A choppy session played out today with some decent buying off early lows before the mkt simply rolled over and drifted into the weekend. Public School holidays start today so volumes will drop off and as we suggested in the AM report this morning, markets are generally well bid from here until the tubby bloke in the red suit squeezes himself down the chimney. I was out of the office today, a few meetings this morning before getting ready for my Dads birthday bash we’re hosting tomorrow. It was meant to be a surprise of sorts however the cat was out of the bag early – anyway, should be a great night and look forward to catching up with many family and friends – a lot of who read these notes!
Back to markets and the banks were the real dead weight on the index today, ANZ the major drag down nearly 1% with yet more new claims coming out of the CBA Austrac hearing – that stock off by 0.62% as a result. Resources were ok, particularly RIO and Fortescue supporting the market
The Industrials sector was the standout, while Real Estate struggle. An overall range today of +/- 21 points, a high of 6010, a low of 5989 and a close of 5997, off -14pts or -0.24%
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
1.Genworth Mortgage (GMA) $3.06 / -1.92%– Downgraded 2017 Net Earned Premium guidance by around 6% today through changes to the “earnings curve”. The changes come at the conclusion of the annual review noting that they are a result of the losses from mining related regions and improvements in underwriting quality after an ASIC query. GMA though is typically one to buy into bad news particularly around lower sales given that reduced sales = less capital and therefore more capital management. They currently have a $100m buy back going on and can afford to do more, and the stock price showed that today, rallying ~6% from the daily lows. We own GMA in the Income Portfolio and view it as a big capital return story.
Genworth Daily Chart
2. Macquarie Atlas Roads (MQA) $6.12 / -3.77% – Macquarie Group announced that it had sold it’s 11.3% stake in MQA overnight, selling 76 million shares ($456 mil) at a 5.7% discount to last traded price. The sale put an end to the recent strong run in MQA which had put on around 10% in the last month, however with the removal of this overhang, it is likely that MQA will trend higher. Similar reasoning was used to enter Woodside in our portfolios after the Shell sell down.
MQA Daily Chart
3.Transurban (TCL) $12.80 / +4.8% – came back online today after raising $1.9bil from investors to fund Melbourne’s West Gate tunnel. The entitlement offer for existing shareholders was completed at $11.40, however the book build was completed at a significant premium at $12.50 for each new share, around a2.5% above last traded. This is a huge premium on the stock and the reaction by the market will be one to watch in the short term.
Transurban Daily Chart
Have a great weekend
James & The Market Matters Team
Prices as at 15/12/17
James is a Portfolio Manager within Shaw and Partners heading up a team that manages direct equity and option portfolios. He is also the Primary Contributor to Market Matters, a daily investment report that offers real market insight.