18 September 19
Gold & IT stocks best on ground, Energy stocks weigh (CNI, CMA, QAN)
18 September 19
Gold & IT stocks best on ground, Energy stocks weigh (CNI, CMA, QAN)
18 September 19
Income Report: Stepping up and fading the recent move in bond yields – includes portfolio buy-sell alerts (SKI, TCL, FLT, WHC, EHE)
18 September 19
Overseas Wednesday – International Equities & ETF Portfolios (GDX US, NCM, BABA US, TTD US, PSH NA, BAC US, RY CN)
17 September 19
RBA still banging the lower for longer call on rates
17 September 19
Bond yields firm, oil surges should we “run” from growth to cyclicals? (RHC, NCM, BSL, WPL)
16 September 19
Crude spikes, Bellamy’s bid while Sims scraps guidance (BAL, SGM, BHP)
16 September 19
Subscribers questions (BHP, OZL, IIND, MSB, MGG, NCM, ASL, AWC, WSA, HLS)
15 September 19
Market Matters Weekend Report Sunday 15th September 2019
13 September 19
Tech continues to struggle
13 September 19
Does the Healthcare sector look poised to repeat 2018? (CSL, COH, RMD, ANN, PME)
The ASX200 was sold off relatively hard again yesterday finally closing down 48-points, registering very similar damage to an index based portfolio as on Wednesday. By the close every sector except the Telco’s had closed in the red with the Energy & Resources stocks coming under the most pressure led by Fortescue (FMG) and RIO Tinto (RIO), both of whom fell well over 3%, not a great surprise following iron ores massive gains and current minor consolidation.
Today is the last day of May and unless we see any major surprises the combination of the Liberal election victory and RBA’s ever increasing dovish stance looks set to produce a positive month up over 1%, shrugging off the usual seasonal weakness i.e. over the last decade the local markets fallen -2.8% in May followed by -1.8% in June. This has come as no great surprise to MM and our feeling remains a decent market correction will unfold later rather than sooner this year.
Overnight we saw Melco Resorts and Entertainment buy 19.99% of Crown Resorts (CWN) from James Packer for $1.76bn at $13, less than a 1% premium to the stocks last trade at $12.92. This appears to confirm a quick return by suitor Wynn Resorts is highly unlikely – goodbye $14.75! However further down the track with Mr Packer an apparent keen seller a full blown takeover by the new buyer may occur but the price feels likely to be significantly lower than Steve Wynn’s April (sort of) bid.
MM remains bullish the ASX200 technically while the index can hold above 6350, a break of 6450 will look great.
Overnight US stocks finally held their ground closing up +0.2% and the SPI futures are calling the ASX200 to enjoy a bounce of ~20-points, retracing half of yesterdays losses. BHP closed up 30c in the US even when iron ore, copper and crude oil all closed in the red.
NB When we talk about how BHP closed in the US its always relative to how it closed on the ASX and currency adjusted, hence the theoretical price it will open at 10am today.
In today’s report we are going to look at the Real Estate sector following Mirvac’s (MGR) announced $750m capital raising.
Firstly looking at “The Good, the Bad & the Ugly of the MM Platinum Portfolio”, Mays been a good month for the MM Portfolios and SMA’s – up 1.75% to yesterdays close. Unfortunately the Costa Groups (CGC) downgrade yesterday through a little cold water over things. I have briefly looked at 3 stocks today that both fit the profile and MM members have been questioning over the last few days.
1 Iluka (ILU) $9.91
The “good” - ILU has rallied nicely since we went long a few weeks ago at $8.55, happily the reasons for the position discussed at the time all remain intact. Now the mineral sands stock has broken to fresh 2019 highs we remain bullish initially targeting a rally towards $11 but a break back below $9.60 is likely to see us take our $$.
MM remains bullish targeting another 10% upside.
Iluka (ILU) Chart
2 Emeco Holdings (EHL) $1.86
The “bad” slot could easily have been taken by Pact Group (PGH) but we mentioned that culprit yesterday hence we’ve looked at the leaser of earth moving equipment EHL.
Yesterday’s large disappointment by CGC appears to have reignited some selling in stocks that experienced downgrades in 2019 as fears increased of a 2nd, or even 3rd to follow. However at this stage we still believe EHL is a potentially excellent turnaround story but like PGH we are watching this one carefully. The next month is generally a risk period for further downgrades across the ASX.
MM remains cautiously bullish EHL.
Emeco Holdings (EHL) Chart
3 Costa Group (CGC) $3.75
CGC was hammered almost 28% yesterday following its downgrade which we discussed in yesterday afternoons report but the selling felt too severe in our opinion. As I said last night “It felt like there was a large holder with an axe to sell the stock and the massive volume supports that thesis. Of the top five holders of CGC only Bennelong has been a major seller during calendar 2019. They’re also the major holder of the stock with 27m shares on board. Being a substantial holder, it will be interesting if we see any changes here over the coming day – we’ll keep you posted.”
