The S&P/ASX 200 Index (ASX: XJO) seems to have had a rather dramatic mood swing. After some great gains early in the week, both Thursday and Friday have seen massive sell-offs, pushing the ASX 200 decisively back below 6,000 points.

With the global economy and the coronavirus pandemic still in very fluid situations, next week might well see the sell-off of ASX shares continue.

So with this in mind, here are 3 ASX shares that I think have defensive qualities and should be an asset to any portfolio if the sell-off continues next week.

Transurban Group (ASX: TCL)

Transurban is a gigantic owner and operator of tolled roads and motorways across Australia and North America. Transurban’s monopolistic grip on the roadways of our major capital cities is inescapable – both as a motorist and as an investor. Yes, Transurban did see a massive collapse in road usage during the height of the lockdown period over March and April. But I think with restrictions easing, this company will continue to bounce back and remain a great investment for the long-term.

BHP Group Ltd (ASX: BHP)

Miners are not normally my ‘go-to’ for a defensive holding. But I think the unique circumstances 2020 has brought us has changed the game somewhat. Commodity prices have held up remarkably well over the coronavirus pandemic. Chief amongst those has been iron ore, which has topped US$100 per tonne in recent weeks. Thus, I think a diversified commodity play like BHP is a prudent investment going forward. It’s one of the largest miners in the world, is diversified across coal, iron, copper and oil, and has some of the lowest extraction costs in the business. Therefore, I don’t think you can go wrong with Broken Hill Proprietary if the markets sell-off once more.

Metcash Limited (ASX: MTS)

Metcash is often overlooked for its larger rivals Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW). But I think this perpetual underdog is a great defensive investment if there is another ASX sell-off. Not only does it own the IGA network of grocers, but it also has in its stable hardware chains Mitre 10 and Home Timber & Hardware.

Both grocers and hardware stores have seen increased consumer spending during the coronavirus lockdowns, and I see these trends continuing well into the future. As such, I think Metcash is another great defensive share to look at if the ASX does indeed continue to shed value next week.

More reading

• 3 top ASX dividend shares to add to your portfolio in June
• Woolworths facing fresh threat from Amazon.com
• 3 quality ASX dividend shares to solve your income needs
• 3 ASX 200 shares to add to your watchlist in 2020
• 2 top ASX dividend shares for income in 2020

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Despite the falls we have seen today, the S&P/ASX 200 Index (ASX: XJO) has still had a remarkable month and is up 7.8% over the past 4 weeks.

This is in no small part due to the ongoing easing of restrictions related to the coronavirus pandemic. Australia’s success so far in containing the disease is enabling the economy to slowly return to ‘normal’, which is obviously great news for ASX companies.

So with the coronavirus still looking to be the major market mover in 2020, it makes sense to position your portfolio accordingly. That’s what the fund managers at Spheria Asset Management are looking at anyway. Spheria runs a micro-cap fund that returned more than 15% in April – so I reckon we should at least have a look at what they’re doing.

Spheria’s top 4 ASX picks

In its April update, Spheria named 4 ASX picks for a COVID-19 recovery.

First off, we have G8 Education Ltd (ASX: GEM). Spheria notes that childcare providers like G8 have benefitted enormously from the government offering free childcare over the last few months. Although this support is scheduled to end soon, it’s still likely to have residual benefits for G8. The fundies also note that due to the successful capital raising G8 recently undertook, the company has fortified its balance sheet for the rest of the year.

Next, we have Ardent Leisure Group Ltd (ASX: ALG). Ardent runs a portfolio of theme parks including Dream World and WhiteWater World. Obviously, this company struggled immensely with the coronavirus outbreak with its parks forced to shut down. But Spheria thinks there is a lucrative potential recovery to be harnessed here, once restrictions are lifted and business can start to return to normal.

Village Roadshow Ltd (ASX: VRL) is next cab off the rank here. This company is another theme park operator, which owns Movie World, Sea World and Wet’n’Wild. Clearly, Spheria is making another bet on the easing restrictions, with Village Roadshow likely to benefit from the same potential tailwinds as Ardent Leisure. The fund notes that any increase in domestic tourism as a result of bans on international travel will likely benefit these 2 theme park operators as well.

