Month: May 2022

The S&P/ASX 200 Index (ASX: XJO) is having a decent day of trading so far this Thursday, which would no doubt come as a relief to many investors. At the time of writing, the ASX 200 is up a healthy 0.64% at 7,351 points. But that’s nothing compared to the joys of the Pilbara Minerals Ltd (ASX: PLS) share price.

Pilbara Minerals shares are smashing the ASX 200 index today. This lithium producer is up a pleasing 7.6% at present to $2.83 a share.

Although a welcome development for Pilbara Minerals fans, this doesn’t take away from the fact that the past few months have been incredibly volatile for the lithium stock.

Over the past month, the Pilbara Minerals share price remains down by about 20%. It’s down by a similar amount over 2022 thus far. But looking at the long term, Pilbara Minerals is up by 140% over the past 12 months.

So, what might be causing Pilbara’s exceptionally strong performance this Thursday?

Why is the Pilbara Minerals share price soaring?

Well, it’s not entirely clear. There have been no announcements out of Pilbara Minerals itself. However, what we can see is a fairly consistent trend amongst ASX lithium stocks.

Other ASX shares in Pilbara’s wheelhouse are performing similarly today. Take Core Lithium Ltd (ASX: CXO). Its shares are currently up by 9.2% at $1.31 each. Or AVZ Minerals Ltd (ASX: AVZ), up 5.6% to 85 cents.

So, we seem to be witnessing a fairly consistent sector-wide move upwards with ASX lithium stocks. And the Pilbara Minerals share price is enthusiastically participating.

Lithium shares are often in demand when the markets are in a good mood, and are often shunned if investors are fearful. The latter we saw earlier in the week when the ASX 200 was taking a hit. But thankfully for investors, the former seems to be playing out today.

At the current share price, Pilbara Minerals has a market capitalisation of $7.82 billion.

The post Why is the Pilbara Minerals share price rocketing 7% today? appeared first on The Motley Fool Australia.

More reading

• What will the lithium price be in 2025?
• Top brokers explain why not all ASX lithium shares are created equal
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A message from our CIO, Scott Phillips: “G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So, we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.” 

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The QBE Insurance Group Ltd (ASX: QBE) share price is surging after the company updated the market on its performance in the quarter ended March.

Within the update, the insurer noted it will likely have some exposure to the conflict in Ukraine. That exposure is estimated to have a US$75 million ($103 million) impact.

The company also held its annual general meeting (AGM) on Thursday.

At the time of writing, the QBE share price is $12.48, 3.83% higher than its previous close.

QBE share price gains 4% on strong quarter’s performance

Some of the main points from the update included:

• 19% growth in gross written premium compared to the same quarter of 2021
• Ex-rate growth came to 18%
• Excluding crop, gross written premium increased 15% and ex-rate growth came to 10%
• Renewal rate increased averaged 7.9%
• Company flagged potential US$75 million of costs from Ukraine war

What else happened in the quarter?

QBE was faced with more catastrophic weather events over the first quarter of 2022.

Widespread and devastating flooding hit Australia’s east coast last quarter. Meanwhile, Storm Eunice battered the United Kingdom and Europe.

Despite the increased intensity of natural events, catastrophe claims for the quarter remained in line with the company’s allowance.

Last quarter also saw the beginning of Russia’s invasion of Ukraine.

QBE CEO Andrew Horton commented on the war at the company’s AGM, saying, “the tragic loss of life is deeply concerning”.

QBE expects it will be exposed to the conflict through lines including political violence, political risk, and aviation. “While the situation remains dynamic, potential net impact is currently estimated at around $75 million, and the ultimate impact from the conflict will be reported in catastrophe costs,” the company said.

Finally, QBE worked to reposition its investment portfolio over the quarter. As of 31 March, risk assets represented 9% of its total investment assets.

Risk-free rates increased last quarter, resulting in a negative asset risk-free rate impact of US$459 million. That was mostly offset by a US$440 million beneficial claims liability discount impact.

As a result of higher risk-free rates and slightly wider credit spreads, last quarter’s exit fixed income running yield of 1.52% increased materially on the financial year 2021 exit running yield of 0.68%.

Last quarter’s exit running yield of 1.52%, alongside QBE’s expected risk asset return of approximately 5.5%, would equate to a first-quarter exit total investment return run rate of approximately 2%.

What did management say?

