José Luis González Pastor from Neuberger Berman speaks to James Dunn at The Inside Network’s Alternatives Symposium in Melbourne on sector opportunities amid evolving valuations. The Inside Adviser
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
ASX worst week since April, AMP under offer
ASX stumbles to worst week since April, AMP (ASX:AMP) under offer, Resmed (ASX:RMD) upgrades earnings
The ASX 200 (ASX:XJO) delivered its worst week since April, falling 3.9% after Friday’s 0.5% weaker close.
That said, it was a strong month given the background of uncertainty with the index 1.9% higher.
By far the news of the day was under pressure wealth manager, AMP Ltd (ASX:AMP) receiving a non-binding offer from Ares Capital to purchase 100% of the company.
The news sent the share price 19.5% offering some validation to those who have seen value in the company’s asset management and banking divisions.
Management confirmed the offer but also highlighted that they have received significant interest in each of their businesses, with hopes of a bidding war to come.
The other highlight was ResMed Inc. (ASX:RMD) who made the incredible pivot towards manufacturing ventilators in 2020.
The company reported a 37% increase in net profit to $184.4 million after ventilator sales spurred a 10% increase in revenue, to $751.9 million; shares finished 9.5% higher for the day.
US markets deliver second month of losses, big tech earnings mixed but Alphabet (NASDAQ:GOOGL) the leader.
It was a rough finish to the week, despite the strong GDP results, with the S&P 500 falling 1.2% and the Nasdaq 2.6% with the world’s largest companies all providing earnings updates.
The rough day sent both indices down 5% for the week and over 2% for the month, the second consecutive month of losses.
Given the backdrop of the impending election and over 100,000 COVID-19 cases in the US, some weakness was expected.
It was a mixed day for the technology sector with Apple Inc. (NASDAQ:AAPL) falling 5.6% after announcing a 20% fall in iPhone sales but revenue slightly ahead of estimates at $64.7 billion for the quarter.
Accessories, including the Air Pods remain the key growth driver, up 20.8% for the month.
Amazon Inc. (NASDAQ:AMZON) offered a more mixed result, with the cloud computing division up 29% and revenue slightly ahead of expectations at $96.1 billion for the quarter.
CEO Jeff Bezos did however flag higher costs and shrinking margins as COVID-related costs hit earnings.
Facebook Inc. (NASDAQ:FB) was among the hardest hit falling 6.3% despite overcoming a boycott of ad sales to beat revenue expectations by 10% hitting $21.47 billion.
In the case of Facebook this 20% quarterly sales growth was considered a slowing! Alphabet Inc. (NASDAQ:GOOGL) was the winner of the day, reporting revenue of $46.2 billion driven primarily by its booming YouTube division where ad sales grew 32% as the world turned digital during the pandemic.
Not quite out of the woods, Australia a global highlight, resilience is key
The key takeaways from Melbourne’s first week out of lockdown, are that we are not quite out of the woods yet.
Despite the great news and feeling of normality returning, border closures continue to dominate headlines as does the second wave hitting Europe and the US.
This week offered a reminder that Australia remains an attractive hunting ground for companies, with Coca-Cola (ASX:CCL), AMP and Link Administration (ASX:LNK) all under offer from global players.
The common trait for each of these businesses was resiliency amid the pandemic.
Whilst they don’t offer the incredible growth rates of the popular technology companies, it is clear that slow, consistent growth will only become more valuable in the years ahead.
The question is who’s next? In my view, any company with consistent, non-cyclical recurring revenue will be popular, particularly given the incredibly low cost of debt.
