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Wirecard Files For Insolvency After $2.1 Billion Went Missing
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Wirecard files for insolvency, becoming first DAX member to fail
Wirecard said on Thursday it was filing for insolvency after disclosing a $2.1 billion financial hole in its accounts, becoming the first sitting member of Germany’s blue-chip share index to go out of business. Shares were suspended by the Frankfurt Stock Exchange before the news. Wirecard said in a two-paragraph statement that its new management had decided to apply for insolvency at a Munich court “due to impending insolvency and over-indebtedness”.
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Lufthansa’s Biggest Investor to Back Government Bailout Deal
(Bloomberg) — Deutsche Lufthansa AG’s biggest stockholder publicly backed a 9 billion-euro ($10 billion) government bailout, giving the rescue plan a major shot of momentum and boosting the airline’s shares and bonds just before a crunch vote.With Heinz Hermann Thiele declaring support after days of frenzied speculation about his intentions, the state rescue appears likely to secure the two-thirds backing required at Thursday’s special shareholders meeting. The German billionaire who had earlier criticized the conditions held the votes to single-handedly stop the deal and plunge Europe’s largest airline into turmoil.A failure of the landmark bailout, which featured the state buying a heavily discounted 20% stake in the airline, would also have been a serious blow to Chancellor Angela Merkel’s efforts to take a more activist approach to managing Germany’s economy.Thiele eased those concerns by saying he “will vote in favor” of the plan at the meeting, according to an interview with Frankfurter Allgemeine Zeitung published on its website late Wednesday.Because only 38% of shareholders registered for the online meeting, Thiele’s 15.5% stake translates into about 41% of the votes. Lufthansa needs to win about half of the rest for the share sale to pass. It’s only part of the larger bailout package that also includes state loans and a so-called silent participation.Approval of the deal would bring the curtain down on weeks of high-stakes drama that buffeted Lufthansa’s stock and bonds and forced it to examine insolvency. It would also thrust the state back into the heart of a company that was privatized with fanfare two decades ago.Lufthansa shares jumped as much as 21% Thursday in early Frankfurt trading, the biggest intraday rise since March 13. They were up 15% at 10.35 euros at 10:53 a.m., valuing the company at 4.9 billion euros.The news of Thiele’s support also triggered a sharp rally in Lufthansa debt, with the company’s euro bonds maturing in 2024 jumping the most on record to trade as high as 90.2 cents on the euro. The airline’s bonds have been under pressure since March and a sell-off accelerated last month when the company lost its investment-grade rating at S&P.The virtual meeting starts at 12 p.m. in Frankfurt. Chief Executive Officer Carsten Spohr, who’s fighting for the airline’s survival, will address shareholders before opening the floor to questions. The process could take several hours before the vote proceeds and the results are released later in the afternoon.In another step forward the deal, Lufthansa on Thursday won European Union approval for a 6 billion-euro recapitalization plan, the bulk of the financing in the rescue plan. To ease competition concerns, the airline has committed to make slots available at its Frankfurt and Munich hubs.Securing a state holding would be a victory for Finance Minister Olaf Scholz, pleasing his Social Democratic allies and bolstering his ambitions to run for chancellor next year. Economy Minister Peter Altmaier would notch a landmark deal that’s meant to serve as a model for the government’s plan to act more as a state capitalist.‘Better Than Insolvency’Andreas Laemmel, a member of the Bundestag’s economy and energy committee for Chancellor Angela Merkel’s bloc, said the negotiations with Lufthansa had served as a “learning process” for the government which will inform talks on possible future bailouts for other companies.“The aid package will protect the value of the shares and help the company be successful again,” Laemmel said Thursday in an interview with Deutschlandfunk radio. “That’s the best contribution that the government can make, giving shareholders security.”Read more:One Man Can Save Lufthansa’s Bailout or Unleash BedlamLufthansa Closes German Charter Carrier With Loss of 1,200 JobsGermany Dares Lufthansa’s Top Shareholder to Scuttle BailoutLufthansa’s Fate Will Affect German Savers Holding Its DebtUnions, many investors and proxy advisory firms recommend shareholders back the deal. While stockholders will see their holdings diluted, it’s not clear what the rationale for blocking the package would be without a major investor proposing an alternative.