Day: 22 March 2023

While some sectors and companies might not be considered “fashionable”, ASX investors can’t let such prejudices cloud their judgement.

Because if you want your portfolio to grow, all that matters are the prospects for the businesses.

Even if the goods or services produced are “boring”, if they are essential to the lives of consumers then the associated ASX shares have to be at least considered.

That case is even more pertinent in 2023 as the Australian and global economy battle very dark clouds.

As an example, Marcus Today market analyst Matthew Lattin named two ASX shares this week that he would buy right now:

‘We anticipate organic growth’

It doesn’t get much more unfashionable than insurance. 

But the reality is that it’s a reliable sector in times of turbulence. 

Insurance is a service that still sees strong demand through tough economic times, and insurers earn superior returns on collected premiums when interest rates are high.

Lattin thus likes the look of QBE Insurance Group Ltd (ASX: QBE).

“QBE’s recent underwriting performance against a backdrop of heightened inflation, geopolitical tensions and elevated catastrophes demonstrates resilience,” Lattin told The Bull.

“We anticipate organic growth and increasing premiums moving forward.”

The numbers coming out of reporting season last month were positive.

“Gross written premiums of US$20.054 billion in fiscal year 2022 were up 13% on the prior corresponding period,” said Lattin.

“Statutory net profit after tax rose from US$750 million in fiscal year 2021 to US$770 million in fiscal year 2022.”

The QBE share price has risen 27% over the past 12 months, while paying out a dividend yield of 2.8%.

Signs of a massive turnaround 

It’s been tough going for TPG Telecom Ltd (ASX: TPG) shares.

The company listed on the ASX in July 2020 after a merger of TPG and Vodafone Australia. Unfortunately, the stock has lost a painful 42.6% from the closing price on its first day.

Telecommunications might be a service with evergreen demand, but it’s not easy competing as the number three player in a country with a fairly small population.

But the stock is showing signs of life in 2023, heading up 2.58% year to date.

“In our view, TPG has significant growth potential.”

Lattin thought the results from reporting season were “relatively strong”.

“Service revenue of $4.439 billion was up 1.5% on the prior corresponding period,” he said.

“Mobile subscribers grew by 300,000 in 2022. Average revenue per user for mobiles was up 1.9% to $32.40 a month, mostly reflecting higher international roaming levels.”

Earlier this month Morgans analyst Andrew Tang agreed with Lattin’s bullishness on TPG.

“This was the first time since merging that positive earnings momentum is obvious across the group.”

The post ‘Significant growth potential’: Expert names 2 unfashionable ASX 200 shares to buy appeared first on The Motley Fool Australia.

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More reading

• Boost your passive income with Westpac and this ASX 200 dividend share: experts
• ‘Turning point’: Fundie names 2 great-value ASX 200 shares to buy now
• 5 things to watch on the ASX 200 on Wednesday
• 4 ASX 200 shares trading ex-dividend on Wednesday
• ‘A rocky road ahead’: Expert names 2 ASX 200 shares to thrive in a tough 2023

Motley Fool contributor Tony Yoo 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 recommended Tpg Telecom. 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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S&P/ASX 200 Index (ASX: XJO) gold shares have enjoyed some heady tailwinds amid the banking crisis gripping the United States and Europe.

Angst over potential bank failures has seen gold retain its shine as investors turn to the yellow metal for its classic haven status.

Any rise in the gold price is, as you’d expect, good news for the big Aussie gold miners.

And gold edged higher again on Tuesday, closing the day trading for US$1,984 per ounce, up from US$1,977 per ounce on Monday.

Despite that 0.4% increase, the Northern Star Resources Ltd (ASX: NST) share price closed the day down 1.52%.

However, rival ASX 200 gold share Newcrest Mining Ltd (ASX: NCM) finished up 0.62%, while the Evolution Mining Ltd (ASX: EVN) share price gained 2.1%.

Following Monday’s meteoric share price gains, these three ASX 200 gold shares are all well into the green over the past five trading days. Here’s how they’ve performed since this time last week (as at yesterday’s close):

• Northern Star shares are up 6.7%
• Newcrest Mining shares have gained 5.4%
• Evolution Mining shares are up 6.3%

But there could be more good news to come for ASX 200 gold shares.

More tailwinds ahead for ASX 200 gold shares?

Bullion traded at all-time highs of $2,075 per ounce in August 2020 during the early months of the global pandemic as investors sought a safe place to park their wealth. That record level offered ASX 200 gold shares some outsized profits at the time.

Gold briefly touched US$2,000 per ounce on Monday amid ongoing concerns over the Swiss government-backed deal for UBS to takeover Credit Suisse.

Some smaller US banks also remain vulnerable. That includes First Republic Bank (NYSE: FRC), which closed down 47% on Monday.

Now global central banks are stepping in to provide liquidity for their stressed banks. And analysts are now expecting fewer rate rises from those same core central banks.

This combination could well see gold set new all-time highs, according to Sprott Inc CEO Whitney George (courtesy of Bloomberg).

“I certainly think we’re on our way to new highs,” George said. He noted that following market downturns, “The minute liquidity is restored back into the global market, gold seems to always be the first thing to recover, and then often hits new highs.”

Even just edging into new record territory would mean a 5% increase from the current price of bullion, which would be welcome news for ASX 200 gold shares.

