Profile cover photo
Profile photo
Clime Asset Management
14 followers
14 followers
About
Posts

Post has attachment
One of the continuing influences affecting the Australian equity market is the sober outlook for world growth. Recent economic numbers confirm the world’s economies will continue in a low-growth environment.

Our strategy remains... Be patient, invest for the long term, not for the fast gain. Look out for your next opportunity (we list our picks), but ensure you are also revisiting your current holdings.

Post has attachment
ANZ’s capital raising shows how important pricing of assets is in these difficult markets. Everyone is at risk of misreading prices and values! Investors, shareholders, boards and indeed investment banks need to have a basis for assessing value because market prices are being shown to be volatile and illusory. Investors need to carefully watch the pricing of markets and securities. The lesson is clear: investment in equities is a long term endeavour and a focus on the short term actually creates more pricing risk and not less. Indeed short term pricing actually gives no indication of value.

Post has attachment
 
7 key macro factors will influence this earnings’ season, but how honest will companies be about their impact? We want to see some integrity in the presentation of results this earnings season, with companies being honest about how macro factors affected their performance and outlook. Will companies acknowledge some of those trends which have occurred and look likely to continue?

Shareholders need to be able to clearly differentiate between how companies performed from management decisions and from macro changes. There are 7 major macro trends you need to be watch.

Post has attachment
The massive cost of launching legal action in Australia is damaging the integrity of our financial system. Joe Hockey is now a victim of those huge legal fees and he needs to act to reduce them.  Media reports have suggested the Treasurer will pay $500,000 in legal fees after launching a defamation action against Fairfax. It brings into focus the enormous legal costs facing Australians who launch legitimate actions, plus the impact this has on all of our legal rights, the integrity of financial markets and investor protection in general.

Investors who want to protect their rights, or seek recovery of losses caused by misdemeanours of public companies, are confronted by the massive costs of doing so.

Now Joe Hockey has personally felt the consequences of horrendous legal costs in Australia. As a senior member of the Government we are entitled to ask - will he do anything to try and bring those costs down?

Post has attachment
The huge numbers of baby boomers retiring are looking for greater certainty in retirement income, and Challenger is aiming to meet that desire with its annuity products. But Challenger’s shares may also be a good source of income for baby boomers. The company is trading within range of our valuation and offers a solid dividend yield, along with exposure to two major trends — demand for annuities and growth in superannuation savings — so we think Challenger is a good option for income-focused investors.

Post has attachment
Should the GST rate go up?

Yes, we think the #GST should probably rise to 15% – but it needs to be part of a comprehensive #taxation adjustment process. The instigation of a GST debate from a State Premier is another example of the chaotic nature of economic policy in this country. The debate is serious: a GST rate hike can’t just be another grab for money, which the community is sick of.

Any changes to the GST need to part of a broader debate that considers other taxes such as #superannuation and negative gearing; and that looks closely at how #Australia spends its money. We think the tax debate also needs to focus on the plight of Australia’s savers who are seeing their returns decimated by taxation and inflation; a situation a GST rise will exacerbate by ramping up inflation.

Post has attachment
There is another opportunity to play the weakening $A again this financial year, and not only for international investing. A year ago we forecast the $A would fall significantly. At the time we said the potential currency decline created an opportunity, particularly for savvy SMSF and self-directed investors, to shift funds offshore and benefit from the weakening local currency. That play paid off. A portfolio that allocated 30% offshore would have returned around 7.5% – that’s double the return of the Australian share market and with a lot less risk and volatility. The success of the strategy highlights that asset allocation strategies like this are becoming increasingly important for SMSF and self-directed investors. The good news is we think that play is on again this financial year.

The ECB is poised to step in and buy rotten Greek debt off the financial system to stop contagion. We believe that the fairly stable response from markets on Monday (Europe) and Tuesday (Australia) indicate that markets have been too pessimistic regarding Greece. The ECB will unleash the full force of Quantitative Easing (QE) to prevent a Greek default hurting the European financial system. The ECB has the power, and there is precedence from when the US Federal Reserve bought sub-prime debt and securities from banks and other financial participants back in 2008-09. The ECB will probably copy the Fed’s playbook. This action will help calm markets further before the true economic reforms are introduced into the Greece economy or Greece exits the Eurozone. http://www.clime.com.au/latest-news/why-the-ecb-will-now-buy-greeces-rotten-debt/?utm_source=gplus&utm_medium=social&utm_campaign=content

Post has attachment
While Warren Buffett’s recent investment in IAG Limited suggests that parts of the Australian equity market represent a growth opportunity, it also exposed how inefficient the Australian capital market has become. In this context, efficiency is not measured by price movement or price performance; rather it is measured by the ability, capacity or willingness of Australian capital to invest in or fund Australian business growth. When large Australian companies structure capital raising deals with offshore entities on favourable terms to the other party, then questions are raised.

Post has attachment
Share markets throughout the world moved higher as Greek made progress towards a deal with creditors, increasing the probability that an exit from the Eurozone will be avoided. The Greek equity market alone advanced 9% after the news was released. Could this be the turning point towards a Greek and European turnaround? Perhaps. Only time will tell. What we can be more certain about is which companies stand ready to benefit from any improvement in economic growth, employment and consumer spending. We take this opportunity to review some European businesses we have a favourable opinion of, who have large European operations and stand to benefit from an economic improvement in the region.
Wait while more posts are being loaded