22 December 19
Market Matters Weekend Report Sunday 15th December 2019
22 December 19
Market Matters Weekend Report Sunday 15th December 2019
13 December 19
Landslide – a Boris Johnson cover
13 December 19
Will the Australian Real Estate stocks follow their US peers lower? (CBA, WBC, WTC, GMG, SCG, DXS, MGR, SGP)
12 December 19
Stocks sold off ahead of UK election (WBC, LYC)
12 December 19
Britain goes to the polls, how will it affect the ASX? (S32, EML, PDL, IRE, JHG, XRO, SGM)
11 December 19
Has the Christmas rally begun? (WEB, WBC, S32)
11 December 19
Income Report: Should we buy resources for yield? (BHP, TCL, GMA)
11 December 19
Overseas Wednesday – International Equities & ETF Portfolios (TTD US, 700 HK, TBF US)
10 December 19
IOOF get the go ahead (IFL, BOQ)
10 December 19
Do we like the 5 standout performers into 2020? (A2M, BPT, AVH, PNV, FMG, APT, JIN)
The market struggled yesterday under the weight of a weak banking sector led lower by regional Bank of Queensland (BOQ) which delivered a weaker than expected 1H result highlighting some of the risks in the sector. The ASX200 finally closed down just -0.4% although it did feel heavier and we noticed some of the risk averse stocks like Telstra (TLS) enjoying a bid tone with our largest Telco closing within 1c of a fresh 6-month high. Under the hood our weak impression of the day was confirmed with only 32% of the market managing to close in the green highlighting how the index managed to hold up ok all things being considered.
The much loved healthcare sector, which is dominated by $US earners, also struggled as the $A had the 72c area in its sights. Cochlear (COH) in particular fell to within a few cents of fresh 2019 lows, who would have thought over the last 3-months that Estia Health (EHE) would have outperformed the hearing implant company by over 35% - as we repeatedly say its vital to remain open-minded when investing, especially when a bull market is a decade old. Following a strong night by the $US overseas some of these falls may be recovered today.
No change, we continue to feel the market is positioning itself for a begrudging pullback towards 6100 and potentially 6000 with the recent 5 days of consolidation around the psychological 6200 area fitting our negative picture but a close below 6180 is required technically for us to feel on the money.
The ASX200 has now achieved our upside target area switching us back to a neutral / bearish stance short-term.
Overnight the US indices were extremely quiet but the SPI was surprisingly strong calling the ASX200 up ~0.5%, looks like some buying’s around in our banks and healthcare sectors, especially as BHP was mildly lower in the US.
Today we are going to look at 5 international stocks who have caught our eye over the last week – we have found that sticking to Wednesday as the Overseas Report tough with obvious limitations when we have interesting action locally – moving forward we will simply make this the Weekly Overseas Report.
Bank of Queensland (BOQ) $8.95
Yesterday the Bank of Queensland (BOQ) tumbled almost 5% following a disappointing 1H report, the regional bank saw profit slide 10% from the same period in 2018, despite growing the loan book by 3%. The net interest margin (NIM) fell 4bps over the 6 months to an extremely tight 1.94% due to rising funding costs and increasing competition. Although they still remain at low levels, bad debts are starting to creep higher in the quarter – an area which has helped support bank earnings over the past few years.
The bank will pay a 34cps dividend for the half, about 10% below each of last year’s dividends, and importantly below expectations of 38cps. It does still trade on a yield of over 7%, grossed up to over 10% but after the company guided to a flat second half we may see some investors start to doubt how sustainable the payout is over the years ahead.
The papers are again talking this morning that BOQ will need to merge with the likes of Suncorp (SUN), Bendigo Bank (BEN) or Macquarie (MQG) to eventually deliver to shareholders – perhaps this talk might ignite the sector at some point moving forward but its hard to imagine any quick fix.
MM has reduced our banking exposure by trimming both NAB and CBA in the last month which has increased our flexibility for such falls in the sector.
1 - We are now actually watching Bendigo in the regional banking sector with the $9 area currently our ideal entry level, or around 5% lower - at this level the bank will be yielding ~7.8% fully franked providing a buffer for disappointment moving forward.
2 – Also, we still like Macquarie Bank (MQG) around the $125 area.
MM is watching the banks carefully but we’re not yet close to the “buy trigger” just yet.
Bendigo Bank (BEN) Chart
Sims Metal (SGM) $10.06
Yesterday became a tough day at the office for MM with our stop being triggered in Sims Meta (SGM) but this is a market for discipline as we have explained a number of times in 2019. We are proud of our transparency at MM but unfortunately running real money portfolios does at time necessitate taking some unpleasant medicine.
