20 January 20
Edging higher, but wind seems to be coming out of the sails (NHF, SUL, KGN)
20 January 20
Edging higher, but wind seems to be coming out of the sails (NHF, SUL, KGN)
20 January 20
Subscribers questions (MXWO, EVN, RRL, ABP, PLS, ORE, SYR, NBI, 700 HK, ALX, TCL, IPH, LNK, BUB, NCM, STO, NST, SIQ, BBOZ)
19 January 20
Market Matters Weekend Report Sunday 19th January 2020
17 January 20
Strong production numbers from RIO to end the week (RIO, NUF)
17 January 20
5 stocks catching my eye as we search for upside (CBA, APX, BGA, IVC, IPH, MIN)
16 January 20
Market smashes through 7000 (WHC, S32, WPL)
16 January 20
What pockets of the resources sector does MM prefer in 2020 (WHC, GDX US, RIO, OZL, SFR, WSA, S32, AWC, FMG)
15 January 20
Industrials, Energy take the ASX within a whisker of 7000 (RSG, PPT)
15 January 20
Income Note: Hybrids, Fortescue & updated thoughts on Smart Group (FMG, SIQ, NBI)
15 January 20
Overseas Wednesday – International Equities & Global Macro ETF Portfolios (ORE, TSLA US, JPM US, WFC US, GS US, AAPL US, JHG US, IEM US, 700 HK, SH US)
The ASX200 stormed higher this time last week before consolidating the gains in a similar manner to its 5-day “rest” earlier in the month. Most people’s minds are understandably not focused on markets this time of year, but this can on occasion lead to opportunities for the prepared i.e. low volumes can often create exaggerated moves in stocks / indices providing such opportunities for buyers and sellers alike.
1 – MM is still considering taking $$ on 1 or 2 positions into strength.
2 – MM is also considering re-entering the BBOZ Bearish ETF basis the ASX200 making fresh highs above 6900.
MM is short-term bullish the ASX200 while it can hold above 6750.
On Saturday morning the SPI futures were pointing to an opening down almost -0.5% this morning even though US stocks rallied to fresh all-time highs, the $A rallying back above 69c appears to be an ongoing headwind for local stocks.
Thanks again for the questions, I’m delighted by the volume / interest only a few days before Christmas, 2-days and counting!
ASX200 Index Chart
Many investors have missed out on 2019’ excellent year for equities which has been spearheaded by the US but in hindsight it shouldn’t be hard to comprehend, just consider the below simple numbers:
1 – At the start of 2019 US 10-year bonds were trading around 3.3%, today they’re well under 2% at ~1.9%, when bond yields fall by over 40% it creates a huge tailwind for stocks.
2 - In 2019 buybacks in the US will come in above $US700bn, another huge supportive factor for American stocks.
We are mindful that since early October bonds have declined (rates up) while stocks have maintained their ascent, a short-term concern for MM.
MM remains mildly bullish US stocks.
USS&P500 Index v 10-year Bonds Chart
“Firstly, many thanks for your informative service over the year, and all the best for Christmas and the New Year - may it be fruitful for us all! Can I sneak in a cheeky two questions for Monday? First - if we assume as an exercise interest rate have bottomed and may rise from here, what stocks do well in that environment? Secondly, what does your analysis tell you about LYL? I am looking at this stock for income. All the best!” – Karl B.
Thanks for the kind words to everyone, I have obviously split your question in 2 halves this morning:
1 During times of rising bond yields investors generally want to be exposed to Value Stocks like the Resources & Banks while avoiding the Growth, yield sensitive and high valuation stocks e.g. Utilities and IT stocks. Stocks with higher debt do worse as do those seen as a quasi-bond.
2 Lycopodium (LYL) is an engineering consulting firm with a market cap of over $200m. The stock’s had a great few years but it still only trades on an Est P/E for 2020 of 12.4x while yielding 5.7% fully franked. This is cheap relative to the market however generally this is a sector that trades at some discount given the cyclicality of earnings. i.e. we hold NWH in the sector which is also cheap. While this is not a stock MM has invested in the past but on the surface both technically and fundamentally it looks excellent buying between $4 and $4.50.
