Author: Tabarruk

January 24, 2021

December – Week 3 update

After a steady rise. the market seems to be quieter and sluggish heading into the Christmas holiday period. That suits most ASX investors just fine, especially with the US markets flat overall. It’s like T20 season on the markets is over for now and we’re in the middle overs of a one-day game.

Key Market Headlines

  • The FDA has been busy, saying that Moderna’s coronavirus vaccine is “safe and highly effective”, market is anticipating approval by end of the week
  • FDA also approves first COVID home testing kit that can be purchased without a prescription
  • Pfizer’s vaccine is being deployed across US hospitals
  • Australian unemployment rate out this morning, down to 6.8% from 7%
  • Resources have been doing well. Oil up 0.4%. Base metals mainly stronger. Iron ore up 0.8%. 

The ASX VIX (volatility index) is holding under 15.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

The S&P/ASX 200 VIX Index (XVI) calculates the amount of volatility expected in the market over the next 30 days.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

Watchlist, portfolio updates and purchase entries for members are at the bottom of this update.

On to the latest CEO insights.

CEO Insights by Sector

Retail & Ecommerce

“What we have seen as physical retail opens up, this has not had a cannibalising impact on the online channels. It is additive to what is already a tide that has risen online” 

Nick Molnar, Co-CEO, Afterpay Ltd

“As we look ahead to post-COVID, we do believe that a lot of the e-commerce gains will stick, and we’ll continue to grow off of a higher base and the reasons why we believe that is convenience is habit forming” 

“I think the other trend that we believe is significant here [for e-commerce] is entrepreneurship, in times of tough economic climates, we know that business formation generally increases”

Amy Shapero, CFO, Shopify Inc

Domestic Economy

“We’ve been through some seven years of drought where most of those economies in the Australian bush have struggled to keep afloat, and now with the good harvest and the good tourism, there is money coming back into communities” 

Peter Langley, CEO, FedEx’s Australasia

Domestic Property

“The market is improving and there is one reason for that: there is a lot of money at very low rates of interest. That’s the only reason. There is always demand, and there is always insufficient supply. That is still the case. What’s changed is cheap money in great abundance” 

Harry Triguboff, CEO Meriton

Energy & Resources

“We’re not an electricity company so we’re not going to make a big announcement about going into renewables. Why? Because I don’t see much money in it, No 1. And No 2 it’s already a very, very crowded space. Electricity markets and retail markets are very crowded. We will continue to operate in fuels” 

Kevin Gallagher, CEO, Santos Ltd

Food, Beverage & Hospitality

“There’s absolutely no doubt in my mind that it’s going to take a very long time to recover to 100% of bars and restaurants that were open before the pandemic. I think that’s a long-haul – if we ever get back to that place” 

Gavin Hattersley, CEO, Molson Coors Beverage Company

Telecommunications

“Structural shifts are stripping profitability out of the sector: The NBN, growth of the tier-two MVNO [mobile virtual network operator] market, and the OTT [over-the-top/streaming] providers, who contribute little, if anything, to the infrastructure they rely on, yet drive increased usage and continued investment for telecommunications providers” 

Kelly Bayer Rosmarin, CEO, Singtel Optus Pty Ltd

Technology

“Over the next decade, technology spending as a percentage of GDP is projected to double” 

“I think we definitely are going to have real structural change [with technology adoption] so when we remove the pandemic constraints, I don’t think we just go back to the way things were in the beginning of 2020 or late 2019”

Satya Nadella, CEO, Microsoft Corporation

“We believe the explosion of devices, applications and data at the edge [computing] will continue to drive demand for secure connectivity, cloud computing capabilities and analytics, especially in a post-COVID world” 

Antonio Neri, CEO, Hewlett Packard Enterprise Company

Social Media

“When we think about what drives people to Twitter, we think about the events and topics that are happening in the world”

Ned Segal, CFO, Twitter Inc

Automotive

“It’s very much [a] truck first recovery so far” 

Mark Smith, CFO, Cummins Inc [global engine manufacturer]

“I think overall the automotive industry is going to have a strong fourth quarter, and I do believe it’s going to be a strong 2021. I think the industry is in a sweet spot right now” 

Mark Fields, Former CEO, Ford Motor Company

“Labour shortages have become increasingly the concern since we restarted our operations in Q3” 

Doug DelGrosso, CEO, Adient plc [world’s largest automotive seat manufacturer]

Transport & Logistics

“We have the weekly normal flights, but we’ve had to top them [up] with additional flights because there has been so much volume coming into Australia and it has been difficult to get the volume in” 

Peter Langley, CEO, FedEx’s Australasia

Travel & Leisure

“There’s been a rush of bookings as each border restriction lifted, showing that there’s plenty of latent travel demand across both leisure and business sectors” 

Alan Joyce, CEO, Qantas Airways Ltd

Environmental, Social & Governance (ESG)

“If we’ve got customers today that aren’t thinking about climate change, haven’t considered it in terms of their operations, what the risks are and what they should do about it, that’s a pretty big red flag to me that these are not good customers in the way they think about other issues” 

Shayne Elliott, CEO, ANZ Banking Group Ltd

December – Week 2 update

A streak of 7 days in the green for the ASX. The market has 7,000 in its sights. Will we test it before the year ends?

There is a more certainty in the market, amidst progress in vaccine related news and the political / election volatility subsiding for now.

The ASX VIX (volatility index) is under 15 and heading to pre-covid levels.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

The S&P/ASX 200 VIX Index (XVI) calculates the amount of volatility expected in the market over the next 30 days.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

Watchlist and portfolio updates for members are at the bottom of this update.

On to the latest CEO insights.

CEO Insights by Sector

Banking & Payments

“The virus has been very interesting for payments. On one hand, it’s suppressing cash usage as people are worried about germs being spread via currency and so more people, even for small ticket items where they might have used cash in the past, are looking to use a debit card or a credit card” 

Albert Kelly, CEO, Visa Inc

Technology

“With 5G, data driven insights, automation and embedded intelligence, we will see an explosion of edge computing [computing done at the location it is needed] in smart cities, transportation, factories, hospitals and schools around the world” 

Jeff Clarke, COO, Dell Technologies Inc

Tourism & Leisure

“If you look at the leisure industry, that is airline, hotel, gambling…All those industry specialists are saying that it will take three years and more to recover, then [based on this] we believe that maybe the surge that we had this summer will be a bit reduced. But we have a pretty good runway in front of us” 

José Boisjoli, CEO, Bombardier Recreational Products Inc [owner of Sea-Doo, Ski-Doo & other RV brands]

“I do think the [luggage] marketplace will be disrupted. I do think there’ll be smaller plays in the industry that struggle to come out of this. But it will remain competitive and remain fragmented” 