While taking losses is never a nice experience, investors should always remember that the optimum route to successful returns is to “cut your losses and run your profits”.
MM is now neutral SGM and the market has voted with both feet that they are not happy with the company’s growth plans.
Sims Metal (SGM) Chart
Five international stocks catching our eye this week
Global stocks have enjoyed one of best rallies / recoveries in history assisted by central banks who have donned their dovish hats in an attempt to fan post GFC global growth - bigger picture we are slowly becoming concerned that a decade on we still need such economic stimulus to avoid a worldwide recession.
However fighting the Fed and other central banks when they are in a stimulatory mood is fraught with danger and the current policy shift and market momentum looks highly likely to take equities to fresh all-time highs – now under 5% away for the MSCI Global World Index. Short-term we see major resistance around the October 2018 highs which would enable investors who held on and hoped during the markets +20% correction to “get out” with their money back, usually an area that encounters meaningful psychological selling.
MSCI World Index Chart
Now moving onto 5 stocks who have caught our eye during a fairly benign week for international strocks – as usual we have looked at both end of the spectrum i.e. winners and losers.
1 Tencent (700 HK) HKD391.40
Asian goliath Tencent has been one of the huge recovery stories in 2019 with the stocks +3.5% appreciation over the last 5-days helping investors who were left stunned by the stocks almost 50% plunge from its early 2018 high. The market has clearly become more relaxed around the Chinese regulators stance on the video gaming industry following Beijing restarting approvals for video games in December.
At this point in time MM are struggling to identify a decent risk / reward opportunity for Tencent following its strong recovery but we will keep an eye on the company moving forward.
MM likes Tencent as a business but are neutral at this point in time.
Tencent (700 HK) Chart
2 Walmart (WMT US) $US100.80.
Walmart rallied another +2.7% over recent days demonstrating correctly run and positioned retail stocks can still provide good returns for shareholders.
The company soared in February after beating earnings estimates including growing e-commerce sales by an impressive 43%.
MM believes WMT will ultimately make fresh highs above $US100 but the risk / reward is tough just here.
Walmart (WMT US) Chart
3 Alibaba (BABA US) $US184.98
Internet giant Alibaba looks very similar to many international stocks, its rallied strongly following aggressive declines in 2018 leaving us neutral at current levels – the risk / Reward is tough.
The companies share price enjoyed a beat to earnings expectations in January and a disciplined approach to spending was clearly appreciated by investors.
MM is neutral at current levels with the risk reward is more attractive around $US170.
Alibaba (BABA US) Chart
4 Wells Fargo (WFC US) $US47.74
WFC has fallen almost 3% over recent days and the stock looks vulnerable to further declines plus the Feds current dovish stance does not help the sector fundamentally.
MM is neutral / bearish Wells Fargo (WFC).
Wells Fargo (WFC US) Chart
5 Boeing (BA US) $US370.16
Boeing has fallen another -6.5% over the last 5-days and the stock is again testing its March lows as the negative news flow following recent plane disasters continues to weigh on the stock.
No change, MM remains bearish Boeing (BA) looking for another 10% downside.
Boeing (BA US) Chart
Of the 5 international stocks looked at today MM is neutral Tencent (700 HK), Walmart (WMT) and Alibaba (BABA) looking for lower levels to consider buying while we are bearish Wells Fargo (WFC) and bearish Boeing (BA).
US stocks were very quiet last night as Easter approaches. Medium-term we still think the NASDAQ has another ~5% upside medium-term but a pullback feels overdue – importantly our 8000 target for the NASDAQ is only a good week or two away in today’s market!
With both the S&P500 and tech based NASDAQ reaching fresh 2019 highs we have turned mildly neutral / negative US stocks.
US NASDAQ Chart
No change with European indices with BREXIT gaining an extension it’s again become yesterday’s “fish and chip paper”, we remain cautious or even slightly bearish in this region.
German DAX Chart
Overnight Market Matters Wrap
· The US equity markets closed with little change overnight, as investors get ready for US reporting season tonight, with analysts forecasting the first quarterly profit fall since 2016. Some of the most keenly watched results will be released by JP Morgan and Wells Fargo with forecasts of soft market related revenue.
· China-US trade talks are progressing well, while Fed officials said that the domestic and global soft patch of growth is behind us, with GDP expected to rebound. Meanwhile US weekly initial jobless claims came in below consensus.
· All metals on the LME were lower, in particular nickel which fell 2%. Iron ore rose 1%, crude oil fell and gold is down to $US1292.28/oz.
· The June SPI Futures is indicating the ASX 200 to open 27 points higher, testing the 6230 level this morning.
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 12/04/2019
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, 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.