Lycopodium (LYL) Chart
“Hi James and team, another educational query. I hold Mesoblast (MSB) shares but I don’t know about their ADRs or how to purchase. They came up in your report this afternoon, could you please explain?” - Kind Regards, Peter H.
Along with being listed on the ASX, Mesoblast (MSB) has now been listed as an American Depository Receipt (ADR) in the US allowing US investors to buy it in their local currency. The only reason an Australian investor would buy MSB via the ADR is if they wanted to own the stock in $US terms. There are many examples of ASX listed companies that also list as ADR’s overseas, essentially to make it easier for overseas investors to buy in.
MM likes MSB as an aggressive play but stops need to be under $1.60.
Mesoblast (MSB) Chart
“Hi James, thanks for an invaluable daily read. In regard SVW, at what point, or TP would you consider selling IF you were a holder?” – David J.
Seven Group Holdings (SVW) is a stock we’ve discussed a few times over recent weeks with a definite bullish bias. Currently we would be running stops below $18.20 which offers solid risk / reward in our opinion.
MM likes SVW with stops under $18.20.
Seven Group Holdings (SVW) Chart
“James, I typically stay well clear of Insurance stocks as I just don't trust their earnings capability and I think QBE sits in the box seat with that one. In the article below they state they are receiving increased premiums, I don't know what might be occurring out there in the corporate world in relation to Insurance premiums but for individuals such as me if I see a large increase in premium on any insurance I hold I will immediately shop around and go elsewhere. Case in point, many years ago we held insurance with QBE until they started raising premiums heavily, we shopped around and went elsewhere and to this day we have never gone back even when of late I've checked their premiums against others and they are still too expensive for me. I really can't see how they can sustain themselves by increasing premiums, if you're on the ball and check insurance elsewhere most people will walk away, and I personally know people who have done exactly that in relation to QBE. Quite frankly I wouldn't buy an insurance stock if it were the last stock listed on the stock exchange and I certainly wouldn't touch QBE unless things drastically change for the better. I'm with Brett, I think they've got big hurdles to get over.” – Thanks Steve S.
QBE has been a vehicle of wealth destruction post the GFC, its collapsed while the markets soared adding definite weight to your argument. I agree that as we become a more digital society price comparisons will play an ever increasing role in consumers decision making process. However, I most definitely would never say never, at MM we believe investors should always remain openminded, most stocks have value at a price. Shaw’s analyst in the sector is an outlier in terms of his calls on many stocks and QBE is certainly one of those. He has a $9 price target and a sell, glaringly different from the ‘streets’ expectations.
QBE Broker Calls
MM is neutral QBE.
QBE Insurance (QBE) Chart
“Hi James and team, Metalla Royalty & Streaming MTA what is your opinion on this type of stock, is it an alternative to buying gold stocks and or physical precious metals.” – Daniel C.
At this stage these precious metal and streaming companies are clearly outperforming the Australian gold sector and we feel they remain bullish. At MM we believe they are an alternative to gold stocks, but their correlation is not as direct to the gold price as other assets mentioned, by definition they will not always outperform the underlying precious metals.
Canadian based MTA only has a market cap of $CAD229m making it small for MM.
MM likes MTA while it remains above $5.80.
Metalla Royalty (MTA CN) Chart
“Dear MM, sounds like essential knowledge before undertaking any share transactions but I still have great difficulty in knowing when to sell. IMF Bentham [IMF] is a litigation funder, with class actions much in vogue and it has bounced up recently on favourable court outcomes. Please could you comment on IMF and perhaps use it to illustrate how you might decide whether to sell or hold.” - Thank you, Paul T
There’s a critical saying with both investing and trading – “Plan you trade and trade your plan”. In other words you should always know what you intend to do if the stock goes up or down before you actually buy it otherwise human emotion is likely to hinder your decision making – “Fear & Greed” rarely adds value to the investor.