“A government-orchestrated bailout is better than insolvency,” said Patrick Schuchter of Union Investment, holder of a 0.12% stake. He plans to vote for the rescue, despite the drawbacks for shareholders. “Investors need to choose the lesser evil or sell their shares.”Securing the bailout would allow Lufthansa’s management to turn attention to negotiating restructuring packages with the company’s powerful labor unions. The airline late Wednesday reached a deal with its cabin crew union that would save around 500 million euros until 2023. In return, Lufthansa pledged not to make redundancies for the duration of the coronavirus crisis.The company faces tough choices as it seeks to slim down for what Spohr predicts will be years of depressed travel demand. Labor representatives back the deal as the alternative coould man even deeper cuts.“We extraordinarily welcome the decision to support the state aid package,” Christine Behle, a supervisory board member and deputy chairman of labor union Ver.di, said in an emailed statement. “With this, the survival of the company would be secured and an insolvency avoided.”(Updates with EU approval, adds chart)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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These top ASX dividend shares could be great option for income investors
Are you looking to add a few dividends shares to your portfolio? Then take a look at the three shares I have picked out below.
All three offer above-average yields and look well-placed to grow their dividends over the coming years. They are as follows:
Aventus Group (ASX: AVN)
Aventus is a retail property company specialising in large format retail centres across Australia. In total, the company has a portfolio of 20 centres which are home to a diverse tenant base of 593 quality tenancies. These include many of the largest retailers in the country, with a high weighting towards everyday needs. I think this leaves Aventus well-placed for growth over the coming years. For now, Goldman Sachs recently forecast a ~17.3 cents per unit distribution in FY 2021. This equates to a massive forward ~8.1% distribution yield.
Fortescue Metals Group Limited (ASX: FMG)
Another top dividend share I would buy is Fortescue Metals. I think it is a great option because of the high prices that iron ore is commanding at present due to supply disruptions and robust demand. Combined with its improving production grades and low cost operations, Fortescue is currently generating high levels of free cash flow. I expect the majority of this to be returned to shareholders in the form of dividends in FY 2020 and FY 2021. As a result, I estimate that its shares currently provide investors with a forward fully franked dividend of at least 6%.
Macquarie Group Ltd (ASX: MQG)
A third and final ASX dividend share to consider buying right now is Macquarie. I think the investment bank is a great option for investors wanting exposure to the banking sector but are not keen on the big four. This is because it is a very different beast to the big four and generates its revenue from a wide range of channels. And while it won’t be immune from the pandemic, I believe it will bounce back strongly once the crisis passes. This could make it well worth snapping up shares with a long term view. At present, I estimate that its shares provide a partially franked forward yield of 3.9%.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- Add some diversity to your portfolio with these quality ETFs
- Top brokers recommending you buy these ASX shares in this market sell-off
- Why the risk of a market correction for the ASX 200 is rising
- Where to invest $10,000 in ASX 200 shares for 2030
- Ready to invest $5,000? I’d buy these ASX dividend shares today
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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Add some diversity to your portfolio with these quality ETFs
If you’re looking for a quick way to diversify your portfolio, then exchange traded funds (EFTs) could be the answer.
These financial instruments give investors exposure to a wide range of themes, countries, indices, and sectors through just a single investment.
But which ones should you buy? Three top ETFs that I like are listed below:
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
The first ETF to look at buying is the BetaShares Asia Technology Tigers ETF. This ETF allows investors to gain exposure to a portfolio of exciting tech shares that are revolutionising the lives of billions of people in Asia. I believe the majority of these companies are well-placed for growth over the next decade and beyond. Included in the ETF are the likes of search engine company Baidu, ecommerce giants Alibaba and JD.com, electronics behemoth Samsung, and WeChat owner Tencent.
