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Australian Market Summary | 31 August 2018

The last day of winter has finally arrived coinciding with the end of reporting season.

This week we saw quite a few mid-cap ‘market darlings’ miss numbers which led to their shares prices falling sharply.

Despite this, the ASX200 erased last week’s losses adding 1.5%, boosted by the banks which saw strong buying and was the best performing sector adding 2.5%.

The telco sector saw a proposed merger between TPG Telecom (TPG) and Vodafone Hutchison (HTA) to establish a fully integrated telecommunications operator in Australia with a combined value of $15bn. The merger creates a more effective challenger to Telstra (TLS) and Optus and is expected to deliver significant cost synergies from the combination of two completed networks.

Offshore, emerging markets tumbled as Argentina struggled to cope with yet another financial crisis. Not even an emergency rate hike could prevent the Argentine Peso from plunging overnight as the central bank lifted interest rates to 60%.

Concerns Argentina may soon default given its struggles to repay its debt combined with a weakening economy and an inflation rate running at over 25% this year spooked investors. Meanwhile the Turkish Lira fell further on news the central bank’s deputy governor was intending to resign.

It remains an ongoing concern for investors that emerging market debt levels are simply too high and any shift in global monetary policy places too much pressure on these highly indebted economies running large current account deficits.



We witnessed a steep fall in building approvals in July which fell over 5% and reversed a 6% rise in June.

The majority of the decline was once again seen across the apartment sector which fell over 6%.

Economists had forecasted a 2% decline in July so the pace at which building approvals came off continues to point to significant underlying weakness in the residential construction sector.

We have harped on about construction and housing for some time now and this remains a genuine concern.



Reporting season often presents future buying opportunities and we were pleased to see a few names we have on the watchlist miss numbers this past week.

Costa Group (CGC) shares fell 11% having traded down 20% intraday. Despite reporting a net profit uplift of 26%, strong growth in EBITDA rising 30% and reported revenues up 10% the market regarded the result as a ‘miss’ with expectations the company would deliver more.

Cold weather in Morocco negatively impacted CGCs blueberry production which serves a portion of the European market

CGC has long been on our radar however we have struggled for some time with its valuation. We remain confident in the business and its strategy and point to its sell-off as a reminder that high ‘PE trading’ stocks can often post good numbers but still disappoint the market. 

Reliance Worldwide (RWC) was another victim of the market expecting more. FY19 guidance disappointed forecasts with one broker raising concerns over RWCs ability to achieve organic growth in the longer term resulting in it downgrading the stock.

BWX Limited (BWX) reported a strong increase in revenue and a 52% increase to EBITDA because of acquisitions of the Mineral Fusion, Andalou Naturals and Nourished Life businesses. Disappointingly though its key Sukin branded product sales showed softer 6% growth.

BWX remains in the sights of private equity firm Bain Capital who lodged a non-binding bid in May at $6.60 and who continue to conduct their due diligence.

With shares now trading at 18-month lows and a global shift towards more natural organic skin products we think the upside/downside risk may now be in our favour at these levels and would consider buying it nearer to $4.

Finally, Regis Healthcare (REG) reported today and whilst NPAT was in line with guidance at $57m, EBITDA missed slightly on account of increased staffing costs and changes to the Aged Care Fund Instrument. Refundable Accommodation Deposits (RADs) were weaker than FY17 which was disappointing.

We continue to think that REG is well positioned to profit from Australia’s ageing population and it provides a good source of income for client portfolios yielding over 5%.

Telstra (TLS) went ex-dividend this week providing investors with an 11c distribution to be received next month. We continue to think TLS will face headwinds in the medium term and recommend clients trim holdings in the mid $3.30s.



An update to all on the progress of WCM Quality Global Growth Fund (WCMQ) which listing on Monday.

WCM are a specialist global equities manager who will invest in a high conviction, actively managed portfolio of high growth listed companies.

We have added WCMQ to our international equity models.

That’s it for this week.


Finals footy is around the corner and so too hopefully some warmer weather.

Have a great weekend



Thursday 5pm values





All Ordinaries




S&P / ASX 200




Property Trust Index




Utilities Index




Financials Index




Materials Index




Energy Index






Thursday Closing Values





U.S. S&P 500




London’s FTSE




Japan’s Nikkei




Hang Seng




China’s Shanghai





Key Dates: Australian Companies


Mon 3rd September

Div Ex Date – Altium Limited (ALU), Bendigo Bank (BEN)

Div Pay Date - ANZPD

Tue 4th September

Div Ex Date – Boral (BLD), Nine Entertainment (NEC), Oil Search (OSH),

Div Pay Date – IOOF (IFL)

Wed 5th September

Div  Ex Date – APN Outdoor (APO), BWX Limited (BWX), InvoCare Limited (IVC), Treasury Wine Estates (TWE) 

Thu 6th September

Div Ex Date – ASX (ASX), BHP Billiton (BHP), CBAPC, CBAPD, CBAPE, Corporate Travel (CTD)

Div Pay Date – Fairfax Media (FXJ)

Fri 7th September

Div Ex Date – Adelaide Brighton Limited (ABC), Amcor (AMC), BlueScope Steel Limited (BSL), Southern Cross Media (SXL)

Div Pay Date – JB Hi-Fi Limited (JBH), Kogan (KGN)


31st August 2018, 330pm


For more information on the above please contact your Partners Wealth Group advisor directly or on 1800 333 143.

This information is general in nature and is provided by Partners Wealth Group. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.




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