Australian Shares

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The Banksters: Part 1

Note: This is part 1 of a 2-part series on trading and valuing the big four Australian banks. Part 2 shall be forthcoming soon. Fellow equities blogger Sell on News completed an excellent thematic post on the bubble like growth of the finance industry recently. In the face of a likely change in how capital

6

Sell finance

With global markets facing a period of sustained uncertainty, it is worth taking a longer perspective, comparing the current conditions with the so-called “Goldilocks” economy that existed just prior to the GFC. It turned out then to be a case of all the three bears instead of Goldilocks, but at the time things seemed robust

10

Stocks for Bears

It’s a scary and volatile world at the moment:  floods, cyclones, earthquakes, tsunamis, US housing crashes, Aussie housing bubbles, the GFC, QEII, PIIGS, Japanese debt, revolution in the Middle East and Charlie Sheen.  As the Chinese curse goes, we are living in interesting times. So what’s a bear to do?  I’ve never been the “head

3

Will this cat bounce?

Today’s strong uptrend in almost all risk markets is not that surprising. In trader’s parlance, this may just be a “dead cat’s bounce“. Sorry for the awful terminology, but there it is. This broad correction offers both risks and opportunities for trader’s and investor’s alike. For the latter, it offers excellent buying opportunities in “Very

3

Buy on news

The fear gripping global markets after the earthquake in Japan is the kind of event that creates investment opportunities. It may be time to buy on news, as it were. The implications are many. Merrill Lynch believes that the Australian market is now cheap (see report).  The market’s forward price earnings ratio is 11.6 times,

1

QBE shaken

Given the enormity of what is happening in Japan, it seems a little trivial to be tracking the possible effects on Australian shares. The greatest concern will be the long term impacts on the world’s third largest economy and one of the power houses of the Asian region. Japan is a heavy consumer of Australian

0

Banks eating one another

Banking Day has some interesting analysis today of Westpac’s new move to revive the Bank of Melbourne brand: An intensive program of new branch openings in Victoria is the key feature of Westpac’s decision to revive the Bank of Melbourne brand from August this year. The bank will, however, retire the St George brand name

3

The Neck is broken? ASX200 drops below 4750

Well that didn’t take long – the ASX200 has corrected again this morning, with an intraday level at 4714 points. Readers may have noticed that I am still wrong about a possible rally! In my last regular weekly analysis I did mention however: But basic charting analysis suggests a more bearish stance: a classic head

0

AMPed, for now

The AMP-AXA deal has been bedded down and a familiar, very Australian, story will unfold. The fast growing Asian business has been sold off – despite some analyses suggesting it would double in value in less than three years – and a domestic oligopoly is concentrating its market share. Once again, Australia makes a hash

10

When a Donkey Meets a Thoroughbred

After a quick holiday across the pond in NZ (luckily not near Christchurch), your blogger returned to Australia to the news that West Australia Newspaper Holdings (WAN) is going to buy the Seven Media Group from Seven Group Holdings (SVM). So a WA media monopoly is marrying the TV sideshow of a Caterpillar servicing business. I can’t wait to see their kids.

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In the carbon crosshairs

Amidst the heat and confusion about the carbon price, it does seem increasingly likely that some sort of tax will be applied. What does it mean for stocks? “Don’t know yet,” is the commonest answer, and not unreasonably so. But it is likely to hit the big emitters. The steel companies, BlueScope Steel and OneSteel

6

Oiling the portfolio

Having read with fear, bordering on terror, the percipient Houses and Holes’ blog Sell Signal, I am struck by how different broking analysis is from H&H’s dire world of lightning strikes and imminent turmoil. Grains, H&H informs us, may be decoupling. Metals are getting “smashed”. Wheat may be a give away. But none of that

6

Weekly Market Analysis: a close below 4800

Weekly Summary Apologies for not posting my regular end-week summary, but this blogger is feeling the combined effects of moving house and re-valuing the avalanche of HY earnings reports. What follows is my analysis from last week but with notes on today’s correction and what it may mean looking ahead for the rest of this

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Buy time, apparently

What is the reporting season saying about the stock market? Little surprise that brokers think that equities are cheap. Might be time to ring, well, a broker. The overall picture is certainly reasonably healthy, although that of course is historical and doesn’t say much about future price movements. According to Goldman Sachs sales were up

2

Hundreds of thousands factory

Investors in Macquarie Group might wish to avoid an article in The Economist, entitled “Can investment banks make high enough returns on equity to exist?” They may also consider it appropriate not to look to closely to Macquarie’s fundamentals. The gist of the argument is that investment banks will be “clobbered”  by the new Basel 3 rules. For most types

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The US stock market’s declining importance

There has been an interesting debate going on amongst some of my fellow bloggers in recent days about the meagre future return potential of stocks in developed markets. The return prospects for the US look particularly cloudy. And this is important, because as Sell on News noted today, the US still dominates the global markets

1

Are stocks long in the tooth?