BetaShares NASDAQ 100 ETF (ASX: NDQ)
Another ETF which I think could provide strong returns for investors over the next decade is the BetaShares NASDAQ 100 ETF. As its name implies, this ETF provides investors with exposure to the 100 largest non-financial shares on the NASDAQ index. This includes giants such as Amazon, Facebook, and Microsoft. These companies have been growing at a very strong rate over the last decade and look well-placed to continue their positive form over the next 10 years. In light of this, I think the BetaShares NASDAQ 100 ETF could be a great addition to most portfolios today.
VanEck Vectors Australian Banks ETF (ASX: MVB)
Another option to consider is the VanEck Vectors Australian Banks ETF. I think this ETF is perfect for investors that want exposure to the banking sector but can’t decide which bank to buy. This is because this ETF gives investors access to all of the big four banks and also the regional banks and investment bank Macquarie Group Ltd (ASX: MQG). And given the dividends that these shares pay, I expect it to provide a generous yield in the region of 5% in FY 2021.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- These top ASX dividend shares could be great option for income investors
- Where I would spend $2000 on ASX shares right now
- Top brokers recommending you buy these ASX shares in this market sell-off
- Why the risk of a market correction for the ASX 200 is rising
- Ready to invest $5,000? I’d buy these ASX dividend shares today
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF and Macquarie Group Limited. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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In today’s market, should you buy ASX shares, buy gold, or hold cash?
The S&P/ASX 200 Index (INDEXASX: XJO) was hammered 2.5% lower on Thursday as ASX travel and oil shares were hit hard.
The big share market move came as the International Monetary Fund (IMF) warned of a bleak economic outlook and fears of a “second wave” spooked investors.
No one knows if this will be just another day of volatility or if we’re headed for another bear market.
If it’s going to be the latter, should you be buying ASX shares or cash and gold right now?
Why buying and holding ASX shares is a good strategy
As with all investing, each investment decision is obviously up to the individual and will change with circumstances.
That being said, buying and holding ASX shares has proven to be a good strategy over a number of decades.
If you’re a little worried about market losses, just remember that they’re only paper losses until you sell. If you’re still holding shares, you haven’t actually lost anything until you pull the trigger.
In the February–March bear market, we saw some irrational investing by a lot of first-timers. People panicked as ASX shares fell across nearly all sectors before buying back their shares in April or May.
This is just a form of market timing. Yesterday, I wrote a little bit about why you don’t have to time the market to get rich. Given the sharp losses across the ASX 200 yesterday led by Flight Centre Travel Group Ltd (ASX: FLT), I think it’s worth reiterating.
If you have a long-term investment horizon (i.e. retirement) then what happens today or tomorrow shouldn’t matter. Day-to-day ASX share price movements are just noise – the key is to invest in high-quality companies with long-term potential.
So… what about cash and gold?
I think both cash and gold can have a place in a well-rounded investment strategy. Both have different characteristics including safety (both), liquidity (cash) and inflation hedging properties (gold).
However, I don’t think changing your investment strategy in the midst of a pandemic is necessarily a wise move.
I won’t be loading up on cash and gold even if the share market falls further. If anything, I’ll be trying to deploy what cash I do have into cheap ASX shares.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- ASX 200 drops 2.5%, ASX travel shares dumped
- The BHP share price has jumped 40% higher in the last 3 months
- Top brokers recommending you buy these ASX shares in this market sell-off
- Transurban Group and 1 other ASX share I’d buy in another share market crash
- ASX retailers beware! Amazon.com is gearing up for its next major attack
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group 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.
The post In today’s market, should you buy ASX shares, buy gold, or hold cash? appeared first on Motley Fool Australia.
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Purchasing Openpay shares in March in would have pocketed you this return
The Openpay Group Ltd (ASX: OPY) share price is having one of those ‘ordinary’ days today. Openpay shares are down more than 9% today to $2.25. This is despite no major news out of the company.
But that’s not why we’re talking about Openpay today.