The post Why ASX 200 gold shares could see the yellow metal hit new record highs: expert appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why A2 Milk, Accent, Northern Star, and Select Harvests shares are dropping
• ‘Increasing demand’: Expert picks 2 ASX 200 mining shares to buy (not BHP)
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) returned to form and pushed higher. The benchmark index rose 0.8% to 6,955.4 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to continue its recovery on Wednesday following a solid night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 60 points or 0.85% higher this morning. In late trade on Wall Street, the Dow Jones is up 1%, the S&P 500 is up 1.45% and the Nasdaq is 1.7% higher.

Oil prices climb

Energy producers Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good session after oil prices climbed overnight. According to Bloomberg, the WTI crude oil price is up 2.75% to US$69.50 a barrel and the Brent crude oil price has risen 2% to US$75.27 a barrel. Oil prices rebounded after banking crisis fears eased.

New Hope shares are a buy

The team at Morgans has reiterated its bullish view on New Hope Corporation Limited (ASX: NHC) shares. In response to the coal miner’s half-year results, the broker has reiterated its buy rating with a $6.35 price target. It believes that “windfall returns of surplus capital (in time) are on offer for patient/ value investors.”

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a poor day after the gold price dropped overnight. According to CNBC, the spot gold price is down 2.1% to US$1,941.6 an ounce. Traders were selling gold ahead of the US Federal Reserve’s interest rate decision.

Goldman Sachs on ASX 200 banks

Analysts at Goldman Sachs remain confident in the health of the Australian banking sector and have reiterated their conviction buy rating and $27.74 price target on  Westpac Banking Corp (ASX: WBC) shares. Goldman highlights that Westpac and the rest of the big four banks have liquidity well above requirements.

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Which ASX 200 big four bank share could be the safest to hold?
• Want high income right now? These are the ASX dividend shares I would buy
• Here are the top 10 ASX 200 shares today
• Guess which ASX 200 director has bought $50m worth of shares in a fortnight?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 recommended Westpac Banking. 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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It certainly has been a tough month for ASX 200 banks.

The drama involving Silicon Valley Bank and Credit Suisse has shaken investor confidence and led to many investors selling their bank shares.

The good news is that every cloud has a silver lining, which on this occasion is the cheaper prices that investors can pick up bank stocks.

But given the uncertainty in the global banking sector, it’s possible that some investors may be wanting to buy only the safest of banks.

So, which big four ASX 200 bank share is the safest at the moment?

How safe are ASX 200 bank shares?

Firstly, it is worth noting that the Australian banking sector is among the most robust in the world. So, we’re going to be looking at arguably the safest of the safe when doing this.

Moving on, to get an idea of which big four bank might be the safest, we can look at metrics that banks provide.

The first is the Common Equity Tier 1 (CET1) ratio, which is essentially a measure of spare cash. It compares the core equity capital of a bank to its risk-weighted assets.

APRA notes that having adequate capital is critical to protect financial institutions’ depositors and policyholders. As such, regulators set requirements on minimum capital to ensure financial institutions can absorb unexpected losses in their business.

At present, the big four bank with the highest CET1 ratio is ANZ Group Holdings Ltd (ASX: ANZ), which last reported a ratio of 12.2%. However, it is currently in the process of acquiring the banking operations of Suncorp Group Ltd (ASX: SUN). When adjusting for that acquisition, its CET1 ratio drops to 11% on a pro forma basis.

So, Commonwealth Bank of Australia (ASX: CBA) and its CET1 ratio of 11.4% may be the true winner here.

The good news is that the other big four ASX 200 bank shares are not far behind. National Australia Bank Ltd (ASX: NAB) has a CET1 ratio of 11.3% and Westpac Banking Corp (ASX: WBC) has a CET1 ratio of 11.13%.

Importantly, all are comfortably ahead of APRA’s requirements.

Anything else?

Another couple of metrics of note are the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR). The International Bank of Settlements defines these liquidity ratios as the following:

The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets (HQLA) to allow them to survive a period of significant liquidity stress lasting 30 calendar days. The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. This ratio should be equal to at least 100% on an ongoing basis.

Leading the way with these liquidity metrics is Westpac. The combination of its ratios edges out Commonwealth Bank by one percentage point.

At the last count, Westpac had an LCR of 122% and an NSFR of 139%. Whereas Commonwealth Bank has ratios of 131% and 129%, respectively.

Next in line was NAB with an LCR of 134% and an NSFR of 118%. In last place, but well above required liquidity levels is ANZ with an LCR of 125.7% and an NSFR of 119.1%.

The winner

All in all, based on the above, it would be hard to argue against CBA being the safest ASX 200 bank share.

Though, with its shares trading at a significant premium to the rest of the big four, investors may get more bang for their buck with Westpac. As covered here, Goldman Sachs believes its shares are very cheap at current levels.

The post Which ASX 200 big four bank share could be the safest to hold? appeared first on The Motley Fool Australia.

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More reading

• Want high income right now? These are the ASX dividend shares I would buy
• Boost your passive income with Westpac and this ASX 200 dividend share: experts
• ASX 200 bank shares shrug off global banking turmoil to leap higher
• Forget term deposits and buy these ASX 200 dividend shares: analysts
• Where I would go hunting for defensive ASX 200 shares with upside

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 recommended Westpac Banking. 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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