Speaking on the news driving the QBE share price higher today, Horton commented:

Despite a number of natural catastrophes and significant geopolitical events, positive momentum experienced through [financial year 2021] continued into [last quarter], and I was pleased with QBE’s resilience through what was a turbulent operating environment.

We have had a strong start to the year for gross written premium growth and will review [financial year 2022] outlook at the half-year result following the key mid-year renewal period.

What’s next?

QBE hinted at what might be included in its full-year results.

It estimates its crop gross written premium will be approximately US$3.3 billion in financial year 2022. That would be a notable jump from US$2.7 billion in financial year 2021.

Due to the increase, QBE has placed an external quota share on the 2022 underwriting year to manage net retention.

Its crop net earned premium is expected to be between approximately US$1.3 billion and US$1.4 billion. That’s up from US$1.2 billion in financial year 2021.

The insurer is also working to “reinsure legacy North American excess and surplus lines prior accident year liabilities”.

That’s expected to reduce its exposure to further reserve volatility in this run-off portfolio and to impact QBE’s financial year 2022 underwriting result by approximately US$50 million.

QBE share price snapshot

Today’s gains have helped boost the QBE share price further into the long-term green.

Right now, the company’s stock is trading for 5% more than it was at the start of 2022. It has also gained 20% since this time last year.

The post QBE share price lifts despite potential $100m impact of Ukraine conflict appeared first on The Motley Fool Australia.

More reading

• Expert says investors are ‘missing this inflection point’ for QBE shares
• QBE share price riding on these 3 ‘macro tailwinds’, analysts say
• Top broker tips 14% upside for QBE share price

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re a fan of buy and hold investing, then you may want to look at the “champion stocks” listed below.

These are the ASX shares that the team at Bell Potter believe would be great investments over a period of three to five years.

Here’s why these are three of the broker’s champion stocks:

CSL Limited (ASX: CSL)

Bell Potter is a big fan of this biotherapeutics company due to its leadership position in plasma therapies, the impending acquisition of Swiss pharmaceutical company Vifor Pharma, and its ongoing research and development investment.

The broker explained:

“A leading global company in the development, manufacture, and distribution of plasma therapies as well as non-plasma biotherapeutic products and influenza related products. The soon to be completed acquisition of Vifor Pharma will add global leadership in pharmaceutical products for renal disease and iron deficiency. The global growth in plasma volumes is expected to be around a solid 8% per annum for the foreseeable future and, in addition, the group is planning to launch new products from its very extensive Research and Development portfolio.”

Netwealth Group Ltd (ASX: NWL)

Another ASX 200 share that Bell Potter believes could generate strong returns for investors over the long term is Netwealth. The broker believes the investment platform company is well-placed to benefit from a structural shift within the wealth management sector.

Bell Potter commented:

“A specialist investment platform technology provider in Australia that offers investment management solutions to financial intermediaries, who provide financial advice on superannuation and other investments, and self-directed individuals who have chosen not to seek advice. In recent years, the group has been taking market share from the institutional platform providers such as the major banks and other large diversified financial companies. Looking forward, a structural shift within the wealth management sector from large vertically integrated players towards the more independent players should further boost the group’s growth outlook.”

Transurban Group (ASX: TCL)

A final ASX 200 share that Bell Potter expects to be a long term market beater is Transurban. It is one of the world’s largest toll road operators and the owner of a portfolio of integral roads in Australia and North America. In addition, the company has a significant development pipeline which has the potential to underpin solid growth over the 2020s and 2030s.

The broker explained:

“Australia’s largest builder, owner and operator of urban toll road networks. The group also has toll road assets in North America. The group’s current pipeline of growth projects is $3.9 billion (TCL’s share of total project cost) and further huge development opportunities are expected over the next few decades supported by population and economic growth.”

The post Broker names 3 ‘champion’ ASX 200 shares to buy and hold appeared first on The Motley Fool Australia.

More reading

• CSL share price lifts as plasma collections continue recovery
• Here’s why the CSL share price beat the market in April
• What drove the Transurban share price higher on Monday?
• 2 ASX dividend shares analysts have named as buys for income investors
• 2 highly rated blue chip ASX 200 shares brokers rate as buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and Netwealth. The Motley Fool Australia has positions in and has recommended Netwealth. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Li-S Energy Ltd (ASX: LIS) share price is charging up during early Thursday afternoon trade.

This comes after the lithium-sulphur battery company provided a positive update to the ASX, exciting investors.

At the time of writing, Li-S Energy shares are swapping hands at 62 cents, up 6.9%.