Instead, let’s talk about the company’s recent performance. Openpay started the year going for $1.24 a share. Its pre-COVID-19 high of $1.40 came on 13 February (just in time for Valentine’s Day). Then the March market crash happened and Openpay was smashed. Its shares dropping all the way down to 32 cents on 23 March (a loss of 77%).
But since 23 March things have really got juicy. On today’s prices, anyone who bought into Openpay on 23 March would be sitting on a tidy 600% gain right now. That’s the highest return to date for any ASX company over a $50 million market capitalisation that I know of (even beating fellow payments company Afterpay Ltd (ASX: APT) ).
It gets even better. On 4 June, the company’s shares popped all the way up to $4 a share on a surge of buying activity. Anyone purchasing Openpay at 32 cents in March and selling them at $4 in June would have enjoyed a return of 1,150%. Of course, its shares didn’t last long at $4. After another week, the shares were back to around the levels we see today. But hey, it’s always fun dreaming of what could have been!
Still time to buy Openpay shares?
Well, that depends on your view of the future of the buy now, pay later sector. Unlike its rivals Afterpay and Zip Co Ltd (ASX: Z1P), Openpay focuses on more ‘expensive’ purchased — think cars, healthcare and home improvement.
I think this niche is a great area for Openpay to be focusing on, but it remains to be seen whether it can fend off other BNPL providers and really cement its dominance. This company only floated on the ASX in December of last year, but early signs are very promising. In May, for instance, Openpay reported that it’s customer numbers had increased by more than 130% year on year in the month of May. With its current market capitalisation of ~$244 million, there is definitely room for growth here.
Foolish takeaway
Whilst I did get some FOMO (fear of missing out) looking at Openpay’s recent performance, I don’t think I’ll be jumping on this share in the near future.
It’s still very early days for this company, and I think it will need to pull off a herculean task in carving out a successful presence in the buy now, pay later space. A space which seems to be getting more crowded every week. As such, I’ll be sitting on the sidelines on this one.
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- Could one of these ASX shares be ‘the next Afterpay’?
- Why Xero and these ASX tech shares just hit record highs
- 3 high quality ASX shares I would buy if there were another market crash
- ASX 200 finishes higher, Afterpay hits new record
- 3 ASX payments shares that could double your money
Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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ASX 200 drops 2.5%, ASX travel shares dumped
The S&P/ASX 200 Index (ASX: XJO) dropped 2.5% today to 5,818 points.
Investors are becoming more fearful about the spread of COVID-19 again. The S&P 500 (INX) fell by 2.6% overnight and the ASX generally follows what international share markets do in the short-term.
ASX travel shares and banks sell off
Some of the ASX 200 shares that are most at risk of another COVID-19 uncontrolled outbreak were the ones that fell the most today.
The share price of Flight Centre Travel Group Ltd (ASX: FLT) fell by 11%.
Webjet Limited (ASX: WEB) suffered a share price decline of 8.6%.
The Corporate Travel Management Ltd (ASX: CTD) share price dropped 8%.
It wasn’t just ASX 200 travel shares that declined today.
The Commonwealth Bank of Australia (ASX: CBA) share price fell 2.3%, the Westpac Banking Corp (ASX: WBC) share price dropped 3.5%, the Australia and New Zealand Banking Group (ASX: ANZ) share price declined 3.1% and the National Australia Bank Ltd (ASX: NAB) share price dropped 3.5%.
CSL Limited’s (ASX: CSL) deal
Healthcare leader CSL announced it is going to acquire the exclusive global license rights to commercialise an adeno-associated virus (AAV) gene therapy program called AMT-061 for the treatment of haemophilia B. The AMT-061 program, currently in phase 3 clinical trials, could be one of the first gene therapies to provide potential long-term benefits to patients with haemophilia B.
If AMT-061 is successful, appropriate candidate haemophilia B patients would be able to have a one-time treatment to restore factor IX plasma level activity to functional levels capable of eliminating the need for frequent and ongoing replacement therapies.