The effect of demographics on investment patterns is pretty straightforward – people get more conservative as they get older and they don’t care much when they are young. An article in The Economist, aptly titled “Betting on Ben”, cites research by Barclays Capital about the relationship between population variables and equity markets. The key causal

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Oil profits

The oil price looks headed north, maybe a long way north, which will probably focus investor attention on potential domestic equity market plays in the energy sector. But wading through the broker reports, it is a pretty mixed picture. Morningstar Equities describes Woodside as “Australia’s premier oil and gas play” and has a buy on

1

Weekly Market Analysis: blinkers or whips?

Weekly Summary The ASX200 finished the week at 4836 points, down 100 points or 2%. Total move for the month (still have Monday to go) is 1.74%. As I thought would happen in last weekend’s analysis, a small correction occurred, ostensibly because of the Libyan crisis and the Christchurch earthquake, but most likely because of

3

Like WOW – like wipeout?

The duopolist retailer Woolworths (WOW) has announced its HY11 results before the market opened this morning. In addition, it announced the acquisition of The Cellarmasters Group for $340M (subject to non-regulatory intervention). Highlights include: Revenue up 4.2% Interim dividend up 7.5% Net Profit after-tax up 6% All good figures, reflecting a strong result in difficult

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New bull market Part II

Following on from this blogger’s previous post, a similar position has been put forward by a fellow blogger/moderator, SuitablyIronicMoniker, but from a US market perspective and the interaction of the ongoing QE2 program enacted by the Federal Reserve. Things are good at the moment. Unemployment is low, commodity prices are high, the stock market is

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Seven’s bad reception

What do you avoid in an industry sector that has a doubtful future? Debt might be one obvious answer. But no-one has told Australia’s television networks. The merger between West Australian News and the Seven Group will only create synergies of $15 million. The merged entity will sit on a net debt to EBITDA of

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New bull market for stocks?

This blogger is a regular trader of the Australian stock market, and one of his studies has been – why do stock markets start a new bull market? There are many technical reasons/readings one can make, but the key prerequisite for a new bull market in stocks is economic growth. So this blogger uses macro-economic

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Dutch Disease hits earnings

What will Australia’s industry base look like after the mining boom has become dominant (assuming it will)? The effect on the currency is clear enough, with it trading at parity. The latest reporting season for listed stocks gives us another clue. It is very much a case of rich man, poor man. According to Deutsche

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Fortescue arrives

Friday was an interesting day for Andrew Forrest, chief executive of Fortescue Metals Group, one of the few people in the last two decades to successfully carve out a position against an Australian cartel. In the morning the company announced its first dividend, which was deemed by no less an authority than Bank of America-Merrill

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Weekly Market Analysis: 5000 and beyond?

The ASX200 finished the week at 4936 points, up 56 points or 1.15%. Total move so far this month has been a stunning 3.85%. The 200 is approaching its mid-April 2010 high (pre “Flash Crash”) after almost a year of trading sideways before The Bernank decided it was time again for commodity traders to buy

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The flying wombat

When it comes to investing in shares, Australians love paying high prices for former government-owned monoliths.  And the love affair continues as Qantas (QAN) released its half years results with a headline $417 million underlying profit, before tax. The economic commentariat gave mixed reviews, with Royal Bank of Scotland saying the result was reasonable whilst

0

Big bull

The equity bulls are loudly spruiking their bull and the big cap stocks might be a beneficiary. A report by Southern Cross Equities (see below) puts the case. It notes that most equity strategists are recommending only “neutral” sector weightings in the two major sectors in Australia, materials and financials. But Southern Cross’ “multi-factor quant

2

Gearing down

My fellow blogger, Houses and Holes, has magisterially, even regally, detailed how private debt has come to matter in Canberra circles since the global financial crisis. It seems Australia’s largest companies agree. The game of pass the parcel – private business gets the profits and ideological smugness; governments get the losses, debt problems and blame