Kyle Gendreau, CEO, Samsonite International SA

“Travel in 2021 and beyond will be a much more considerate exercise than it has ever been before” 

Luis Cabrera, CEO, Lonely Planet

Workplace & Employment

“I think all of us, as business leaders, have realised that perhaps we had people taking trips that might not have been necessary, or we sent too many people on a trip, or we sent somebody to give a presentation for an hour and a half and sent them around the world, and that cost money and it cost time, which is money, and now realize that, boy, a lot of that stuff can be done on any one of these video platforms that work darned well” 

Albert Kelly, CEO, Visa Inc

“I do believe there will be more change in the next two years than in the last 10 years…Almost every company on the planet is and will have to reimagine their business. Quite simply, different work needs to get done and work needs to get done differently” Gary Burnison, CEO, Korn Ferry Inc

“Printing volumes continue to be significantly below where they were before the pandemic” Enrique Lores, CEO, HP Inc

Agriculture

“Australia has been in a strong moment of rebuilding [cattle] herds. Australia, overall production of beef in Q3 was 30% below last year. Just to give you a perspective, 30% is a big, big reduction…since last year, and even more this year, probably the best conditions for grass in Australia in many, many decades. So, it came from extreme [drought] to another extreme now, so that’s why the [cattle] retention has been so strong in Australia” 

Andre Nogueira, CEO, JBS USA [world’s largest beef producer]

“In the coming period we need to be prepared for ongoing uncertainty in terms of access to the Chinese market” 

Hugh Killen, CEO, Australian Agricultural Company [AACo] Ltd

Residential Property

“I don’t think the housing market is a risk anymore. I mean we’ve substantially upgraded our forecast in and around housing versus where we were in May and even in August” 

Matt Comyn, Chief Executive, Commonwealth Bank of Australia Ltd

Building & Construction

“We’re anticipating this post-COVID retail environment [where] the nesting effect of the DIY starts to minimize over time” 

Marvin Ellison, CEO, Lowe’s Companies [world’s 2nd largest hardware chain]

Manufacturing

“We are starting to see strength in our [aluminium] markets. We gave a view at the beginning of the fourth quarter that was somewhat uncertain around the value-added products markets globally. We are starting to see the value-added products markets strengthen globally” 

William Oplinger, CFO, Alcoa Inc [global aluminium manufacturer]

“We’ve observed in the last month very strong dynamics in the market for hydrogen technologies, at least say which we have not seen before being this strong” 

Martina Merz, CEO, Thyssenkrupp AG [multinational chemical, steel & elevator manufacturer]

Transport & Logistics

“Building on the V-shaped recovery in the September quarter, we continue to see consistent improvement in terms of mobility and miles driven, and this bodes well for the replacement demand of tyres, both in terms of passenger vehicles as well as truck and bus” 

Sean Keohane, CEO, Cabot Corporation [multinational chemicals company/supplier of chemicals for tyre industry]

Consumer Goods

“I think in the label industry in general, because this pandemic has increased at-home purchases, so if you are in the label business, I don’t think it’s been a stressful time…you wouldn’t say it’s been a bad time for consumer packaged goods companies” 

Geoffrey Martin, CEO, CCL Industries Inc [world’s largest diversified label company & banknote maker]

Retail

“Fundamentally it seems like the consumer is relatively strong” 

Katrina O’Connell, CEO, GAP Clothing Inc

“It doesn’t look like the economy is going to be anything other than very strong in the immediate future” 

Gerry Harvey, Chairman, Harvey Norman Holdings Ltd

December – Week 1 update

After a high in November, the market had a small pullback before starting December steadily in the green.

There is a new picture emerging when comparing global economies. Our employment and GDP numbers show we’re not on the brink of recession and recovering rather well. The US on the other hand, has 10 million people out of work, a long wait on vaccines, questions on further stimulus, all leading to a limping economy.

The contrast is even greater with the COVID situation. Over 2500 deaths a day (that’s a death every minute) and 200,000 new cases daily in the US. Zero deaths for some time now in Australia and a handful of cases, mostly from people flying in.

The ASX VIX (volatility index) remains in a slow downward trend.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

The VIX reading is under 15 points at COB yesterday.

The S&P/ASX 200 VIX Index (XVI) calculates the amount of volatility expected in the market over the next 30 days.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

marketindex.com.au

On to the latest CEO insights.

CEO Insights by Sector

Banking & Payments

“So there has been a run on cash in every central bank in the world in the pandemic. I mean there isn’t a single bank in the world that hasn’t seen increased demand for cash” 

“There is a lot of interest in polymer [bank] notes and I would say that it’s accelerated during the pandemic because people are worried about the cleanliness of [paper] currency as well as the cost efficiency and all the other aspects of it. So, we’ve got a lot of interest in that field”

Geoffrey Martin, CEO, CCL Industries Inc [world’s largest diversified label company & banknote maker]

Technology

“We’re seeing such trends and such tailwinds around streaming, whether it be audio or video and that plays right into what we’re doing” 

Patrick Spence, CEO, Sonos

“COVID has resulted in the acceleration of technology in every aspect of our lives and there will be no turning back. This is a fundamental shift” 

Frank Calabria, CEO, Origin Energy

Tourism & Leisure

“Regional tourism is very, very strong. Holiday parks with their open space make social distancing very easy to do. This has been a real positive for the whole industry” 

Grant Wilckens, CEO, G’Day Parks [Australia’s largest holiday/caravan park owner and operator]

“If you said tomorrow that there was a vaccine with 100 per cent efficacy, and everyone gets it, do people want to live on a cul-de-sac or in a city? They’d rush back and realise there was a reason they weren’t living in a cul-de-sac before” 

Peter Kern, CEO, Expedia Group

“We’re seeing extremely strong demand in the back half of fiscal-year ’21 and all of ’22 in terms of cruise line bookings” 

Bob Chapek, CEO, The Walt Disney Company

Workplace & Employment

“My prediction would be that over 50% of business travel and over 30% of days in the office will go away” 

Bill Gates, Co-Founder, Microsoft Corp

“At the beginning of the pandemic, we heard an awful lot about how effective it is using technology to work from home…But what we’re also hearing now is how important it is to be in the office for creativity, the team working, the projects for coaching and development” Dominic Blakemore, CEO, Compass Group PLC [world’s largest contract food service company]

Residential Property

“With the scheduled end of the Job Keeper and deferred mortgage programs still yet to be determined, along with other macro factors impacting consumer confidence, there is still material uncertainty as to whether the momentum evidenced in the first half of FY21 will be maintained in the second half results” 