Li-S Energy joins Future Battery Industries Cooperative Research Centre

The Li-S Energy share price is on the move following the company’s latest announcement.

In today’s statement, Li-S Energy advised it has joined the Future Battery Industries Cooperative Research Centre (FBICRC).

Established in 2019, FBICRC is a partnership of industry, government, and researchers on battery technologies. The centre has 70 participants across 15 research projects, collaborating to ensure Australia plays a role in battery evolution.

Li-S Energy stated this will “help it leverage co-funded R&D on advanced electrolytes for Lithium Metal and Lithium Sulphur batteries.”

According to FBICRC CEO Shannon O’Rourke, global battery demand is expected to accelerate nine to 10-fold over the next decade.

Li-S Energy CEO, Dr Lee Finniear commented on delivering lithium sulphur and lithium metal batteries with unmatched performance and cycle life:

These batteries are the “holy grail” of EV, drone and electric aviation markets, combining high energy storage and low weight.

Our collaboration with FBICRC accelerates our time to market by enabling us to access advanced electrolytes developed specifically for these high energy cells, further magnifying the benefits over lithium-ion.

About the Li-S Energy share price

Since listing in September 2021 at a price of 85 cents, Li-S Energy shares have continually fallen.

They hit an all-time high of $3.05 on the day of listing. But the positive investor sentiment was short-lived. The Li-S Energy share price has since declined by 80%. When looking at the year to date, Li-S Energy shares are down by almost 60%.

On valuation grounds, Li-S Energy commands a market capitalisation of roughly $371.3 million.

The post Why is the Li-S Energy share price powering ahead today? appeared first on The Motley Fool Australia.

More reading

• What will the lithium price be in 2025?
• Here’s why the Bitcoin price surged 6% overnight
• Why are ASX 200 energy shares leaping higher today?
• Another country adopts Bitcoin as legal tender. What does this mean for investors?
• Here’s why the Air New Zealand share price is diving 6% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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While commodities have been strong in 2022, few have been as strong as lithium.

Thanks to seemingly insatiable demand in the electric vehicle market and tight supply, prices of the white metal have surged higher.

Lithium prices continue to rise

The good news for current miners of the battery making ingredient is that lithium prices are expected to remain strong during the current quarter.

For example, Allkem Ltd (ASX: AKE) recently advised that it expects to command spodumene concentrate prices of US$5,000 per dry metric tonne and lithium carbonate prices of US$35,000 per tonne during the June quarter.

This is up from US$2,178 per dry metric tonne and US$27,236 per tonne, respectively, during the March quarter.

Furthermore, to show how far lithium prices have come, the release highlights that Allkem was commanding US$796 per dry metric tonne for spodumene concentrate in the September quarter and US$5,853 per tonne for its lithium carbonate during the March 2021 quarter.

Clearly, these are boom times for Allkem and other producers such as Mineral Resources Limited (ASX: MIN) and Pilbara Minerals Ltd (ASX: PLS).

But what about the many lithium developers and explorers on the ASX boards?

Where are lithium prices going?

Commodity prices have a tendency to move in cycles. At the current moment, prices appear to be nearing the top of the cycle thanks to the aforementioned strong demand and tight supply.

However, high prices attract more supply and eventually when that supply floods into the market and satisfies demand, prices will start to fall.

So, what should shareholders of future lithium miners AVZ Minerals Ltd (ASX: AVZ), Core Lithium Ltd (ASX: CXO), Lake Resources N.L. (ASX: LKE), Liontown Resources Limited (ASX: LTR), and Vulcan Energy Resources Ltd (ASX: VUL) be expecting?

Lithium carbonate

According to a recent note out of Goldman Sachs, its analysts are expecting lithium carbonate prices to average US$46,640 per tonne in 2022. However, from 2023 onward it is expecting a sizeable decline.

The broker’s commodities team expects lithium carbonate prices to fall to:

• US$20,500 per tonne in 2023
• US$17,180 per tonne in 2024
• US$14,468 per tonne in 2025.
• Long run average of US$11,500 per tonne

What about spodumene concentrate?

It is a similar story for spodumene concentrate (6% li2O), with Goldman expecting an average of US$3,679 per tonne in 2022 before a sizeable pullback thereafter.

It is forecasting spodumene concentrate prices to be:

• US$1,750 per tonne in 2023
• US$950 per tonne in 2024
• US$900 per tonne in 2025
• Long run average of US$800 per tonne

In light of this, it would be worth considering just how profitable (or not) some lithium explorers and developers will be once prices normalise again.