MM added to our holding yesterday and in support I bought some raspberries for the kids last night – made me feel better!
NB We have said for months that we would add to our CGC ~$4 so this was not “hit and hope” stuff but simply following our plan.
MM remains bullish around $4 but its clearly high risk at the moment.
Costa Group (CGC) Chart
Is the Real Estate Sector approaching its zenith?
The Australian REIT’s are investment businesses that invest in and usually operate income producing real estate assets e.g. in the ASX200 Cromwell Group (CMW), Charter Hall (CHC), National Storage (NSR) and Shopping Centres Australia (SCP).
The sector has really enjoyed the post GFC environment of “cheap money” advancing over 150% , while the BRW Rich list out this morning also highlights the money made in commercial property over the past 12 months. However, technically we are now very wary that a decent pullback is on the horizon.
MM is neutral / bearish the REIT’s as an index following their impressive post GFC gains.
ASX200 A-REIT Index Chart
The Australian Real Estate sector as a whole includes a broader scope of stocks than just the REIT’s, it also includes the likes of Mirvac (MGR), Aveo Group (AOG) and Lend Lease (LLC).
Similarly MM is neutral / bearish the Real Estate sector as an index following their impressive post GFC gains.
ASX200 Real Estate Index Chart
Now moving onto a few stocks within the group to see if any nuggets of opportunity exist or signs that this sectors party is coming to an end, just as the picture of the respective indices suggests.
1 Mirvac (MGR) $3.01
Mirvac announced a substantial $750m capital raising this week as the pessimism towards housing declined, albeit slightly. The funding is intended for MGR to expand its build and rent business plus a couple of major inner city projects in Sydney & Melbourne.
The stock has defied the housing slump helped by its forecast that FY19 earnings will be 4% above the previous year. The stocks currently trading on a Est P/E for 2019 of 18x while yielding 3.75% unfranked. Boringly we see no decent risk / reward opportunity in MGR at present.
MM is neutral MGR at present.
Mirvac (MGR) Chart
2 Goodman Group (GMG) $13.28
Goodman Group (GMG) has been an enormous success within the ASX200 over the last few years basically doubling over the last 12-months. The appreciation in the integrated property provider is undoubtedly justified as we saw in the First Half of FY2019 a greater than 10% rise in operating profit to $465m. The shares are currently trading on a fairly rich Est P/E for 2019 of 25.8x while yielding only 2.33% unfranked.
The business has prospered from the greater customer demand for quality industrial centres close to high density living areas. Fundamentally we believe GMG is a great business but technically we feel the shares have rallied little too far too fast – we called it a sell ~$14 a few weeks ago and again and this is looking on the money at present, our initial target is ~5% lower.
MM is currently neutral to bearish GMG.
Goodman Group (GMG) Chart
3 Charter Hall (CLW) $4.90
CLW completed a $150m institutional placement early last month but the shares have continued to appreciate well above the placement price. The monies were used by the REIT to purchase Rockdale Plaza in NSW for $142m.
My concerns with CLW are to the potentially late cycle appreciation of the company’s assets – we’ve all seen what’s happened to residential real estate over the last 6-months. However, there are no technical sell signals while its Est P/E of 18.2x is not too demanding plus its 5.4% unfranked dividend remains attractive. Hence after liking the stock around $4 we are now neutral.
MM is currently neutral CLW.
Charter Hall (CLW) Chart
4 Scentre Group (SCG) $3.79
SCG has been an ugly duckling within the sector as its portfolio of shopping centres in Australia and New Zealand has not excited investors.
Comparatively the stocks cheap trading on an Est P/E for 2019 of 14.6x while the stock yields 5.85% part franked – great compared to bond yields.
MM is now neutral SCG after being bearish for the last 12-months.
Scentre Group (SCG) Chart
5 Lendlease Group (LLC) $14.26
Lastly developer / operator of both property and infrastructure projects LLC which as endured an awful year – the basic numbers are unexciting with the shares trading on an Est P/E for 2019 of 18x while the stock yields 3.3% unfranked.
Technically LLC is now 50-50 making this an easy leave alone, we want some better risk / reward before walking into this lion’s den.
MM is neutral LLC.
Lendlease Group (LLC) Chart
Due to our bigger picture view of the sector we intend to avoid the Real Estate space for the foreseeable future.
Nothing new with our preferred scenario the current pullback is a buying opportunity although we are only looking for a test of / slight new 2019 highs from US indices.