Eddie Law, CEO, McGrath Ltd

“The major lenders have seized the opportunities presented by favourable funding conditions and have aggressively targeted market share growth with generous cash back offers and very competitive fixed rates for new customers. This has seen the major lenders regain market share from the non-majors. They now hold 60.1% of the market, up from circa 52% in the same period last year” 

David Bailey, CEO, Australian Finance Group [AFG] Ltd

Building & Construction

“Demand strength [from the construction industry], particularly in the Australian market, has continued to outpace our expectation” 

Mark Vassella, CEO, BlueScope Steel Ltd

Transport & Logistics

“Despite the fact that we are still in the middle of the pandemic with continued high uncertainties, we have seen a strong recovery in demand within transportation and logistics, which has led to equipment shortages, both containers and vessels” 

Søren Skou, CEO, Maersk [global shipping company]

Advertising & Marketing

“Millennials and Gen Z are hard to reach. The traditional modes of advertising don’t reach this generation” 

Anthony Eisen, Co-CEO, Afterpay Ltd

Retail

“I do think that some personal [shopping] habits will have changed on a relatively permanent basis in terms of customers focus on handwashing and overall safer lifestyle choices when it comes to keeping clean go forward” 

Andrew Meslow, CEO, L Brands Inc [global clothing, soap & fragrance conglomerate]

Food & Beverage

“I think we are at the very beginning, for meat and dairy substitutes, of their market growth – they are still tiny compared to the overall meat and dairy markets. In the most developed countries, it’s 5%of meat or dairy – some predictions say it could go to 50%.” 

Hanneke Faber, President, Foods & Refreshment, Unilever

“Long before the pandemic started, we were witnessing a shift away from the traditional sit-down family dinner. Anyone who has kids has experienced this. Many activities, not enough time and dinner was whatever could be eaten between activities. The pandemic brought the sit-down family dinner back. Meals previously eaten on the go have become family activities” 

Jim Snee, CEO, Hormel Foods Corporation [multinational processed foods conglomerate]

Aviation

“The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack up unprecedented losses” 

Alexandre de Juniac, CEO, International Air Transport Association [IATA]

“[A lack of national cohesion on borders] Is kryptonite for the tourism industry. No one knows what is going to happen from one day to the next” 

Geoff Culbert, Chief Executive Officer, Sydney Airport Ltd

Energy & Resources

“Renewables are plunging in cost so fast, gas will never get a look in. This isn’t about politics. It’s about economics and realism” 

Mike Cannon-Brookes, Co-CEO, Atlassian Inc

Chinese Economy

“If you look at China right now where things are pretty much back to normal, you will see our businesses are performing well there, people are socializing outside the home again” 

Ivan Menezes, CEO, Diageo PLC [multinational alcohol company]

On to purchase entries and company updates for members.

November – Week 3, ASX glitch, thoughts on portfolio breaking 250k

The market, ASX 200 (XJO) hit a post-covid high of over 6,500 yesterday and ended the day just under it.

In the last 48 hours markets globally have seen a positive uplift, mainly due the news of a second vaccine from Moderna that is claimed to be 95% effective as opposed to Pfizer’s claims for their vaccine last week.

Pfizer’s vaccine headlines were also accompanied by the CEO selling 7.5 million AUD worth of shares on the same day the vaccine effectiveness was released to the media and the share price rose 15%. Made us raise our eyebrows and think of our article on Director’s buying and selling shares just 2 weeks ago.

Other highlights of note to markets:

  • Australia signed the world’s biggest trade deal RCEP (Regional Comprehensive Economic Partnership)
  • NSW plans to make stamp duty optional. A land tax instead.
  • Australia’s travel bubble plans with NZ on hold with new outbreak of cases in South Australia
  • US now has 11.2million cases of covid, and is on a trajectory that will top 200,000 new cases daily by the end of November. France has gone over 2million cases
  • Thousands of people volunteer to take test cruise ship trips as operators look to satisfy CDC standards for being COVID safe.
  • US election uncertainty seems to be subsiding.
  • Rotation into Energy, Travel and Leisure, cyclical companies continues for now, but at a slower pace.

We’re keeping a close eye on things and looking at companies that will become ideal to take positions in, both from our existing portfolio and our watchlist.

The VIX (volatility index) has dropped even further.

Volatility has been levelling out the last few months and has now sharply dropped.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

The VIX reading is under 15 points at COB yesterday.

Source: marketindex.com.au

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

16th Nov, Monday’s ASX “crash”

When we wrote ‘Will there be another share market crash in 2020’, we didn’t think it would the kind that had the ASX tech support team putting out fires.

Office Monkey GIF

Monday’s ASX outage which started around 10.30am, lasted for hours before the market was officially closed to investigate and fix an issue with a system upgrade of the data trading system, which was implemented by NASDAQ.

And it was specifically due to to do with combination trading of equities, and options (CX trades). This type of combination trading has been disabled and the ASX resumed trading the next day.

ASX released an official apology and response late on Monday.

They’ve only been a few instances of the ASX having technical issues and having to shut down trading. Yesterday’s 6.6 hour outage was the longest the market has been shut in 10 years. Reports say that the impact of no trading yesterday, across 2000 listed companies and institutional money etc. totals about 1.2. trillion AUD.

It hasn’t been a great quarter for the ASX, a publicly listed company itself. Last month the ASX’s much-anticipated new website failed shortly after launch, blocking access to company announcements and market data leading to criticism of the ASX being the only exchange in Australia.

Many other countries have multiple exchanges which lends itself two more providers competing for providing the service, generally a good thing.

Are tech issues on the ASX a concern and are shareholdings safe?

Without getting into too much detail, the short answer is that we are very fortunate with the way ASIC and the ASX work, the regulations around ownership and trading of shares, being linked to a CHESS / HIN number that is unique to each shareholder. And with registries like Computershare to manage share holdings and brokers, shareholder’s actual ownership of shares is always safe and therefore the value of money is safe in them. There’s always going to be a track record and history of what trades were done with the ASX.

The other reason we feel safe, is that we use brokers like SelfWealth who allow you to buy shares with your own CHESS / HIN that’s connected to your Tax File Number.

With some of the other brokers including new ones like SuperHero, this is not the case. You do not technically own the shares because they trade all the shares on your behalf, under their own CHESS / HIN which means they technically own the shares. Of course, it’s up to everyone to decide whether cheap brokerage is worth the technical ownership issue. We’ve never used brokers that don’t allow us to trade with our individual CHESS / HIN, thereby ensuring the shares are actually owned by us.