The post What will the lithium price be in 2025? appeared first on The Motley Fool Australia.

More reading

• Up 250% in a year, the Liontown share price surges 6% higher again today
• Top brokers explain why not all ASX lithium shares are created equal
• Why ARB, AVZ, Temple & Webster, and Zip shares are sinking
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why the AVZ share price went from being up 19% to down 20% today

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Bitcoin (CRYPTO: BTC) price made its biggest move in more than seven days while most Aussies were asleep.

The token’s notorious volatility took a break over the past week, with the Bitcoin price trading within a 5% range.

Last night it edged out of that range, gaining 5.9%. The Bitcoin price has retraced a touch since then, currently at US$$39,681. That’s up 4.4% from this time yesterday, according to data from CoinMarketCap.

What lifted the Bitcoin price?

The world’s original cryptocurrency looks to have gotten a boost from the US Federal Reserve yesterday (overnight Aussie time).

The central bank increased the official interest rate by 0.50% and announced it will begin cutting its holdings of US treasuries next month. But Fed Chairman Jerome Powell wasn’t as hawkish as investors had feared.

With the market having broadly priced in the likelihood of an 0.75% rate hike, shares rallied on the announcement. Risk assets, like high-growth tech shares, led the way. The tech-heavy NASDAQ closed up 3.2%.

That same bullish sentiment boosted the Bitcoin price and swept through the crypto markets. In fact, every one of the top 100 tokens by market capitalisation (save the stablecoins) is well into the green over the past 24 hours.

According to Stephane Ouellette, CEO of FRNT Financial, Powell’s relatively more dovish stance “contributes to speculative appetite, which is likely to be bullish for crypto”. (Courtesy of Bloomberg.)

Now what?

For the Bitcoin price to break out of this year’s trading range and charge higher, investors need some excitement to spur them on, says David Duong, head of institutional research at Coinbase.

According to Duong (quoted by Bloomberg), “We have seen the carry-over of many important crypto-specific themes from last year but very little in the way of new ‘top down’ narratives, which are crucial to the ‘hype cycles’ in this space.”

With the Bitcoin price closely aligned with the NASDAQ, Nexo co-founder Antoni Trenchev said it could drop to US$33,000 in the near term. Trenchev is forecasting that it would find strong support from buyers around US$30,000.

However, he added: “Sentiment towards Bitcoin can move on a dime. The narrative changes quickly. Nobody needs reminding what happens when Bitcoin starts to move and retail FOMO kicks in.”

The post Here’s why the Bitcoin price surged 6% overnight appeared first on The Motley Fool Australia.

More reading

• Another country adopts Bitcoin as legal tender. What does this mean for investors?
• ‘Stupid and evil’. Warren Buffett and Charlie Munger unload on Bitcoin
• Why Bitcoin, Ethereum, and Coinbase Jumped Today
• The top 2 cryptos of April unmasked
• What happened with the Bitcoin price in April?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX 200 energy shares are jumping today on the back of higher oil and natural gas prices.

The S&P/ASX 200 Energy Index (ASX: XEJ) is climbing 1.6% at the time of writing. In contrast, the  S&P/ASX 200 Index (ASX: XJO) is up 0.66%.

Let’s take a look at what is boosting ASX 200 energy shares today.

ASX 200 energy shares rise

On a good day for ASX 200 energy shares, the Woodside Petroleum Limited (ASX: WPL) share price is up 1.64%, while Santos Ltd (ASX: STO) is rising 1.3%. Meanwhile, Beach Energy Ltd (ASX: BPT) shares are up 2.85% and the AGL Energy Limited (ASX: AGL) share price is climbing 1.94%.

Oil prices surged by 5% after the European Union put forward a plan to ban Russian crude oil imports within six months. The proposal was outlined in a speech to parliament by European commission president Ursula von der Leyen, the Wall Street Journal reported. The EU is also looking at other financial sanctions.

Von der Leyen said: “With all these steps, we are depriving the Russian economy from its ability to diversify and modernise.”

Brent crude oil is currently priced at US$110.26 per barrel, while WTI crude oil is US$107.87 a barrel, Bloomberg data shows.

Meanwhile, natural gas price futures also surged to more than 13-year highs in the US on Wednesday. The natural gas price is currently trading at US$8.425 per million British thermal units (MMBTu), Trading Economics data shows. This is the highest level since July 2008. Higher temperatures in May and an early start to the air-conditioning season are increasing demand for gas in the US, oilprice.com reported.