US Russell 2000 (small cap) Index Chart
No change again with European indices, we remain cautious European stocks but the tone is improving fast.
German DAX Chart
Overnight Market Matters Wrap
· The Australian market should end the week on a positive note, after a calmer, less volatile night on equity markets, with Wall St closing slightly higher, despite ongoing concerns about the US-China trade wars and its impact on slowing global growth. The three key Wall St indices closed between 0.2% and 0.3% higher after a late rally. Bond yields, however, continued to slide to near 20-month lows, with the ten year benchmark falling to 2.23%, which weighed on the US bank sector - Bank of America fell 2% and JP Morgan dropped 1%.
· Oil prices, plummeted 4% after a smaller than expected decline in US crude stockpiles, which fell around 300,000 barrels (vs expectations of a 900,000 drop). The benchmark Brent price fell US$3 to US$66.40/bbl, dragging the key energy stocks lower.
· The broader commodity market was mixed, with iron ore dropping 2.3% back below US$104/t, gold was about 0.5% higher at US$1293/oz and copper about 0.5% lower at US$2.65/lb. The A$ continues to hold above US69.1c despite expectations of a rate cut by the Reserve Bank next week of 0.25%. The chances of a rate cut were raised by the weaker than expected building approvals slump yesterday of 4.7%, led by a drop in both apartments and detached housing. The ASX futures are currently about 0.3% higher.
Have a great day!
James & the Market Matters Team
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 31/05/2019
Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The MarketMatters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports. Market Matters may publish content sourced from external content providers.
If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Financial Services Guide
Date prepared: Wednesday, 22 November 2017
Last update: Friday, 23rd April 2019
About this Financial Services Guide (FSG)
This FSG provides you with key information about a range of subscription services offered by:
Marketmatters Pty Ltd (Market Matters) Australian Financial Services Licence No. 488798 ABN (20 137 462 536)
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
T: 1300 301 868
E: [email protected]
In this FSG, “we”, us” and “our” refer to Market Matters.
Market Matters holds Australian Financial Services Licence No. 488798 (AFSL) and is responsible for any financial services that we provide to you.
This AFSL was issued on 8th September 2016.
The purpose of this FSG is to provide you with information about:
Market Matters operates a website, www.marketmatters.com.au (Website), where customers may, for the payment of a subscription fee, access certain financial information and general advice. In particular, the Website provides:
This FSG relates only to the Website Services.
What financial services we can offer in connection with the Website Services
As holder of AFSL number 488798, in connection with the Website Services we are authorised to provide general financial product advice to both retail and wholesale clients in relation to the following financial products:
The Website Services are comprised of general advice only. That is, none of the advice given on the Website or by provision of the Website Services takes into account any of your objectives, financial situation or needs (Your Personal Circumstances). Before acting on any of the information, advice or Website Services, you must consider the appropriateness of this information in light of Your Personal Circumstances and, if necessary, consult a financial adviser before making any investment decision.
If you are seeking to acquire a specific financial product or security, you should obtain a copy of and consider the Product Disclosure Statement or Prospectus for that product before making any investment decision.
The Website does not provide a trading platform or access to a trading platform. There is no ability to purchase or sell financial products through the Website.
How do I access these services?
You can access these services by going to www.marketmatters.com.au and following the prompts and steps required to sign up for membership. Please read all terms and conditions carefully.
Fees and benefits payable to us and our associates
The Website is a subscription-based service. A yearly fixed subscription fee is payable to Market Matters when you subscribe to the Website which will vary depending on the type of subscription for which you subscribe. At the date of this FSG, the yearly subscription fees are as follows:
Platinum: $1,238 for 12 months
Platinum: $1,993 for 24 months
Subscription fees vary from time to time and are provided on the Website.
The Website does not currently feature third party advertising. Market Matters reserve the right to advertise at a future time for which they may receive remuneration. Any such advertising will be independent of any other content on the Website.
All representatives of Market Matters (Market Matters Staff) receive a salary paid by Market Matters. Market Matters Staff may also receive performance-based bonuses which are based on profitability, the number of subscribers and subscription renewal rates.
How do we manage potential conflicts of interest?
Market Matters have implemented policies and procedures to mitigate the risk of conflicts of interest. These include:
Market Matters Staff and Contributors are encouraged to express independent views and opinions on the topics they write about. This is established through ongoing training, external audits and our conflict of interest and staff trading policies. Market Matters Staff are required to serve the best interests of the subscribers, without consideration of any commercial or personal interests.
How is my personal information dealt with?
