL offer, Magellan outflows continue
Shares in embattled fund manager Magellan (ASX:MFG) managed to gain 3.4 per cent despite the company reporting another $2.4 billion in outflows, primarily from institutional investors. This took the managers assets down to just $42.7 billion after peaking above $100 billion. Healthcare group Healius (ASX:HLS) managed a positive finish to the day after the company rebuffed a $2.67 per share takeover offer from Australian Clinical Labs which management suggests comes at a discount to the prevailing share price. The challenge for the global economy remains real, as the US banking crisis looks set to take another US bank in PacWest, while Chinese manufacturing activity fell back into contraction in April. Energy remains a key focus of investors, with the oil price falling close to 7 per cent in Asia as the threat of a US recession hits demand, however the likes of Santos (ASX:STO) managed to deliver positive return finishing 1.9 per cent higher.
US markets book four straight losses, regional banking crisis expands, Shopify, Zillow outperform
All three US benchmarks finished weaker on Thursday, led lower by the Dow Jones, which fell 0.9 per cent on a further worsening of the banking crisis. The latest banks to be embroiled in the liquidity issues were PacWest (NYSE:PACW) whose shares fell 50 per cent during the session as managed seeks strategic alternatives including a sale. Shares in Western Alliance (NYSE:WAL) also fell by 28 per cent on lending troubles. Experts are now predicting rate cuts before the end of the year, with the latest rate hike actually sending bond yields lower. Shares in online e-commerce business Shopify (NYSE:SHOP) gained more than 20 per cent after the company announced the sale of its logistics division along with a more than 15 per cent increase in revenue as the sector looks set to recover. Shares in online real estate platform Zillow (NYSE:ZG) also outperformed as the company continues it’s shift back to the core business of advertising. Sales beat expectations by more than 10 per cent with the real estate losses beginning to taper.