Among the ASX 200 energy shares, Woodside today announced plans for a carbon re-use project in collaboration with Eastern Metropolitan Regional Council in Perth. This is subject to a final investment decision later this year.

Woodside, Santos, and Beach Energy are oil and gas producers, while AGL energy is involved in gas and electricity markets.

Share price recap

The S&P/ASX 200 Energy Index (ASX: XEJ) has ascended 30% this year to date. For perspective, the benchmark ASX 200 index has fallen 1.2% over the same period.

Woodside shares have outperformed the index this year, surging 44%. Meanwhile, Santos has soared by 29%, Beach Energy has rocketed nearly 35%, and AGL Energy has ascended 37%.

The post Why are ASX 200 energy shares leaping higher today? appeared first on The Motley Fool Australia.

More reading

• Here’s why the AGL share price was cooking with gas in April
• Why is the Woodside share price climbing today?
• Own AGL shares? Boss says Cannon-Brookes made ‘false claims’
• 5 things to watch on the ASX 200 on Thursday
• When, why, how? All the details on the AGL demerger and what might happen if it flops

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

On April 27, The Central African Republic’s parliament voted unanimously to make Bitcoin (CRYPTO: BTC) legal tender. Unless you are familiar with your geography or keep up with politics in central Africa, this might be your first time even knowing such a country exists. The Central African Republic is now the second country to do so in the last year. El Salvador was the first country to recognize Bitcoin as legal tender in June 2021. 

Reasoning behind the law

Understanding the Central African Republic’s history helps clear the air on potential motives for this decision. The country is a former colony of France. Many of these former colonies still rely on the governments and financial institutions that once ruled them. 

The Central African Republic uses the CFA franc. This currency is used by six other countries within the region and pegged to the euro. To maintain this peg, the Bank of Central African States (BEAC) who oversees these six countries’ banking and financial policies is required to keep at least 50% of its foreign assets in the French treasury. 

Some believe this has limited economic development in the country. An embrace of Bitcoin will sever dependence on the euro and their former French colonial power. 

Bitcoin offers a way out

Countries that use currencies tied to Western economies have little to no say in economic policy. This is one of the main reasons why El Salvador made a similar move. Policies enacted in the U.S. or France eventually trickle down and negatively impact these countries’ economies. 

International economic policy tends to be decided by countries with the wealthiest economies. Naturally, these policies favor their own domestic interests. Smaller economies are left on the periphery and forced to deal with the hand they are dealt. 

Now there is a way out. Bitcoin levels the playing field. Because Bitcoin cannot be manipulated or controlled by a governing authority, smaller economies can make their own policies without needing consent from other world powers. Governments will no longer be able to control the money supply. Countries that once got the short end of the economic stick can now control their own financial destiny.

Invest in history

Only time will tell how these countries fare. Yet as investors, we should see the bigger picture. The year is 2022. The second country just adopted Bitcoin. Other countries in similar situations like El Salvador and the Central African Republic will notice that Bitcoin is an exit from the status quo.

Critics of Bitcoin will argue only small countries are the ones using the cryptocurrency. And for now they are right. But to even utter those words shows how far Bitcoin has come. The day when a developed economy in Asia, the Middle East, or the West enacts similar Bitcoin laws like El Salvador and the Central African Republic will be the day when Bitcoin undoubtedly cements itself. 

Investors should know that this day is coming sooner than later. You don’t have to look far to find examples of this progress. In Colorado citizens can pay taxes in Bitcoin. In Arizona, legislation was introduced to make Bitcoin legal tender.  Take the opportunity now to gain exposure to Bitcoin. Ignore the short term price fluctuations. 

A quote from a personal favorite book, The Alchemist, seems fitting. “Everything that happens once can never happen again. But everything that happens twice will surely happen a third time.” 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Another country adopts Bitcoin as legal tender. What does this mean for investors? appeared first on The Motley Fool Australia.

More reading

• ‘Stupid and evil’. Warren Buffett and Charlie Munger unload on Bitcoin
• Why Bitcoin, Ethereum, and Coinbase Jumped Today
• The top 2 cryptos of April unmasked
• What happened with the Bitcoin price in April?
• Why Shiba Inu, Ethereum, and Dogecoin are sinking today

Fool contributor RJ Fulton owns Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Air New Zealand Limited (ASX: AIZ) share price is heading south after coming out of a trading halt on Thursday.

