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ASX market update; fifth straight month for the ASX

Weak open ahead, Fifth straight month for the ASX, IOOF loads up
Defensive assets

Weak open ahead, Fifth straight month for the ASX, IOOF loads up

The ASX 200 (ASX:XJO) finished Monday near its low, down 0.2%, yet the market was able to finish August 2.2% higher.

The result marketing the fifth straight month of gains and a 33% rally from the March lows; those who sold amid the volatility have now truly been left behind.

The monthly gains closely reflected the recovery of US markets, with the digitally enabled IT sector up 15% behind the likes of Afterpay Ltd (ASX:APT) and ASX Ltd (ASX:ASX) and the Consumer Discretionary sector up 11.6% driven by the e-commerce powered JB HiFi Ltd (ASX:JBH) and Kogan Ltd (ASX:KGN).

  • The biggest news of the day was the $1.6 billion IOOF Ltd (ASX:IFL) announcing the purchase of MLC Wealth from the National Australia Bank (ASX:NAB) for a price of $1.44 billion.

    The successful acquisition would result in a $510 billion superannuation, wealth management and advisery platform, the largest of its type in the country.

    In my view, the deal will take some convincing given the entire premise of the Royal Commission was on removing these vertically integrated institutions.

    China on the front foot, Pacific riding the current, Temple and Webster shows no signs of slowing

    The Australian beef and wine industries took another hit on Monday, after the Chinese announcement it would be launching an investigation into Government subsidisation of the domestic wine industry; with China our largest export market.

    This follows last week’s banning of another Australian abattoir as the Chinese seek to exert their position of strength and comes amid news the some 17% of Victorians are employed but with no work to do.

    Treasury Wine Estates Ltd (ASX:TWE) remained under pressure falling 0.8%. Pacific Current Group Ltd (ASX:PAC) the owner of the fastest growing boutique fund manager in the world, GQG Partners, added 1% after reporting a 21% increase in net profit to $25 million.

    Funds under management increased 52% to $93 billion with GQG Partners alone accounting for $19 billion of the increase.

    The result was a 40% increase in the dividend to 35 cents per share for the year.

    Online furniture retailer Temple and Webster Ltd (ASX:TPW) announced a 77% lift in active customers, a 74% increase in revenue for the year and a further 161% in the short period from July to 27 August; shares finished 18% higher.

    Buffet goes long Japan, Apple and Tesla push the Nasdaq higher

    The records continue to fall with US markets posting their strong August since the 1980’s the S&P 500 finished down 0.2% for the day but 7.2% higher for the month.

    It was a similar story for the tech driven Nasdaq, up 1% and 9.6% respectively behind another rally in both Tesla Inc (NASDAQ:TSLA) and Apple Inc (NASDAQ:AAPL), adding 12.6% and 3.2% after their stock splits.

    As another month of positive returns passes it’s more evident than ever that those relying on traditional ‘value-based’ investing has been left behind, with digital-enabled businesses leading the way post-pandemic; this trend is unlikely to cease anytime soon.

    Warren Buffets Berkshire Hathaway has announced another sweeping investment, adding substantial allocations to 5 mini ‘Berkshires‘ based in Japan.

    The holdings include trading houses, Sumitomo, Mitsui, Mitsubishi and Itochu, with the news sending the Nikkei 225 up 1.1%. This week sees European inflation data and Australian GDP on Wednesday.

    Drew Meredith

    Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.

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