Thoughts on Tabarruk’s portfolio value crossing 250k

We’re at 115% growth with our portfolio and the core of our long term strategy has been:

1️⃣. Investing in established businesses

2️⃣. Finding smaller companies or business recovery signs early

3️⃣. Conviction and patience to hold as growth occurs

4️⃣. Using our secret to buying at the bottom

5️⃣. Investing a portion of our income monthly or fortnightly

Since the start of our portfolio in March 2020, once our initial investment had grown to a baseline of what we felt was ‘secure’ we diversified into some early picks and companies that were recovering. This theme is something that we continue to do while researching companies and sectors, week in, week out.

This has had our portfolio rally to new highs off late as the rest of the market and media got wind of some of these sectors and companies.

This combination really comes into its own when you have multiple early finds, combined with the holdings in established companies also growing at a good rate. Finding companies early can be life changing.

Watchlist and portfolio updates for members are at the bottom of this update.

On to the latest CEO insights.

CEO Insights by Sector

Workplace & Employment

“We believe the shift to distributed work will continue long after the pandemic ends” 

Drew Houston, CEO, Dropbox Inc

“We’re expecting, hoping it [unemployment] will get to 6.5 per cent by the end of calendar year 2021, I think that would be a very, very good result” 

Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Domestic Economy

“Some of the underlying impact of lockdowns we probably can’t quite see until probably April/June quarter next year” 

Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

“Australia is positioned to demonstrate to others the importance of investing in relationships and the power of trade. We have demonstrated for decades a firm belief in cooperation and collaboration in our region and beyond. The Australian Government’s leadership together with China and other nations to finalise RCEP is such an example. We must return the world to growth to help improve living standards and do it in a way that is sustainable and benefits all. For us to ‘build back better’, we must ‘build back better, together’ … we have to ensure we are doing absolutely everything in our power to secure Australia’s continued prosperity through mutually beneficial trade and co-operation”

Mike Henry, CEO, BHP

Chinese Economy

“This was another extraordinary quarter for Chinese consumer consumption” 

Fabrizio Freda, CEO, The Estée Lauder Companies Inc

Food & Beverage

“Despite restricted operating conditions due to a virus resurgence in the State of Victoria, strong drive-thru and delivery sales drove roughly 75% of Australia sales, and they grew market share. Australia has also seen an increase in other digital channels, such as our mobile app and self-order kiosks, as customers use contactless ways to order and pay” 

Kevin Ozan, CEO, McDonald’s Corp

Agriculture

“Milk supply in Australia continues to improve…Favourable weather conditions have helped increase milk production for our current base of suppliers. We’ve seen increased milk purchases from third-party milk brokers, and we continue to increase our toll manufacturing opportunities. Volumes are performing better than prior year” 

Kai Bockmann, COO, Saputo Inc [Australia’s largest dairy processor]

“There were reports just a few weeks ago about rain and hail storms and the damage they had done to crops, put simply we’re not seeing the impact of that coming through our network based on the scale of the crop” 

Robert Spurway, CEO, GrainCorp Ltd

“Right now, we’re into harvest and we’re seeing what’s happening and we’re very confident about the amount of grain coming into our network, based on what we see as a very significant crop across East Coast Australia. We’ve seen good yields. We’ve seen good quality” 

Robert Spurway, CEO, GrainCorp Ltd

Domestic Retail

“With borders reopening and the return of domestic tourism, along with a steady increase in workers returning to CBD offices, this should support improved retail conditions across Australia” 

Grant Kelley, CEO, Vicinity Centres

“As a result of significant pent-up demand, the trading performance across stores in Melbourne has been very strong since they re-opened to retail customers on 28 October 2020” 

Rob Scott, CEO, Wesfarmers Ltd

Media & Advertising

“Since the end of September, the FTA [free to air] advertising market and Nine’s share of that market, have both improved significantly” 

Hugh Marks, CEO, Nine Entertainment Co Holdings Ltd

Construction & Infrastructure

“As we look ahead, our customers are pointing to volumes remaining at current levels through to the start of the new calendar year” 

Ross Taylor, CEO, Fletcher Building Group Ltd

Energy & Resources

“After scientific and personal analysis of the renewable resources of our little planet I can assure you there is more than enough renewable energy to sustainably and economically supply every person on the planet from this time forth” 

Andrew Forrest, Chairman, Fortescue Metals Group.

Commercial Property

“Vacancy is beginning to rise and it’s beginning to rise fairly quickly now which is again exactly what you would expect in a downturn of this sort. Companies that do not have the ability anymore to kick the can down the road are, based on our numbers renewing and that’s at a higher percentage than is typical. They’re not going to the market. They’re just going to renew and they’re renewing at shorter-term leases” 

Brett White, CEO, Cushman & Wakefield plc

“At the moment, the way I would describe, what we’re seeing on the leasing side is rents are holding up. That will change. We know the rents are going to be coming down” 

Brett White, CEO, Cushman & Wakefield plc

“Rising confidence will combine with very low interest rates to drive investor capital toward property, and particularly commercial property yielding two to three times the yield available from buying residential” 

David Harrison, CEO, Charter Hall

Aviation

“There’s reasonable optimism now that [northern hemisphere] summer 2021 will get back to some degree of normality”

Michael O’Leary, CEO, Ryanair

Automotive

“We are now assuming a global car demand down 17% for the full year, 2 percentage points better than our previous expectations, and a minus 5% in the fourth quarter. High-value [car industry] is confirming its resilience” 

Andrea Casaluci, CEO, Pirelli Tyre & Co SpA

Tourism & Leisure

“Caravan sales are very strong at the moment – a six month wait for a new caravan is not unusual – and the two most popular regions in Australia for caravanning and camping are the NSW North Coast and NSW South Coast” 

Simon Owen, CEO, Ingenia Communities Group

Members only updates follow below.

November Update – Week 1 & 2

The market, ASX 200 (XJO) hit a high of 6,437 this morning and is sitting at 6,351 at 2.22pm.

Overnight, Pfizer released a media statement claiming that their vaccine is 90% effective.

This combined with increasing certainty following the US elections caused a significant rally on global stock markets, so it was inevitable that the ASX would follow.

As we saw in April 2020, when the media put out initial ‘recovery / vaccine’ hopes, the sectors and companies that the money has flown into today, and caused surges in share prices were Energy, Travel and Leisure.

Whether the Pfizer vaccine is indeed effective and how long it would take to get to the masses, remains to be seen. Likewise, the rotation of investors attention from Technology and Health into ‘recovery’ plays is also something that needs time to ascertain if it’s temporary or longer term.