This comes after the company provided an update regarding its shortfall bookbuild.

At the time of writing, the airline operator’s shares are exchanging hands at 74 cents, down 6.33%.

Air New Zealand completes shortfall bookbuild

In a statement, Air New Zealand advised it has completed the shortfall bookbuild component of its rights offer.

The two for one pro-rata renounceable rights offer is for shareholders who didn’t take up shares in the company’s recent capital raise.

Air New Zealand said the shortfall bookbuild was well supported by existing shareholders and new investors. It comprised approximately 274 million shares.

The price of NZ$0.81 per share is a NZ$0.28 premium above the offer price of NZ$0.53 per share.

Eligible shareholders who elected not to take up their entitlements, as well as ineligible shareholders, will receive NZ$0.28 for each share sold. Payment is expected to be made by Monday 16 May.

This concludes the company’s NZ$1.2 billion equity raise, which is comprised of the rights offer and the shortfall bookbuild. Air New Zealand will use the proceeds to repay its existing crown loan, strengthen its balance sheet, improve liquidity, and help position the business for recovery.

Air New Zealand chair Dame Therese Walsh commented:

The Rights Offer was structured to provide all eligible Air New Zealand shareholders with a fair opportunity to participate in the equity raise or receive value for their rights.

We are delighted with the level of support shown for Air New Zealand by existing and new shareholders and to have been able to return value to those shareholders who did not or were ineligible to participate.

Air New Zealand share price summary

Since this time last year, Air New Zealand shares have lost 26% in value. The majority of these losses — 19.5% — have come in 2022. The share price reached a 52-week low of 72.5 cents last month before moving in a sideways channel.

Air New Zealand commands a market capitalisation of $887 million. It has approximately 1.12 billion shares on issue.

The post Here’s why the Air New Zealand share price is diving 6% today appeared first on The Motley Fool Australia.

More reading

• Why is the Air New Zealand share price grounded on Wednesday?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Well, this week was a fairly momentous one. It saw our own central bank, the Reserve Bank of Australia (RBA), lift interest rates for the first time in 11 years. This has understandably caused some navel gazing for many ASX investors, who may have gotten used to the successive interest rate cuts the last decade has brought. Not to mention the record low cash rate of 0.1% that was in place for more than two years. Now the RBA has hiked rates from 0.1% to 0.35%.

But if what the RBA had to say on Tuesday proves prescient, it may not be the last interest rate rise we see in 2022. In fact, we are almost certainly going to see another hike soon, seeing as the RBA governor said, “the Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates over the period ahead”.

Previously, the RBA has said that it sees interest rates at the “neutral” level of 2.5% in the future. So if that came to pass, could dividend shares still offer attractive yields?

If interest rates were to move to 2.5%, you could expect many ‘safe’ investments like savings accounts and term deposits to offer similar, if not slightly higher, rates of interest. That would be a big change from the present lay of the land, where it is still difficult to find a savings account with an interest rate above 1%.

So if rates did rise to 2.5%, would it still be worth chasing yield from ASX dividend shares?

3 ASX dividend shares that beat the piggybank

Well, here are three such shares that would still be the piggybank if rates did climb to 2.5%.

Coles Group Ltd (ASX: COL) is one such share. Coles has been ratcheting up its annual dividend for a few years now. 2019 saw this grocery giant fork out 35.5 cents per share in dividends. But last year had the company dole out 61 cents per share, fully franked of course. On current pricing, this gives Coles a trailing dividend yield of 3.31%. With the full franking, that grosses-up to 4.73%.

WAM Research Ltd (ASX: WAX) is another share that has a good chance of being a piggybank-beater in the years ahead. This Listed Investment Company (LIC) has been increasing its annual dividend for more than 10 years now. Last year saw WAM Research pay out 9.9 cents per share, a pleasing rise from 2011’s 6 cents per share. On current pricing, that gives this LIC a dividend yield of 6.12%, or 8.74% grossed-up with the company’s full franking.

Finally, there’s Telstra Corporation Ltd (ASX: TLS) to consider as well. Telstra has had a reputation as a strong dividend payer for years. The telco has kept its 16 cents per share annual dividend payment steady for a while now. Even so, this gives Telstra shares a yield of 4% as it currently stands. Telstra also typically does out full franking credits with its dividends, so that payment grosses-up to a current yield of 5.71%.

The post Could these 3 ASX dividend shares still beat the piggybank if rates hit 2.5%? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited and WAM Research Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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