The ASX 200 business will start with an upfront US$450 million payment to uniQure followed by regulatory and commercial sales milestone payments and royalties.
Qantas Airways Limited (ASX: QAN) turnaround plan
Qantas has announced a $1.9 billion capital raising to help the business remain financially strong during the next three years.
It is looking to raise approximately $1.4 billion in a fully underwritten institutional placement and up to $500 million in a non-underwritten share purchase plan. The placement price is $3.65 per share, which is a 12.9% discount to the last traded price. The new shares represent a 25% increase to the total shares on issue.
Qantas unveiled a plan that is targeting $15 billion of lower costs over three years in line with reduced flying activity including fuel consumption savings. It hopes to achieve $1 billion per annum of ongoing cost savings from FY23 with productivity improvements.
The ASX 200 airline is going to cut 6,000 jobs across all parts of the business. It will continue to stand down 15,000 employees, particularly those associated with international operations. It will also ground up to 100 of its aircraft for up to 12 months (or more). Some leased aircraft may be returned as they fall due.
The cost of implementing this plan is expected to cost $1 billion with most of it realised during FY21.
Bapcor Ltd (ASX: BAP) reports large growth
Bapcor announced it has seen a large amount of sales growth for two of its main divisions.
The ASX 200 auto parts business said its retail segment experienced strong demand in May and June with Autobarn same store sales increasing over 45% from the prior year. On a full year basis to the end of June 2020, it is estimated that Autobarn same store sales will increase by approximately 8%.
Burson Trade has also experienced strong demand in May and June with same store sales growth to be up approximately 10%. On a full year basis, Bruson same store sales growth is expected to be around 5%.
Bapcor’s segments that suffered most heavily due to COVID-19 were New Zealand, specialist wholesale and Thailand. These segments are also recovering.
Management is now experiencing net profit after tax (before significant items) for FY20 to be in the range of $84 million to $88 million.
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- In today’s market, should you buy ASX shares, buy gold, or hold cash?
- The BHP share price has jumped 40% higher in the last 3 months
- Top brokers recommending you buy these ASX shares in this market sell-off
- 3 quality ASX shares offering shareholders generous dividends
- Transurban Group and 1 other ASX share I’d buy in another share market crash
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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor, Corporate Travel Management Limited, and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group 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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Wirecard Whistle-Blower Tipped German Watchdog in Early 2019
(Bloomberg) — Germany’s financial watchdog took more than a year to report Wirecard AG for suspected market manipulation after receiving a tip-off from a whistle-blower about irregularities at the payments company.BaFin received documents on Wirecard from an anonymous source in late January 2019 and evaluated them along with a Financial Times report on alleged accounting issues at the company, Germany’s Finance Ministry said in a written response to questions from lawmakers.The ministry’s reply, which is dated April 9, didn’t specify what the documents contained and on what day BaFin received them.The German regulator has come under intense criticism for its handling of a scandal that top government officials said risked damaging the country’s reputation. While the FT detailed suspected fraud and suspicious transactions at Wirecard, BaFin’s immediate efforts last year appeared to be mainly geared toward containing the damage from the allegations by banning investors from betting against the stock.BaFin started to investigate both short-sellers as well as Wirecard at the end of January last year, but the regulator was unable to ask law enforcement to take on the latter until auditors weighed in earlier this year, according to a spokeswoman.Felix Hufeld, the head of BaFin, issued a major apology on Monday, saying that it was among institutions responsible for the “complete disaster” at Wirecard because it didn’t do a good enough job supervising, while defending his unprecedented ban on short sales of the stock. The regulator said it had to act because it received indications of possible market manipulation, including insider trading.Supervisors have to act if they see “crystal clear indications, not from a shady source coming anywhere around the globe, but from a major public prosecutor in Germany,” he said.Yet the disclosure from the ministry suggests BaFin also had information early on casting doubt on the company, possibly even before the Jan. 30, 2019 FT story that caused Wirecard’s shares to slump. The issue may come up on