Some key highlights we’ve noted:

  • Global coronavirus cases go over 50 million as USA and Europe have difficulty containing surges
  • China state media takes an optimistic tone on Biden, says relations could be restored to a state of greater predictability
  • China auto sales go from strength to strength as virus recedes; optimism growing that slump is over; electric cars gain ground
  • Business sentiment of Japanese manufacturers and service-sector firms was the least pessimistic in nine months in November
  • IEA sees new European lockdowns denting oil demand outlook, but would likely be less severe than under lockdowns earlier in the year
  • International travel into and out of Australia not officially open but sentiment around it seems to be changing

Regardless, we’re keeping a close eye on things and looking at companies that will become ideal to take positions in, both from our existing portfolio and our watchlist.

Also interesting to see the VIX (volatility index) has dropped from the elevated levels the last couple of weeks, as we highlighted in our ASX vs global markets and volatility article.

As you can see, the volatility spiked to a peak around the March covid crash before levelling out over the next few months. There was a clear uptrend forming from the last 2 week period which is now starting to settle down again.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

Today’s VIX reading is around 18 points.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

Watchlist and company updates for members are at the end of this post.

On to the latest CEO insights.

CEO Insights

Retail & E-Commerce

“What we saw in the second quarter, clearly a significant disruption in a lot of areas and scarcity in certain areas in the supply chain and distribution that drove a lot of people shopping online…What we’ve seen in the third is it’s reverting to a more normalised buyer acquisition trend and more normalised repurchase frequency for those cohorts” 

Andy Cring, CFO, eBay Inc

“These [recent e-commerce ASX listing] companies have…taken advantage of good market conditions, but this is the next generation of retail. You can’t put the genie back in the bottle” 

Mark Coulter, CEO, Temple & Webster Ltd

“We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season” 

Jeff Bezos, CEO, Amazon Inc

“As we look into the future, there’s no difference between a micro [SME] business and an online micro business. Every micro business is going to be online. That’s just how people are going to find things. That’s just how people are going to want to transact, because it’s going to be simpler for them and it will allow them to scale in a way that previously they couldn’t” 

Aman Bhutani, CEO, GoDaddy Inc [worlds’ largest domain/website hosting company]

Consumables, Meat & Livestock

“COVID has been the greatest sales changer that anyone has ever seen. When you have five million people locked in their homes or a panic attack across the whole country, that drives sales more than any other promotional event” 

Steven Cain, Chief Executive Offer, Coles Group Ltd

“We see incredible opportunities, quite frankly, across the mega trends all over the world that we’re seeing on the ground. Naturals and sustainability, the urbanisation that we’re seeing in big markets, ageing population in developed markets, or younger population and per capita consumption opportunities in developing countries” 

Noel Wallace, CEO, Colgate-Palmolive Company

“Never in my lifetime have we seen the dearest cattle in the world in Australia” 

Peter Hughes, Owner, Hughes Pastoral Company [major QLD cattle group/landowner]

“Values being paid for young grower or replacement cattle bear no reflection to the current domestic or global meat market and are more a reflection of the desire for producers to restock their properties that have experienced a great season following the drought” 

Trevor Lee, Owner, Australian Country Choice [major cattle group/landowner]

Residential Property

“We continue to see our customers invest more in the comfort of their homes, where many are spending more time working and studying” 

Mark Ronan, CEO, Adairs Ltd

“We have quite an optimistic outlook on what’s going on around Australia” 

Mike Schneider, MD, Bunnings Group.

Travel & Leisure

“We were really quite surprised by the level of demand that came into the product of the winter season. Within the first two weeks, we had literally triple the demand that we were expecting at rates above what we were expecting” 

Michael Bayley, CEO, Royal Caribbean International

“I’d have to say it’s [length of rental] pretty elevated. Our customers are keeping the cars longer so when I say that people are checking out at weekends, it’s not like a weekend rental. It’s like you think where you’d take out Friday and come back Sunday, it’s not that at all. They’re using the car over these longer leisure periods” 

Joe Ferraro, CEO, Avis Budget Group, Inc

“There’s much discovery going on and price shopping and there seems to be more direct bookings in the smaller market independent hotels as people are calling to make sure they’re open, make sure that safety protocols, etc” 

Peter Kern, CEO, Expedia Group Inc

“The recovery for travel is not going to be in quarters. It’s going to be in years” 

Glenn Fogel, CEO, Booking.com Holdings

“There’s a huge amount of pent-up demand. People love traveling, they want to get out, and, by the way, even business travel. People like business travel. It’s a break from the monotony, in some cases, of their work” 

Chris Nassetta, CEO, Hilton Hotels

Aviation

“We’re seeing encouraging industry data validating the safety of air travel. Recently, IATA [International Air Transport Association] published data outlining that of the over 1 billion people who have travelled by air this year, there have been fewer than 50 documented cases of transmission”

“We believe there will be pressure on defence spending as a result of all the COVID-related spending that governments around the world have been experiencing. I don’t think we’re looking at that world through rose-coloured glasses. I expect real pressure on that market”  

David Calhoun, CEO, The Boeing Company

“The last thing that businesses in any sector needs right now is more red tape, taking time and energy when we should be focused on recovery” 

Alan Joyce, CEO, Qantas Airways Ltd

Automotive, Transport & Logistics

“With new car sales returning to pre-pandemic levels in September and dealer inventory more than 20% below average, we’re likely to see continued strength in OE [original equipment sales] demand throughout the remainder of the year” 

“Industry conditions improved meaningfully compared to the second quarter and much faster than we expected…Miles driven trends improved globally as freight volumes benefitted from increased consumer and industrial activity”

Rich Kramer, CEO, The Goodyear Tyre & Rubber Company

“All of our plants are now back up and running…and really, most of them now have returned to what I would call near pre-pandemic production levels” 

Mike Manley, CEO, Fiat Chrysler Automobiles N.V.

