Reserve Bank Australia to set off raging bull market
MST Marquee’s Hasan Tevfik said the cheap money would prompt investors to charge into stocks over bonds and set mergers and acquisitions alight. “RBA stimulus increases the possibility of a raging bull market in equities. The extreme financial repression, which the RBA is trying to orchestrate, should be explosive for debt-financed M&A,” Mr Tevfik said.
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December Monthly Newsletter
- After strong gains in November, December was a quiet month for both listed property and the wider ASX. Positive news on both vaccine roll-outs and Brexit was outweighed by further short-term lockdowns in Australia and fears of a mutated virus strain originating in the UK spreading around the globe.
- The Atlas High Income Property Fund declined by -0.4% in December despite the absence of any new company-specific news. Despite experts in the press in early 2020 forecasting minimal to no distributions this year; of the ten trusts held in the Fund that were expected to declare distributions at the end of December, all ten paid distributions with most unchanged from what was paid in December 2019.
- The Fund declared a quarterly distribution of $0.032 per unit for the December Quarter. The distribution was paid to investors in early January.
Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2021.
AFR: Ghosts of dotcom boom in tech valuations
November Monthly Newsletter
- November saw a significant recovery in global markets which rallied on the news of two successful trials of Covid-19 vaccines, as well as the view that a constrained Biden Presidency will be positive for the US economy, with a Republican-controlled Senate delivering both an effective stimulus plan, but limiting radical legislative change.
- The Atlas High Income Property Fund gained 12% in November, a pleasing outcome. 2020 has proven to be a very volatile year for real estate, with the dire predictions in March that office towers, shopping centres and toll-roads will become little used redundant assets proving to be incorrect.
- In an environment where interest rates are close to zero, we continue to see the market will re-rate property trusts that can deliver a stable stream of dividends to investors.
Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2021.
Can the big four banks return to strong yields?
In this weeks TT, Hugh Dive from Atlas Funds Management looks at the themes in the approximately 800 pages of financial results released over the past two weeks including Commonwealth Banks 1st Quarter 2021 Update,
awarding gold stars based on performance over the past six months.
In early 2020 it seemed that this year the banks were going to get their mojo back, rising profits were expected with the 2018 Royal Commission passing into the rear vision mirror along with falling compliance and remediation costs. After Commonwealth Bank reported their first-half 2020 earnings in early February delivering 11% profit growth that sent the bank’s share price surging over $90.
The only cloud on the horizon was the question as to how the banks were going to maintain profit margins with interest rates so low.
How wrong we were! In late March, a mere five weeks after reporting solid profit results, Commonwealth Bank’s share price had fallen 40% (like all banks) to $54. The financial press was wondering whether the several billion-dollar provisions each bank had taken for bad debts stemming from Covid-19 shutdowns will be enough?