If you have a complaint about our services, you should take the following steps:
Contact us and discuss the complaint directly. If you do not feel comfortable discussing the complaint with us or your complaint is not satisfactorily resolved within 2 business days, please telephone Market Matters, on 1300 301 868 and ask to speak with the Complaints Officer. We suggest you put your complaint in writing at this time so that the issues are fully documented and understood by the parties. Your complaint should be addressed to:
The Complaints Officer
Level 29, Chifley Tower,
2 Chifley Square Sydney NSW 2000
Market Matters will review your complaint within 45 days and attempt resolution. If you are still not satisfied with the outcome, you may take your complaint to an external dispute resolution scheme. Market Matters is a member of the scheme operated by the Financial Ombudsman Service. You should write to:Australian Financial Complaints Authority Limited (AFCA)
You may also wish to consult ASIC in relation to your complaint. ASIC’s website contains information on complaining about companies and people and describes the types of complaints handled by ASIC. You can contact ASIC on its free call infoline:
Tel: 1300 300 630 or email [email protected]
We maintain professional indemnity insurance to cover our employees and Authorised Representatives (including us) for the financial services they provide, having regard to the following:
If you require further information about these compensation arrangements please contact us.
Terms and Conditions
This website, www.marketmatters.com.au, is published by Marketmatters Pty Limited (ABN 20 137 462 536) ('Market Matters', 'MM', 'us', 'we', 'our') Australian Financial Services Licence 488798
Financial Services Guide
Market Matters Financial Services Guide (FSG) is located here, and contains important information about the financial services provided by Market Matters. You must read our FSG and consider it in the context of your Personal Circumstances before acting on any advice. By accepting the terms and conditions you are acknowledging that you have read the FSG.
Provision of the Reports
Reports and other documents published on the Market Matter’s website (‘Reports’) are authored by Market Matters. The Reports represent the views of Market Matters based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Past performance is not a reliable indicator of future results. Brokerage costs have not been included in the calculation of performance. As financial products rise and fall in value, returns may be negative. Performance figures are not intended to be a forecast. Market Matters does not guarantee the performance of or returns on any investment.
Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you may initially subscribe through the complimentary trial which provides you full access to all services for the trial period. You are limited to two trials after which you must subscribe to one or more membership categories available on the website or direct with Market Matters before you can trial the service again, three months after the expiry of your second trial.
To subscribe to Market Matters services and access to the website you may go to the Memberships page of the website, provide the information marked as ‘Mandatory’ and select the payment option for the price quoted (at the time of your transaction) or contact the team directly at Market Matters by phone or email. You will then receive a verification email from Market Matters indicating that your subscription and payment have been accepted and you will be able to access the premium content.
Prices published on the Market Matters website are quoted in Australian Dollars (AUD) and are inclusive of GST and/or all other duties and taxes. Market Matters has used reasonable endeavours to ensure that prices for subscription to its services are published accurately on the website but these prices are subject to change and Market Matters reserves the right to change these prices and will notify you of any increase by email (with the price increase to apply from the time the next payment is due).
Marketmatters Pty Ltd (ABN 20 137 462 536) will issue a tax invoice to paying subscribers in relation to any supply that is subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999.
Any member is entitled to cancel their membership at any time. In the event a member does wish to cancel their subscription, cancellations must be notified in writing to:
Level 29, Chifley Tower, 2 Chifley Square, Sydney NSW 2000
or by email to: [email protected]
All cancellations of month-by-month subscriptions will be cancelled and not billed again the following month.
All cancellations within 14 days we be entitled to a full refund. Any introductory gifts, such as, but not limited to; iPads, Fitbit watches, Apple watches, Google Homes, must be returned in their original condition before a refund will be made.
All cancellations made after 14 days of subscription commencement will not be entitled to a refund unless in the event of extenuating circumstances, at the sole discretion of Market Matters.
Subscriptions will automatically renew on the expiry date of current subscription. In these instances the subscription will be renewed at the current rate published on the Market Matters web site, using the same credit card that paid for the initial subscription, unless otherwise requested by the subscriber. A subscriber who wishes to cancel after being renewed in this way will have a “14 day cooling off period” in which they can request to discontinue and will receive a full refund for the renewal payment, this can be done in writing to:
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
or by email to: [email protected]
Market Matters has not reviewed any of the websites which link to this website or to which this website links. Market Matters is not responsible for the content of any other website or pages linked to or linking to its website. Following links to any other websites or pages shall be at the user’s own risk.
Copyright © 2018 Marketmatters Pty Ltd (ABN 20 137 462 536). No part of this website, or its content, may be reproduced in any form without the prior consent of Market Matters.
This Agreement is governed by and is to be construed in accordance with the laws of New South Wales, Australia. You agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning this Agreement. This website is not available to US and/or EU persons and by accepting these terms you confirm that you are not a US and/or EU person.