Yovich & Co Market Update - 26 April 2016

Apr 26, 2016 | Commentary

Changes in Market

Market Themes

  • The New Zealand market is currently on a ten week winning streak which is persistently pushing the market to new all time highs.
  • Health related stocks have been the focus for the local market with Orion Health (OHE.nz) and Comvita (CVT.nz) both having a strong month. They are up 39% and 20% respectively.
  • The Aussie Resource stocks have finally seen a sustained resurgence with stocks such as Rio Tinto, Fortescue Metals and BHP all trading to their highest levels for the year.
  • Other global markets have been steadily rising and recovering from the bearish start to the year.
  • The New Zealand Dollar softened over the month, reversing the strength seen in the previous month.

Investment News

Australian Funds Management Sector – Summary

Today I summarise the Australian Funds Management sector, a sector that will benefit from the planned increase in the compulsory rate of superannuation from 9.5% to 12% over the next 9 years. This also fulfils our strategy of looking for Australian investments as we believe that it is a good time to be investing in Australia while the exchange rate is around 89 cents to the Kiwi.

 AFMS Summary

Our preference at this time is for Macquarie (MQG.asx) as the analysts are expecting earnings to be upgraded and the share price is currently trading below the “sum of parts” valuation.

Barramundi Warrants – Maturity Date is Approaching.

If you held Barramundi shares before May last year, you received warrants as the company wanted to raise more capital and improve the free float of the shares. The warrants mature on 6 May 2016 and they give the owner the right to buy more shares at an exercise price of 62 cents. With the current share price trading slightly above this level (63 cents to 64 cents) it is an offer to consider. We are generally suggesting to investors to exercise their option as we continue to like Barramundi’s strategy of investing in high yielding, mid cap stocks in Australia. At the current share price, the gross dividend yield is 9.73% and BRM is trading at a 13.6% discount to the Net Asset Backing of 71.62 cents as at 21 April 2016.

 

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About the author



Jarrod Goodall



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