The S&P/ASX 200 (ASX: XJO) delivered a 0.5% weekly loss, again outperforming US benchmarks which fell by more than 2% across the five days.
Here are my three key investor takeaways from the week.
China saving the world
Whilst the Chinese COVID-zero policy is being derided globally, it may well be one of the saving graces amid the incredible surge in prices that is occurring around the world.
With an outsized driver of inflation being energy prices and shortages, exacerbated by the Ukraine-Russia war, China’s lockdowns are crimping demand for the very same inputs that are in demand, placing much needed downward pressure, in the short-term at least.
Quality matters more than ever
Nearly every investor talks about seeking ‘quality’ in any company that they own; however, this qualitative term is clearly in the eye of the beholder, which is being shown by the massive divergence in investment performance in 2022.
What has become clear though is that traditional versions of quality matter. That is, companies that are delivering real cash flow, dividends and growing revenue to their shareholders will be rewarded, or at the very least not punished as much as the others.
Investors are clearly no longer willing to bet on growth rates continuing into the future and for the time being are focused on protection.
Be careful of anchoring
There is a natural tendency to see value in companies that have fallen say 60%, like Robinhood (NASDAQ: HOOD), Spotify (NYSE: SPOT) or Shopify (NYSE: SHOP), but the current market has once again reiterated that even a company that is down 60% can halve again, reiterating the importance of diversification.
On the ASX, similar examples can be seen in the likes of Kogan.com Ltd (ASX: KGN), Redbubble Ltd (ASX: RBL), EML Payments Ltd (ASX: EML) and Magellan Financial Group Ltd (ASX: MFG).