July 1, when Hufeld is scheduled to explain his policy to the parliamentary finance committee.Wirecard itself didn’t supply BaFin with documents related to the allegations, according to the ministry documents. Regulators from other countries also asked the German watchdog about the allegations against Wirecard published by the FT, the ministry said in its response to lawmakers.National EmbarrassmentIn an earlier response to lawmakers, the ministry said that getting to the bottom of allegations against Wirecard employees and subsidiaries in Asia was the responsibility of local authorities. That document shows that BaFin investigated Wirecard on at least three other occasions over its disclosures. The company was fined 1.5 million euros ($1.7 million) last year for failing to publish a financial report in full within the prescribed period.BaFin is responsible for supervising Germany’s financial markets, and it has direct oversight of Wirecard’s banking unit but not of the parent company. Finance Minister Olaf Scholz said Tuesday that critical questions need to be asked about how Wirecard was supervised and that auditors and regulators don’t seem to have been effective.Wirecard has gone from a source of pride that Germany can produce successful technology giants to a national embarrassment after the payments company said this week that a quarter of its balance sheet probably doesn’t exist. The scandal has resulted in the arrest of Wirecard Chief Executive Officer Markus Braun and has set off a blame game between bankers, auditors and public authorities including BaFin.(Updates with Hufeld comment in seventh paragraph, fine against Wirecard in 10th)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Where I would spend $2000 on ASX shares right now
So, you have some spare cash to invest in shares right now? Maybe this is your first time investing in ASX shares, or maybe you are looking to top up your ASX share portfolio.
Either way, with the S&P/ASX 200 Index (ASX: XJO) still well down on its pre-coronavirus highs and market confidence continuing to gradually improve, now could be a good time to invest.
Here we take a close look at 2 of my top ASX share picks right now: BetaShares NASDAQ 100 ETF (ASX: NDQ) and Wesfarmers Ltd (ASX: WES).
BetaShares NASDAQ 100
My first ASX share investment recommendation is an exchange-traded fund (ETF). The advantage of ETFs over regular listed shares is that you get instant diversification to a wide range of listed companies.
The BetaShares NASDAQ 100 ETF invests in a basket of shares on the US NASDAQ exchange. It is comprised of the 100 largest, non-financial businesses on this exchange and is home to some of the world’s most successful businesses, with a high proportion of tech companies. These include tech giants such as Amazon, Google, Facebook, Microsoft, Netflix and Apple. Many are world-leading brands, and many also have strong and dominant positions in their individual market niches.
Given Australia’s tech sector is very small compared to the US market, purchasing this ETF gives you instant access to a much larger tech market not normally available via the ASX.
It’s also an easier (and cheaper) way to get exposure to the US tech market than by investing directly in US-listed tech companies. Buying individual US shares requires a separate trading account, and the transactions fees are also higher than they are for regular ASX shares.
Wesfarmers
Although Wesfarmers is a single listed company, one attribute that it has in common with an ETF like BetaShares NASDAQ 100 ETF is its strong sector diversification. Purchasing this ASX share gives you instant access to Wesfarmers’ expansive portfolio of high-quality companies.
Wesfarmers is a highly diversified business with operations in general retail segments including home improvement and outdoor living, apparel and general merchandise and office supplies. It also has exposure to industrial segments with operations in chemicals, energy and fertilisers, and industrial and safety products. This diversification provides a buffer to various parts of the economic cycle.
Wesfarmers also has a strong balance sheet, positioning it well to ride out the current crisis. It also has witnessed strong demand from its online retail offerings during the coronavirus pandemic.
Foolish takeaway
While both are very different investments, I believe that the BetaShares NASDAQ 100 ETF and Wesfarmers are worthy of consideration for adding to your ASX share portfolio. Both provide strong market diversification in 2 very different markets, and could be well placed to outperform the ASX 200 over the next 5 years, in my view.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- ASX retailers beware! Amazon.com is gearing up for its next major attack
- 3 robust ASX dividend shares you need to own
- Coronavirus second wave potential could drive investment portfolio changes
- 3 quality ASX dividend shares you can buy today
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Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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