Home / In Practice / Financial Planner’s morning report – Thursday

Financial Planner’s morning report – Thursday

In Practice

The end is near

The Australian economy is now experiencing its first recession in close to 30 years. The initial impact of the COVID-19 outbreak sent domestic GDP down -0.3% in the March quarter, with experts predicting a contraction of as much as -8.4% in June. But what does it mean? Clearly nothing as markets continue to rally, the ASX 200 (ASX:XJO) ending up 105 points or 1.8% for the day; it is now down just 11% for 2020.
Australia’s contraction was among the ‘best’ in the world, beating the likes of the US (-1.3%), UK (-1.9%) and the EU (-3.75%), thanks primarily to our continued reliance on construction and mining exports. The global rally also continued with The Dow Jones adding 2%, four stocks rising for everyone that fell and both banks like JP Morgan (NYSE:JPM) (+5.4%) and airlines, Boeing (NYSE:BA) (+12.9%) leading the way. I can’t help but fell a strange disconnect between the issues facing the global economy and the markets charger ever higher.

Questionable decisions

Australia’s Clime Investment Management (ASX:CIM), which operates its own managed fund products and financial advice decision has been identified as the unlikely buyer of financial services licensee Madison Financial Group, for $4.5 million. This will add compliance, administration and technology delivered to financial advisers to their diverse range of services. UAC Energy (UAC:BKK) lobbed a takeover bid for Infigen Energy Ltd (ASX:IFN), one of Australia’s few listed renewable energy providers focused on wind.
The offer was $0.80 or $777 million, with the share price immediately trading in line. Given the uncertain market, I’d suggest shareholders approve the deal despite protestations from the board. Chinese internet giant Net Ease (NASDAQ:NTES), has flagged a re-listing on the Hong Kong stock exchange, seeking more capital to expand internationally, despite some 89% of revenue coming from China 10 years after its initial global expansion.

Free money?

Amazon Inc (NASDAQ:AMZN), was the latest business to head to markets for more debt to fund its operations, managing to secure a three year loan at a rate of just 0.4%. This comes as Australian property experts predict that mall values could fall as much as 30% in the short term as rental receipts fall precipitously; not a good outlook for the likes of Scentre Group (ASX:SCG), Vicinity Centre’s (ASX:VCX) and Unibail-Rodamco-Westfield (ASX:URW).
The highlight of the day was no doubt the unexpected growth in Chinese PMI’s or leading economic indicators, with services moving into growth from 47 to 55 and manufacturing 54 from 47, suggesting the worst may be over, particularly for Australia. This impacted the likes of Northern Star Resources (ASX:NST) and Newcrest Mining (ASX:NCM), in my view the AUD rally will be short-lived as the real issues facing the economy come to light.
The daily report is written by Drew Meredith, Financial Adviser and Director of Wattle Partners.

  • Print Article

    What paraplanners want: How advisers can work better, ditch the double-ups and make staff smile

    It’s not a corner office or a fatter pay packet at the top of paraplanners’ collective wish list, but something that is much more beneficial to financial advice practices and the clients they serve.

    Tahn Sharpe | 30th Nov 2023 | More
    Number of wealthy investors not seeking advice ‘persistently’ high

    Even though there are thousands more HNW investors in the country this year, they are a lot less willing to pay the going rate for financial advice according to Praemium and Investment Trends.

    Tahn Sharpe | 27th Oct 2023 | More
    Advisers offered ‘$50K bump in salary’ as talent poachers circle

    It’s not just money being thrown at financial advisers, with title changes, more responsibility and “other added benefits” also on offer according to financial services recruitment teams.

    Tahn Sharpe | 19th Oct 2023 | More
  • Popular posts: