Cameron Blanks from Pacific Equity Partners speaks to James Dunn at The Inside Network’s Alternatives Symposium in Melbourne on looking through the cycles and catalysing growth. The Inside Adviser
Duncan Farley from RBC Bluebay Asset Management speaks to Giselle Roux at The Inside Network’s Alternatives Symposium in Melbourne on macro trends that matter more. The Inside Adviser
ASX drops 1.1 per cent, global worries weigh on index
Sell off continues, bond yields spike, Smartgroup under offer
The S&P/ASX200 (ASX: XJO) recovered during the session finishing 1.1% lower after falling as much as 1.5%.
The weakness came from a negative global lead with long-term bond yields spurring investors to act on comparatively high equity market valuations.
In Australia, the 10-year bond yield has jumped from close to 1.0% in August to 1.5% today.
Tech was hardest hit both overseas and domestically, with the most highly valued sector falling 2.4% dragged lower by Afterpay (ASX: APT) and Nearmap (ASX: NEA) down over 4 and 5% respectively.
Four in five stocks finished lower with Smartgroup (ASX: SIQ) are rare gainer, the stock jumping 18% after receiving a takeover bid.
The bid came from a consortium including private equity group TPG Global, Potentia and Aware Super, which values the company at $10.35 per share.
Smartgroup undertakes salary packaging and leasing for corporates, so the offer seems opportunistically timed, representing a 38% premium to the closing price.
Orica downgrade, gold outperforms, home loan limits to cap property, APA offer extended
Shares in APA Group (ASX: APA) and AusNet (ASX: AST) outperformed the market after APA’s offer for the latter was extended as their due diligence period came to a close.
The mining sector continues to take the brunt of the sell off, particularly the less diversified, faster growing names with BlueScope Steel (ASX: BSL) and Mineral Resources (ASX: MIN) both falling around 5%.
Explosives distributor Orica (ASX: ORI) added 3% despite announcing a further $345 million hit to net profit for the year ending 30 September.
Management confirmed a write-down on the value of previous acquisition had offset the gains on non-core land sales.
Whilst higher interest rates tend to be positive for the banking sector, allowing them to generate more profit on their variable loans, news that APRA is considering regulating the amount of leverage borrowers can accept could put a halt on the property boom.
There are suggestions that the Government is growing concerned about the surging debt to income ratios of Australian lenders, which are high even on a global scale.
Gold miners were the rare outperformers, with Newcrest (ASX: NCM) gaining 1.9% as investors turned back to the precious metal and the AUD fell.
Correction over? Tech continues to fall, defensives in favour, ASX to rise
US markets appeared to turn the corner overnight, with the Dow Jones and S&P 500 finishing 0.3 and 0.2% higher respectively.
The Nasdaq continued its weakness, however, falling 0.2% as investors returns to more defensive names.
The trigger remains a ‘reset’ of the market due to the significant short-term jump in higher bond rates, however, it is difficult to predict what happens from here with supply side inflation combining with a surge in energy prices having unexpected impacts on the economy.
The country continues to benefit from surging home sales, which were four times higher than expected, up 8.1% in a sign that supply is returning to the market.
Shares in Evergrande (HKG: 3333) surged 15% as the companies begins selling off assets, in some cases to state-owned entities in order to ensure it meets impending repayments.