Payments & Lending

“The trajectory of the recovery, where borders are now open provide some indication of how fast the cross-border business could rebound once most borders reopen” 

Vasant Prabhu, CFO, Visa Inc

“As a result of the overwhelming government support and our ability to manage at a granular level, so far, the [loan default levels] outcome is better than many feared. In a time of ultralow interest rates, time is cheaper than at any time in our history and so buying time through a deferral can be a very rational response for customers” 

Shayne Elliot, CEO, Australia and New Zealand Banking Group Ltd

“We saw [credit] card balances decline a lot and then plateau. We’re still seeing that plateauing effect. I think it will take some time for balances to recover” 

Jes Staley, CEO, Barclays

Insurance

“Insurers have continued to increase premium rates, and volumes have held firm” 

Robert Kelly, CEO, Steadfast Group Ltd

Technology

“The next decade of economic performance for every business will be defined by the speed of their digital transformation” 

Satya Nadella, CEO, Microsoft Corporation

“I look at companies like Microsoft or Amazon and those businesses are the railways of the current era. When railways opened it liberated economies right around the world. What you have with those hyper cloud vendors [eg Microsoft Azure or Amazon AWS], they are the railways of the current era” 

Tony Walls, CEO, Objective Corporation

Energy, Mining & Resources

“We are excited to see recent reinvestment into our sector with major mining houses flagging increased exploration spend and junior miners now accessing capital through equity raisings” 

Jeff Olsen, CEO, Boart Longyear Ltd

“If all the pledges of the Paris Climate Agreement were met, oil and gas would still be 46% of the energy mix in 2040. The energy transition will take time and major breakthroughs in technology will be needed” 

John Hess, CEO, Hess Corporation [global oil & gas producer/refiner]

“Investment in our industry tends to be global and capital will shift to the best place, so governments are aware if they get that wrong through heavy handed intervention, they can actually shift the investment elsewhere and have a negative price impact” 

Lawrie Tremaine, CFO, Origin Energy Ltd

Domestic Economy

“Interest rates will rise but it’s hard to know exactly when, I think we have to be sufficiently optimistic that it will occur sometime in the next five years” 

Dr Phillip Lowe, Governor, Reserve Bank of Australia

“There has been a modest deterioration in our economic assumptions, the expected shape of the recovery and downturn has changed, with a deeper trough and a slower recovery” 

Gary Lennon, CFO, National Australia Bank Ltd

“Anything that helps consumers feel more certain about spending in this important quarter will help propel the retail economy forward – which in turn creates a positive ripple effect on jobs and growth” 

Paul Zahra, CEO, Australian Retailers Association

Chinese Economy

“China’s economy is running. We are developing projects, it’s played back to normal and the pandemic seems to be very, very well controlled” 

Bertrand Camus, CEO, Suez SA [global waste management/recycling company]

“According to the preliminary data, global chemical production was slightly positive in Q3 2020 compared with the prior year quarter. The resilience of chemical demand in some highly relevant customer industries is one reason for that. Another reason is China. The country continues its V-shaped recovery” 

Martin Brudermuller, CEO, BASF SE [world’s largest chemical manufacturing company]

Fitness & Recreation

“We do see strength across categories, basically everything that involves adventure and outdoor activity, especially golf.” 

Cliff Pemble, CEO, Garmin Ltd

Members only updates follow below.

How global markets affect the ASX and planning for volatile periods like USA elections

There’s obviously a lot of content flying around about the US elections and it’s impact on the markets, including predictions of what could happen based on different outcomes.

We’ve never invested based purely on predictions. Our philosophy is based on strong conviction backed by in-depth research, which often leads to the best growth results over the long term.

What we do factor in, is observable data. Like volatility.

How the global markets relate to the ASX

We posted an infographic earlier today on LinkedIn, Twitter and Facebook.

While there, make sure to like, subscribe and follow if you haven’t already.

What the infographic we posted doesn’t show is that 4 of the top 5 companies in the US are bigger than the total market cap of the ASX.

So with the US markets making up almost 50% of the world’s markets, it stands to reason that when they go through volatile periods, it has an impact on the rest of the world, including the ASX, which is 1.5% of the global markets.

Measuring Volatility

The S&P/ASX 200 VIX Index (XVI) calculates the amount of volatility expected in the ASX over the next 30 days. It is also known by other names like “Fear Gauge” or “Fear Index.”

As you can see, the volatility spiked to a peak around the March covid crash before levelling out over the next few months. There is a clear uptrend forming from the last 2 week period.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

Today’s VIX reading is around the 24.5 points reading.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

Source: marketindex.com.au

Approach to planning for volatility

Besides the Democrats vs Republicans outcome of elections in the US, there is another possible outcome.

Australia being isolated in a way, and appearing to have come through the worst of the pandemic in better shape than other economies, we could be seen as a safe haven for the global economy.

So how do we plan to approach investing in this period?

Members, read on to learn what our plans are.


Directors selling or buying their own shares, clues to follow the money?

A question that is asked often – is it a signal for investors to act upon, if company management buys or sells their shares?

It’s a phenomenon that we see across markets, investors reacting to Director trading activity.

Many investors often ‘follow the money’, getting excited and buying when Directors themselves buy shares, and then selling when Directors sell. This is because they assume the Directors have early knowledge of things about to crumble in the company.

We track Director share transactions as an additional factor in our screening and research process, but not to simply ‘follow the money’.

There are ASX regulations that govern Director trading, and the context is an important factor in using the information as investors. There are also cases where Director trading makes no significant difference to the share price in the long term.

Let’s take a deeper look at Director trading activity. We break things down and give you some insights from what we’ve learned and experienced.

The rules and tracking Director activity

Director trading is sometimes called ‘Insider Activity’. Insider Activity is legal and should not be confused with ‘Insider Trading’ which is illegal, i.e. when employees or management who trade based on material information not available to the public or share this information in confidence for them to trade.

Insider Activity is regulated by ASX / ASIC, which require any changes in Director’s shareholdings to be made public within 5 days via notices labelled Appendix 3Y. This is based on the ASX s. 205G of the Corporations Act 2001. ASIC actively monitors trading for misconduct, including market manipulation and insider trading.

Sale notices are typically accompanied by a written notice that states the reason for the sale.

Failure to comply with the above is a $1,700 fine, 3 month jail time or both.

All Director activity notices are publicly available along with the usual announcements in a typical broker platform or on the ASX website.

It is cumbersome to open multiple PDF announcements to look up the multiple Director trades and compare it with other instances in the past.

Some brokers have this information available as a summary, however it is not often up-to-date.

A useful website that lists Director trades for each ASX company is MarketIndex.

As an example, here is what Fortescue Metals Group’s recent Director transactions look like on MarketIndex:

Members can read on to learn about:

  • Reasons Directors buy and sell
  • Analysis of published research and studies on Director trading
  • What can be learnt from Directors trading activity?

October Update – Week 4 and 5

Global markets continue in a period of uncertainty riding on US elections, second and third wave of COVID risks and realistic timelines around an effective vaccine becoming available. Markets tend to do better with certainty and as these factors reach clarity we should see strong trends on the ASX.

The ASX 200 tested 6,200 points following the federal budget measures and then followed the US markets sell off, heading back down towards the 6,000 level.

Folio and company updates for members are at the end of this post.

On to the latest CEO insights.

