Australian Stock Market News - Harvey Norman, ResMed, Webjet, Kogan shares & more.
Market Commentary and Stock Tips - 28th July 2017
2017/18 kicks off with a goal – Kogan a retail online master – International Monetary Fund - a happy bunch of economists – Inflation, is it utopia, nirvana or just a mirage?
‘Start me up’– (apologies Mick Jagger) - Markets response to new financial year
A 1% lift in the market in the first month of this financial year is unequivocally good news after a pretty pedestrian performance in the in the 1st half of 2017. Major stocks to lead the July charge have been -- the former big Australian BHP, Flight Centre, Harvey Norman and JB-HiFi all up around 10% each-- and we now look forward to some good results in the imminent reporting season.
Who said Kiwis don’t fly – but Kangaroos do?
Interestingly enough one sector that has stood out from the rest over the better part of the last year has been the travel related sector. This is no better exemplified than in the on ground battle between the Auckland and Sydney Airports. The winner on points has been Auckland, which has had a rise international traffic numbers of 11% over the last year compared with Sydney’s 9.7%--not bad at all! In a way it makes sense given that both airports occupy an almost monopoly position (a magnet you might say) as far as being a destination for international travelers.
But the travel sector more generally has been the shining star of our share market with the quadrella of travel related stocks showing stellar performances over the last year, these include: Webjet; Qantas; Flight Centre; and Corporate Travel. All showing share price rises of about 40% each respectively.
My View: Reserved for Clients. All the above travel related stocks are worth serious consideration and on my preferred list.
From Garage to Glory -
A young man called Ruslan Kogan, 10 years ago started an online retail business from his parent’s garage located somewhere in Metropolitan Melbourne selling on–line private labeled T.V.’s. He believed he could deliver high level digital efficiency to this area of the market. But the business flourished since then and became a listed company a year ago, and since then Kogan.Com has delivered no less than 3 profit upgrades.
My View: When Amazon finally wends its way to Australian shores this may well prove a positive for Kogan, as heightened attention will be focused on the online purchasing model.
And the world just keeps spinning round and round
Each 6 months The International Monetary Fund does its roundup of what its economists think about the future of the world’s economic prospects. This time the usually humourless economists have given us some brighter news by forecasting that the world’s economic performance is likely to be much better in the next few years than has been recent experience.
And to the awards:-
- The award for most improved economic area goes to Europe, and its major constituent countries,
- China and India get the yellow jersey for the best overall economic growth in the world,
- the award for the most consistent economic performance goes to the South East Asian economies,
- while the wooden spoon is shared by three areas namely South America, Middle Eastern countries and Sub Saharan Africa.
Inflation - the miasma of 1970’s – the mystery performer of the 21st century
Hard to believe but inflation was rising at around 10-15% per year during the decade of the 1970’s. But for the last decade we have been averaging around 1-2% per year. While there are no indications that inflation is likely to break out of its low rate of increase, should the price of oil increase significantly you can kiss good night to the era of low inflation. Take away falling prices for telecommunications and oil, inflation is probably rising in excess of 2-2.5% p.a. Accordingly I believe that the net result of the confluence of various pieces of economic data is likely to see an interest rate rise next year.
Domino’s Pizza– adversely affected its performance by the performance of its U.S. counterpart– watch for now
Technology One – a sound stock, but remains in dispute by the Brisbane City Council – a mid-cap on my preferred list
Westpac and Charter Hall – reach agreement of Westpac’s sale of its Hastings Management subsidiary. – Westpac on my preferred list
Primary Health Care – Looks very much like a profit downgrade. – look else where
Macquarie Group – Impressive commentary at AGM – On my preferred list
We are now in that twilight zone before the reporting season gets underway in earnest next week. Major stocks to report next week are RIO; Suncorp Group; Crown Resorts; ResMed and Tabcorp. Ones to watch in particular are RIO, Resmed and Tabcorp.
For those willing to take on slightly more risk but in stocks with what appear to be strong growth potential, then Kogan, which I referred to earlier is worth consideration. Another quietly impressive performer has been premium electrical appliance designer maker Breville and international share registry business is Link Market Services. And for those who are prepared to believe that the Tabcorp/Tatts merger will be consummated this year, then the current low price of Tabcorp looks attractive.
Monday: New home sales
Tuesday: Reserve Bank decision on Interest rates (no change likely)
Wednesday: Building approvals
Thursday: Australian Industry Groups services survey
In the U.S.
A plethora of economic data including on Motor Vehicle; Home Sales; Manufacturing and Non-Manufacturing sectors; Construction Spending and Employment/Unemployment Data
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