The Match Out: The ASX akin to the English top order - weak right across the board today!

James Gerrish

Market Matters

The ASX knocked for 6 today as the 5th Ashes Test gets underway in Hobart, the poms starting well with the ball taking 3 early wickets. On the market, utilities the only sector in the green while the IT stocks ended a tough week down another 3.92%. The tide has certainly turned.

  • The ASX 200 fell ~80points / -1.08% to 7393 – the 7400 handle remains the magnet for now.
  • Utilities (+0.40%) and Materials (-0.42%) the relative performers while IT (-3.92%) and Consumer Staples (-1.91%) led the line on the downside.
  • Tritium, the Brisbane-based maker of electric vehicle fast chargers will list in the US on Friday via a special purpose acquisition company called Decarbonisation Plus Acquisition Corporation II which trades under the code DCRN US. We’ve been asked about this a few times in Q&A’s and it’s a very interesting business with a big footprint in this market – well worth watching although be wary early on as the vote only just got enough votes for it to happen, implying that a lot of DCRN shareholders were not keen on it.
  • Pendal (ASX:PDL) -15% capped off another tough week for fund managers after reporting net outflows of $6.8 billion for the first quarter with 1Q funds under management ending at $135.7 billion, down -2.5% q/q . That dragged down the rest of the sector. The pain continues.
  • I was completing the weekend Q&A this afternoon and there was a question on why Pinnacle (ASX:PNI) has been weak of late, here’s what we said which is topical today: In terms of Pinnacle, these guys hold stakes in a bunch of fund managers and trade on a forward P/E of 28x, but you need only look at what the listed fund managers are trading on (MFG ~9.4x, PDL ~11x, PTM 11.9x) to see they have experienced big re-rates lower. While I think PNI should justify a higher multiple than the managers listed here given they have better growth through their suite of boutique funds, I’d still question paying 2.5x the multiple for PNI. In short, the sector has been re-rated and PNI is still expensive.
  • Iron Ore was down 3% in Asia today.
  • Gold was a touch higher trading at US$1827 at our close.
  • Asian markets were lower, Nikkei in Japan lower (-1.6%) Hong Kong down (-1%) and China fell (-0.439%).
  • US Futures are mixed, Dow Futures up a touch, Nasdaq Futures lower.

ASX 200 Chart

Sectors this week

Source: Bloomberg

Stocks this week

Source: Bloomberg

Broker Moves

  • Bega Cheese Cut to Hold at Morgans Financial Limited; PT A$5.65
  • Imugene Rated New Outperform at Noble Capital Markets

Major Movers Today

Enjoy your weekend

The Market Matters Team.

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Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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