CEO Insights

Healthcare

“I have some discussions with some people in different hospitals around the world. I mean, when the lockdown came and people postpone surgeries, etc, what actually happened is that a lot of those hospitals were then empty. So, they didn’t have anything to do. So they acted, but maybe they acted a bit too harsh at that point in time.…and I don’t think that we will have a situation that we will lock down the hospitals that quickly [again]” 

Thomas Schinecker, CEO, Roche Diagnostics

Food & Beverage

“The reality is it’s just more expensive to operate in the coronavirus world that we’re living in now” 

Richard Allison, CEO, Domino’s Pizza Inc

“We think this will be the biggest Christmas ever by far, given the circumstances” 

Steve Cain, CEO, Coles Group Ltd

“I think as an industry we have been supply constrained [in addressing online shoppers] for at least the last two years, and what happened, the e-commerce was increasing demand and in this case ourselves and many of our competitors all responded with an increasing supply and that is what has really led to acceleration” 

Brad Banducci, CEO, Woolworths Group Ltd

“The agriculture sector and food…it’s an area of natural advantage for us as a country [to export] and I think that the COVID situation probably only amplifies that. We’ve always had the opportunity to do a lot more and continue to grow” 

Alison Watkins, CEO, Coca-Cola Amatil Ltd

Automotive

“The automotive aftermarket is a resilient industry and historically has performed strongly in difficult economic circumstances. Recent trading is another example of its resilience assisted by the increase in sales of second-hand cars, reduction in use of public and shared transport modes as well as government stimulus” 

Darryl Abotomey, CEO, Bapcor Ltd

“I look at the market for self-driving and the progress that we’ve seen there I have to say that it’s disappointing. I think there are two things playing a role here. First is the complexity of self-driving technology, and I think that has been underestimated…The second one is the justification of the system cost; the total bill of materials for self-driving seems to be higher than originally anticipated” 

Harold Goddijn, CEO, TomTom N.V.

“We do not see retail momentum for RVs [recreational vehicle] and boats slowing anytime soon” 

Michael Happe, CEO, Winnebago Industries Inc

“A lot of the automobile guys and the battery guys are talking to us about nickel [a key input in electric vehicle batteries]” 

Ivan Glasenberg, CEO, Glencore plc

Retail

“It’s not category specific – e-commerce is becoming mainstream. In the first years it was price hunters and early adopters. Now we’re seeing the convenience customer coming online – the convenience customer is a big part of what’s driving ecommerce” 

Ruslan Kogan, CEO, Kogan.com

“We believe the premium audio [product market] uptick is sustainable for a number of reasons. First the entire industry has seen a gain. COVID certainly impacted sales to the upside and it seems consumers have rediscovered quality audio and not just for listening to a stereo system but for movies where we’ve seen growth in home theatre and high-end sound bars but also home gyms, outdoor, gaming” 

Patrick Lavelle, CEO, Voxx International Corp [global consumer electronics company]

“The outdoor apparel [once in a lifetime] moment, we absolutely see…There is a trend towards outdoors and people’s desire to get outside linked to health and wellness” 

Steve Rendle, CEO, V.F. Corporation [footwear & outdoor/action sports apparel conglomerate]

“Demand [for hand sanitiser] has subsequently dissipated and the supply base for such products has become much more competitive, resulting in excess quantities of hand sanitiser inventory” 

Market Announcement, McPherson’s Ltd

Defence

“Many Australians don’t see the significant investment that is being made by the government and industry in the development of world-leading defence technologies. This investment is both supporting the security of the nation and is a catalyst for economic growth” 

Gabby Costigan, CEO, BAE Systems Australia [multinational defence, security & aerospace company]

Travel & Leisure

“Brisbane is currently the busiest airport in the nation due to strong intrastate travel and an increase in domestic tourism”

 James Goodwin, CEO, Australian Airports Association

“We are seeing signs of life” 

Geoff Culbert, CEO, Sydney Airport Holdings

“Yes, I’m fairly confident the worst is over. You do see people are traveling, just nowhere near the rate they were traveling last year” 

Glenn Fogel, CEO, Booking Holdings Inc [conglomerate of online travel agencies]

“It’s really hard to say when a recovery is going to be. This situation we are in now, it’s not sustainable. It’s really bad. You’ve got a lot of pressure on cash flow, and you can only do so much with eliminating expenses and cutting people. You still need revenues” 

David Kong, CEO, Best Western Hotels & Resorts

Transport & Logistics

“Australia is experiencing substantial disruption to the importing of goods through the Asia shipping lane. This is due to several macro factors that are impacting shipping capacity with demand being greater than supply. These international delays have been further exacerbated by delays at Australian ports” 

Andre Reich, CEO, The Reject Shop

“We are planning for a Christmas like no other. Our growth in parcels from July to September was more than the growth for the entire year just two years ago” 

Christine Holgate, CEO, Australia Post

Energy & Resources

“Renewables can’t be sustained unless you firm it [turning a variable energy source into a guaranteed & consistent supply] so we’re heavily investing into firming. There’s no magic answer. Unless you’ve got firming on scale all the renewables in the world can’t be sustained” 

Paul Broad, CEO, Snowy Hydro

“The energy market structure is also difficult at the moment when we’ve got all that variable renewable energy coming in…There are some market structure issues that have to be dealt with” 

Rob Wheals, CEO, APA Group ltd

“I see solar becoming the new king of the world’s electricity markets. COVID-19 has catalysed a structural fall in global coal demand” 

Faith Birol, Executive Director, International Energy Agency

“When it comes to the observed rebound in global aluminium demand, China is leading the way. Though the restart of the Chinese economy from COVID has been faster than other regions, we are [also] seeing improvements across the globe” 

Roy Harvey, CEO, Alcoa Corporation [global aluminium producer]

“The [gold] sector needs to shrink to greatness by producing less gold at a higher margin and being a better investment opportunity” 

Jake Klein, CEO, Evolution Mining Ltd

Telecommunications

“COVID has proven that change can be made and embraced quickly. It has also proven that digitisation of the economy is central to the recovery” 

Andy Penn, CEO, Telstra Corporation Ltd

“Until now, most people have taken a wait-and-see approach to 5G. They’ve been waiting for 5G to get real…Well, today, with [the new] iPhone, the wait is over. 5G just got real” 

Hans Vestberg, CEO, Verizon Communications

“4G drove the consumer app economy and China, the U.S. and the Nordics, they were the first countries to roll out 4G, and that allowed entrepreneurs in those regions actually to innovate on top of the network, building what has become the app economy. So it’s no surprise that we see the, call it, the consumer app economy today dominated by Chinese and American companies” 

Börje Ekholm, CEO, Ericsson

“Much has been made of the technology transitions that have been accelerating by more per month. With these transitions, we believe many of the activities that are now virtual will remain virtual. And as such, this represents a significant change in the way people conduct their lives” 

