21st December 2017, 4.00pm
Weekly Market Update
So, this will be our final missive for 2017. We will return in print on Friday the 12th January 2018.
Obviously, this is a great chance for Guy and myself to thank you all for reading, and particularly to thank all the clients of PRIME for again affording us your goodwill in 2017.
We would like to wish you and your loved one’s a very ‘happy holidays’ and the best of health, wealth and happiness in the year to come.
2018 YEAR AHEAD
I fully intend to do our usual ‘year-ahead’ piece in mid-January upon everyone’s return from summer break, but perhaps a brief precis of our thoughts for the 12-months to come –
As I have conveyed in recent weeks, I am undeniably more optimistic on Australia’s domestic economy than I have been in 18 months, and think the improving outlook for capital investment will reflect itself well certain industries. We have long advocated for SEEK (SEK), but feel confident we will be adding other domestic cyclical exposures in the months ahead.
A RE-CAP of MAJOR TRENDS YEAR-TO-DATE in 2017
To give you all a guide for the sorts of returns across various asset classes and portfolios, I thought I would summarize them as follows below –
In a nutshell, being invested purely in Australian ‘blue-chips’ would have seen serious underperformance in 2017.
Small-caps dominated performance locally, and offshore equity performance was stronger even despite a rise in the Australian Dollar.
THE WEEK GONE
The Liberals (and the market) had a win with the outcome of the Bennelong by-election, and markets globally enjoyed the US tax legislation that will see an earnings upgrade of as much as 10% for the US stock-market as the corporate tax rate is cut from 35% (though the effective tax rate is 28%) to 21%.
Interestingly, Australia has now got the 3rd highest corporate tax-rate amongst all OECD nations, and this will surely rapidly become an election issue in 2018 – a positive no doubt for markets and the economy if the Liberal Government can drive this as a new theme.
The mid-year economic and financial outlook was constructive since corporate tax take was better than expected, smoothing the glide path back to supposed budget surplus in 2021.
THE COMING MONTH TO COME, AND A BUSY Q1 EXPECTED
It will be extremely quiet obviously over Christmas and New Year (pending outlier events like North Korea or the Mueller investigation into Russia’s election meddling), but we are watching a couple of Australian portfolio names lest they reach price targets of ours.
Woolworths (WOW) is probably the main one given it is within 3% or so of our $28 target price. Feel free to speak to your advisor if you would like to leave a limit in.
We are also watching share prices in SEEK (SEK) to add, IOOF (IFL) to re-enter, and some of the domestic economic cyclicals we think might benefit in 2018.
As a heads up, the first quarter of 2018 will be extremely hectic since we have several new issues likely to come to the market (venture capital, fixed income, multi-asset, international equity, small-caps and Australian long/short equity). All of the issues we are looking at are of a high quality and we think can play a meaningful portfolio role for investors.
Exciting times!
Again, wishing you all a safe and happy Christmas season.
Jono & Guy
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21st December 2017, 3.00pm
Australian Market Index
Index | Change | % | |
All Ordinaries | 6158 | +62 | +1.0 |
S&P / ASX 200 | 6063 | +52 | +0.9 |
Property Trust Index | 1428 | -34 | -2.3 |
Utilities Index | 8356 | -114 | -1.3 |
Financials Index | 6532 | -1 | – |
Materials Index | 11381 | +423 | +3.9 |
Energy Index | 10733 | +177 | +1.7 |
Key Dates: Australian Companies
Mon 25th December | Christmas Day |
Tue 26th December | Boxing Day |
Tue 27th December | Div Pay-Date – NABPC, WBCPE |
Thu 28th December | Div Ex-Date – APA Group (APA), Magellan Global Trust (MGG), NABPD, Transurban (TCL), Vicinity Centres (VCX) |
Fri 29th December | N/A |
International Market Index
Thursday Closing Values
Index | Change | % | |
U.S. S&P 500 | 2679 | +27 | +1.0 |
London’s FTSE | 7525 | +77 | +1.0 |
Japan Nikkie | 22881 | +187 | +0.8 |
Hang Seng | 29381 | +215 | +0.7 |
China Shanghai | 3303 | +11 | +0.3 |
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Disclaimer: This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.
This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.