Finally, we have Vista Group International Ltd (ASX: VGL). Vista provides exhibition software to cinemas – another industry that has been hit hard by the coronavirus restrictions. As people start returning to movie theatres around the country, Vista Group is an obvious beneficiary. Spheria is going for a value play on this one, noting it is priced well below its software-based peers when compared to its revenues (even if they don’t return to pre-COVID levels).

Foolish takeaway

Although we should never take fund managers’ picks as investment advice, it’s always interesting and illuminative to check out what ‘the professionals’ are buying!

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• ASX 200 falls 1.9%, big 4 ASX banks retreat
• Down 20% in 7 trading hours… Worse to come?
• The latest ASX shares to be hit by broker downgrades to “sell” today
• What would I rather buy today: TPG or Telstra shares?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Vista Group Intl. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy appeared first on Motley Fool Australia.

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The S&P/ASX 200 (ASX: XJO) fell by 1.9% today. Overnight the Dow Jones Industrial Average (DJI) fell by 6.9% on fears of a second wave of COVID-19.

This week the Federal Reserve boss Jerome Powell said: “This is going to take a whole lot of time. There are just a lot of people that are unemployed and it seems quite likely there will be a significant group, even after a lot of strong jobs growth, that will still be struggling to find jobs.” 

But there was some good news for Australians today. The federal government has announced it’s working on rules with the states to allow stadiums with 40,000 seats to hold crowds of up to 10,000 people. Bigger stadiums could be allowed to fill a quarter of the seats. These changes could come in July.

Major ASX banks retreat

The share prices of each of the big four ASX banks went backwards today.

The Commonwealth Bank of Australia (ASX: CBA) share price dropped 1.2%, the Westpac Banking Corp (ASX: WBC) share price fell 3.1%, the Australia and New Zealand Banking Group (ASX: ANZ) share price declined 2.8% and the National Australia Bank Ltd (ASX: NAB) share price dropped 2.2%.

However, they remain higher than where they were a month ago. 

Big falls in the ASX 200

Thankfully the ASX 200 actually recovered some lost ground – it was down over 3% this morning. However, whilst some shares like Afterpay Ltd (ASX: APT) managed to reverse the decline, others ended the day down heavily.

The Platinum Asset Management Ltd (ASX: PTM) share price went down 12%.

The oOh!Media Ltd (ASX: OML) share price dropped 9.8%.

Southern Cross Media Group Ltd (ASX: SXL) saw its share price decline 9.1%.

ASX 200 engineering business Monadelphous Group Limited (ASX: MND) suffered a share price decline of 8.9%.

The Unibail-Rodamco-Westfield (ASX: URW) share price went down 8.8%.

Zip Co Ltd (ASX: Z1P) announces May 2020 trading update

The buy now, pay later (BNPL) ASX 200 business said that it grew its monthly revenue to $15.6 million, an increase of 78% year on year. Zip’s monthly transaction volume increased by 63% to $189.3 million.

Zip said its receivables figure was up 85% compared to a year ago to $1.2 billion.

Customer and merchant numbers were also up by a significant amount. Customers increased by 63% to 2.1 million. It added 65,000 new customers over the course of the month. Merchant numbers increased by 46% year on year to 23,600.

In terms of net bad debts and monthly arrears, the ASX 200 said it was doing very well. Net bad debts of 2.16% were in-line with management expectations, Zip said this significantly outperformed the market. Monthly arrears reduced from 1.57% in April to 1.47% in May. Monthly arrears are seen as a forward indicator of future losses.

The ASX 200 business said that customer repayment success rates are higher or on par with pre COVID-19 rates. Monthly repayments as a percentage of opening receivables increased to 16%, up from 15% in April.

Pleasingly, there has been no material change to the number of requests for hardship assistance, which peaked at the end of March 2020 at less than 0.08% of receivables.

Zip reminded investors of the acquisition of QuadPay. Management are looking to accelerate Zip’s global expansion strategy. Zip also re-iterated to investors it has reached an agreement to raise up to $200 million from US-based Susquehanna International Group to further drive growth.

The Zip managing director and CEO Larry Diamond said that the BNPL business remains on track to hit its FY20 target of $2.2 billion in annualised transaction volume set at the beginning of the year.

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy
• Down 20% in 7 trading hours… Worse to come?
• The latest ASX shares to be hit by broker downgrades to “sell” today
• What would I rather buy today: TPG or Telstra shares?

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has recommended oOh!Media Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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