Patrick Lo, CEO, NETGEAR Inc

Banking & Lending

“Fintech innovation is changing banking in important ways and our new digital banking platform is part of our long-term strategy to support this trend and better respond to changing customer needs” 

Peter King, CEO, Westpac Banking Corporation

“I think we are seeing a secular shift in getting more younger investors engaged in the market and I think that could create a more sustainably higher trading environment than what we saw in the 2017, 2018, 2019 timeframe” 

Adena Friedman, CEO, Nasdaq Inc

Residential Property

“There’s an opinion it’s [current strong sales] a stimulus driven sugar hit…but what we’re seeing is strong growth in other markets internationally where there haven’t been the same levels of stimulus, which speaks of a structural shift in spending” 

Blaine Callard, CEO, Freedom Furniture

“Customer feedback suggests orders for new homes remain robust into early 2021” 

Theresa Mlikota, CFO, Adbri Ltd

“The housing market overall has been an area that has surprised us on the upside…Overall, housing volumes – in terms of applications and listings coming on the market – are much stronger than you’d expect, or certainly what we had expected. There is some cause for optimism compared to what we were expecting just a month or two ago” 

Matt Comyn, Chief Executive, Commonwealth Bank of Australia Ltd

“The housing stimulus packages from both Federal and State Governments continue to have a positive impact on new house sales and will underpin some recovery in the residential building market” 

Market Announcement, Capral Ltd [Australia’s largest manufacturer & distributor of aluminium products]

Employment & Workforce

“Some people will work from home, but really, the majority will come back to offices. You can’t run a business with people working from home”

 Harry Triguboff, CEO, Meriton

“[Post the initial COVID downturn] we already even now are feeling that same structural scarcity in tech jobs, in educational jobs and in healthcare jobs” 

Jacques van den Broek, CEO, Randstad NV [world’s largest staffing/recruitment company]

Members only updates follow below.

October Update – Week 2

Global markets are entering a period of uncertainty riding on US elections, second and third wave of COVID risks and realistic timelines around an effective vaccine becoming available. Markets tend to do better with certainty and as these factors reach clarity we should see strong trends on the ASX.

Watchlist and company updates for members are at the end of this post.

On to the latest CEO insights.

CEO Insights

Automotive

“Countries such as the USA, Norway and China have all invested in a strong charging network and offered monetary incentives to both commercial and private buyers of plug-in hybrid or fully electric vehicles, leading to high uptake across the board in these markets, however the cost benefit of electrified vehicles is just one of the challenges facing uptake in Australia” 

Vikram Pawah, CEO, BMW Group Australia

“The Board believes a substantial proportion of the recent growth can be attributed to satisfying pent up demand created during the lockdown period. In addition, an increased trend towards local touring in several countries has been helpful and government support has provided spending stimulus to people and businesses” 

Market Announcement, ARB Corporation Ltd

Retail

“Through the pandemic, what we’ve seen is an acceleration of the trend towards casualisation globally and we obviously are set up to capitalise on that, so while the total apparel category has declined during the pandemic, denim’s share of total apparel is unchanged” 

Charles Bergh, CEO, Levi Strauss & Co

Industrials

“We see solid growth in the [DIY] consumer segment for the balance of this year, and we think it will be on a new base that’s higher than what any of us could have achieved on our own. I think [it’s] one of the very few positive consequences of this pandemic. The flip side is supply chains across all industries and certainly in DIY have been disrupted mightily” 

Frank Sullivan, CEO, RPM International Inc [multinational paints/coating company]

Travel & Leisure

“What we have seen during periods of public health restrictions is that there was an increase in sales in products for the home with a reduction in travel related categories, such as car seats and prams, etc. Outside of significant restrictions, these trends have reversed, and we have seen sales in our travel related categories rebound strongly” 

Matt Spencer, CEO, Baby Bunting Ltd

“We know there’s huge pent-up demand for air travel and we’ve seen families travelling to new places during the [September] school holidays because they weren’t able to get to their traditional holiday destinations” 

Andrew David, Domestic CEO, Qantas Airways Ltd

Transport & Logistics

“If you look historically at the demand for this business, the service that we provide has steadily grown in line with global GDP and the global trade which is a multiplier of global GDP, so it’s always been very steady. It’s the supply side that’s messed up the market. This time around it’s absolutely the supply side that looks very healthy [and the demand side doesn’t]” 

Niels Stolt-Nielsen, CEO, Stolt-Neilsen Ltd [multinational chemical storage & transport company]

Energy & Resources

“We need to be realistic about the extreme structural challenges that are facing the asset up at Lytton [Ampol’s oil refinery in QLD]” 

Matt Halliday, CEO Ampol Ltd

Farming & Agriculture

“We’ve gone through some tough times as a farming industry but we’ve had a fairly good run of seasons and some good pricing [of late] and so I think we’re in a good position at the moment” 

Simon Stead, CEO, CBH Group [Australia’s largest grain exporter]

Federal Budget

“It can’t be understated just how much this will provide a shot in the arm to employment, youth job creation, consumer confidence and spending” 

Solomon Lew, Chairman, Premier Investments Ltd

“We have seen in the past how effective some programs have been, such as the instant asset write-off, and that features again in this budget” 

Shayne Elliot, CEO, ANZ Banking Group Ltd

“The HomeBuilder extension is really going to be critical if you want to get growth in housing in that period with low population growth” 

Mark Steinert, CEO, Stockland

“It may have taken a global pandemic to provide the impetus for a course correction, but the government’s gas fired recovery deserves the support of all of us who care about this nation’s economic recovery and future prosperity”

Jeanne Johns, CEO, Incitec Pivot Ltd

Banking & Lending

“We have seen a very significant increase in people making additional repayments to their mortgages over the last 12 months and primarily over the last eight months” 

Bernadette Inglis, CEO, Newcastle Permanent [Australia’s second largest mutual bank]

“While we are seeing encouraging signs that many customers are able to restart repayments on deferred loans, we know that others will continue to need our support for some time to come” 

Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Residential Property

“Australia’s residential property sector generates over $100bn annually for our economy and creating new homes and apartments is one of the most important job multipliers in the country, with the Australian Bureau of Statistics establishing that every dollar spent on residential construction generates a $3 impact in the broader economy” 

Andrew Whitson, CEO, Stockland Communities

“Lately, we see a lot of interest in beautification. A lot of people are taking the opportunity to update their homes”

 Jesper Brodin, CEO, Ikea Group

Environmental

“Our experience has been that it is extremely difficult to purchase carbon offsets from projects located in Australia. This is something that needs to be addressed because what it says is that there are not enough projects contributing to a reduction in greenhouse emissions” 

Andy Penn, CEO, Telstra Corporation Ltd

Members only updates follow below.

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