By their very nature, litigation funders will be volatile around court outcomes. In essence, they spend their time looking for cases that stack up, outlaying money to put the case together, then they get a ruling that is good or bad. In reality, most cases don’t go to court and are settled beforehand however there is still the unpredictability of the courts.
The bigger litigation funders like IMF had a win recently from what seems to be a tweak to class action law, insofar as members of a class action need to actually opt in rather than simply being part of the action from a negative consent (i.e. in if you don’t opt out). That makes class actions more expensive and it may squeeze out some of the smaller opposition.
IMF looks good to us while it can remain above $3.80 – this level will hopefully go up over time as the stock price evolves.
IMF Bentham (IMF) Chart
“Hi James and team, If I wanted to short euro bonds say Italy or Greece, is there a cheap way from Australia to do this using a ETF or such like. Thanks Daniel C.
Not that I can’t find at this stage – I’ve taken on notice and will come back to you.
“When asked for directions to a certain place, Spike Milligan famously replied "well, I wouldn't start from here!"... So, I am interested in creating my own version of your Income Portfolio. Should I start from here? Clearly it has been created over time but if one were to create it right now would it comprise the exact same items? And if not why and what? Cheers and keep up the good work! Dave B.
There is no right or wrong answer here. I manage wholesale portfolios through Shaw and Partners and we also run SMA Portfolio’s through Market Matters. When a client invests new money with me I typically allocate funds over time as opportunities arise in the positions held. Honestly, this at times works well and at other times it is better to simply invest / replicate the portfolio on day one which is what happens in the SMA structure.
In terms of the current positions in the MM Income Portfolio, I’m comfortable with most current holdings at this point in time , Genworth (GMA) is the only stock that may be cut soon given is strong rise, but also uptick in bank arrears that were obvious in the last banking updates.
“Afternoon All, a question for James. Have MM considered adding columns to the portfolios to identify the target price which can always change dependent upon a stock run and one for a sell price if it goes backwards. I know you can have too many columns in a spread sheet, but these suggested two could help a small investor such as myself to make informed choices! (as the saying goes) on stock disposal. Also, about how many months/ years are your term definitions Short - Medium - long? Thanks for all your fantastic advice this year. I hope all at MM enjoy a very happy Christmas” - Cheers Mike D.
Yes, I have considered however the issue is that if we put a target there then amend it, it can create some confusion. We are significantly down the path to a fresh and improved MM offering in Q1 of 2020 which will include some major upgrades to our website, this should help subscribers moving forward. I’ll ponder the target prices some more as I take a break at the start of Jan.
“Loving your informative commentary & reading your thoughts on WAM, I presume WGB, WLE & WMI you would view in the same way? Regards Jenni V.
Not necessarily, 2 you listed are trading below their NTA while 1 is trading above.
WGB has post tax NTA of $2.465 v current share prices of $2.33 (below)
WLE has post tax NTA of $1.294 v current share prices of $1.265 (below)
While WMI has post tax NTA of 1.363 v current share prices of $1.485 (above)
If you like the MM approach and don’t want to worry about trading at premiums or discounts to NTA, you could of course consider the MM SMA Portfolios. For details: https://www.marketmatters.com.au/news/sma/
WAM Capital (WAM) Chart
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. All prices stated are based on the last close price at the time of writing unless otherwise noted. Market Matters does not make any representation of warranty as to the accuracy of the figures or prices and disclaims any liability resulting from any inaccuracy.
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 Market Matters 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, 25th October 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.
Where we refer you to a third party financial services provider, we may receive a referral payment. This referral payment may be a percentage of the fee’s charged by the financial services provider between 0% and 25%, or a fixed amount. These referral payments are made by the financial services provider to Market Matters and are not an additional cost to you.
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.