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S&P/ASX 200 to slide – IFL, TPW & PAC shares in focus

The S&P/ASX 200 (ASX: XJO) is expected to open lower on Tuesday according to the Sydney Futures Exchange. Here’s your daily ASX morning report.

ASX 200 posts fifth straight month of gains

The ASX 200 finished Monday near its low, down 0.2%, yet the market was able to finish August 2.2% higher. The result marked the fifth straight month of gains and a 33% rally from the March lows; those who sold amid the volatility have now truly been left behind.

The monthly gains closely reflected the recovery of US markets, with the digitally-enabled IT sector up 15% behind the likes of Afterpay Ltd (ASX: APT) and ASX Ltd (ASX: ASX), and the Consumer Discretionary sector up 11.6% driven by the e-commerce powered JB Hi-Fi Limited (ASX: JBH) and Ltd (ASX: KGN).

The biggest news of the day was the $1.6 billion IOOF Holdings Limited (ASX: IFL) announcing the purchase of MLC Wealth from the National Australia Bank Ltd (ASX: NAB) for a price of $1.44 billion. The successful acquisition would result in a $510 billion superannuation, wealth management and advisory platform, the largest of its type in the country. In my view, the deal will take some convincing given the entire premise of the Royal Commission was on removing these vertically integrated institutions.

Temple & Webster shows no signs of slowing

The Australian beef and wine industries took another hit on Monday after China announced it would be launching an investigation into Government subsidisation of the domestic wine industry; with China our largest export market.

This follows last week’s banning of another Australian abattoir as the Chinese seek to exert their position of strength and comes amid news that some 17% of Victorians are employed but with no work to do. Treasury Wine Estates Ltd (ASX: TWE) remained under pressure, falling 0.8%.

Pacific Current Group Ltd (ASX: PAC), the owner of the fastest-growing boutique fund manager in the world, GQG Partners, added 1% after reporting a 21% increase in net profit to $25 million. Funds under management increased 52% to $93 billion with GQG Partners alone accounting for $19 billion of the increase. The result was a 40% increase in the dividend to 35 cents per share for the year.

Meanwhile, online furniture retailer Temple & Webster Group Ltd (ASX: TPW) announced an FY21 trading update. It reported a 77% lift in active customers, a 74% increase in revenue for the year and a further 161% revenue growth in the short period from July to 27 August. Temple & Webster shares finished 18% higher. 

Buffett goes long Japan

The records continue to fall with US markets posting their strongest August since the 1980s. The S&P 500 finished down 0.2% for the day but 7.2% higher for the month. It was a similar story for the tech driven Nasdaq, up 1% and 9.6% respectively behind another rally in both Tesla Inc (NASDAQ: TSLA) and Apple Inc (NASDAQ: AAPL), adding 12.6% and 3.2% after their stock splits.

As another month of positive returns passes, it’s more evident than ever that those relying on traditional ‘value-based’ investing has been left behind, with digital-enabled businesses leading the way post-pandemic; this trend is unlikely to cease anytime soon.

Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) has announced another sweeping investment, adding substantial allocations to 5 mini ‘Berkshires’ based in Japan. The holdings include trading houses, Sumitomo, Mitsui, Mitsubishi and Itochu, with the news sending the Nikkei 225 up 1.1%.

This week sees European inflation data and Australian GDP on Wednesday.

This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.

The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Disclosure: Drew Meredith is the author of this post. He may maintain positions in the securities mentioned.

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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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