Category: Stock Market

The BHP Group Ltd (ASX: BHP) share price is the biggest influence on the S&P/ASX 200 Index (ASX: XJO) because of its very large market capitalisation. Certainly, its future performance will play an important part in what happens with the ASX 200.

The last 12 months — and, indeed, the past five years — have been a volatile period for the business.

Despite dropping below US$37 multiple times this year, the BHP share price has risen 17% this year to almost $47.

Over the past five years, the mining giant has seen a rise of more than 70%. So what could the next five years look like?

Current commodity portfolio

The company’s commodity portfolio has shifted throughout the years. The divestment of South32 Ltd (ASX: S32) changed how the business was positioned. Also this year, BHP divested its petroleum business to Woodside Energy Group Ltd (ASX: WDS).

It currently has a portfolio of commodities with operational projects, as well as one that it’s working on.

BHP’s current production comes from iron ore, copper, metallurgical coal, energy coal, and nickel.

The company says that it’s “actively managing its portfolio for long-term value creation through the cycle”. It’s looking to maximise value from iron ore and metallurgical coal (used to make steel).

BHP is increasing its exposure to ‘future facing’ commodities. Copper is needed for electrification, along with nickel.

The company is also working on a potash project called Jansen. This could be the biggest change for the business over the next five years and could influence the BHP share price.

Potash plans

BHP says that the Jansen project has the expansion potential to support up to a century of production. The project is based in Canada, which is described as a “stable mining jurisdiction”.

For readers who don’t know, potash is a type of fertiliser that is described as “low emission, biosphere friendly and positively leveraged to decarbonisation”.

BHP thinks it will be attractive because there could be “reliable base demand leveraged by population growth and higher living standards”.

The Jansen stage one project cost is US$5.7 billion, with this spending ramping up between FY22 to FY26.

The company pointed out that Jansen has “structural competitive advantages” as it uses more efficient, larger, and more automated equipment compared to competitors. Jansen could end up having an impressive profit margin profile.

Other commodities

Meantime, BHP is generating a lot of profit from iron ore. While it has virtually no control over the iron ore price, the company is working on scaling its operations and improving its infrastructure to uplift capacity. For example, its ‘port debottlenecking project ’ is expected to be completed in 2024 and this investment could support throughput of more than 300mt per annum.

The mining giant is also hoping to buy the OZ Minerals Limited (ASX: OZL) business at a price of $28.25 per share. While this was a premium of almost 50% to the last trading day prior to the BHP proposal, the deal is expected to add value.

Buying OZ Minerals would also increase exposure to copper and nickel, which are important for decarbonsation and electrification.

For BHP, there are “attractive synergies” with the creation of a large South Australian copper basin, with how close OZ Minerals’ Carrapateena and Prominent Hill are to BHP’s existing Olympic Dam asset and Oak Dam development resource. OZ Minerals also has substantial growth projects for copper and nickel.

Foolish takeaway

It’s almost impossible to say what commodity prices or the BHP share price will be in five years. But, the company could have a much larger focus on non-iron resources which are focused on decarbonisation. Of particular interest in 2027 could be the prospects of Jansen’s potash production.

The post Where will BHP shares be in 5 years? appeared first on The Motley Fool Australia.

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More reading

• I’d buy 1,000 shares of this ASX 200 stock for $800 in monthly passive income
• Is the SPDR S&P/ASX 200 Fund (STW) an ETF?
• ASX 200 tech shares deep in the red today. Here’s why
• ASX 200 correction: A once-in-a-lifetime chance for supercharged passive income!
• Why is the CSL share price in the spotlight on Wednesday?

Motley Fool contributor Tristan Harrison 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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It’s been a pretty disappointing day for ASX shares this Wednesday so far. At the time of writing, the All Ordinaries Index (ASX: XAO) has slipped by 0.61%. But that’s nothing compared to the carnage we are seeing with the BrainChip Holdings Ltd (ASX: BRN) share price

Brainchip shares are having a clanger today. The ASX artificial intelligence share has lost a painful 7.06% at the time of writing. That puts the company’s share price down to 63.2 cents.

That’s a bit better than what was happening this morning though. Just before midday, the Brainchip share price fell to an intraday low of just 62 cents, which was a fall of almost 9% at that time.

So what’s going so wrong for Brainchip shares today? Well, it doesn’t look like it has anything to do with the company itself. Brainchip has released no ASX news or announcements today.

To be fair, we did hear news earlier this week that Brainchip CEO Sean Hehir has been selling Brainchip shares recently. But that was a few days ago, so it doesn’t look like this is relevant today.

Why is the Brainchip share price getting crushed?

It looks like Brainchip shares are getting caught up in the general sell-off we have seen in tech shares this Wednesday. Tech is one of the worst-performing sectors on the ASX right now.

Companies like Megaport Ltd (ASX: MP1), TechnologyOne Ltd (ASX: TNE), and Pro Medicus Ltd (ASX: PME) are all down between 4-6% at present. As are leading tech shares like WiseTech Global Ltd (ASX: WTC) and Altium Limited (ASX: ALU).

With these kinds of numbers, it was always going to be hard for Brainchip shares to do well today.

Additionally, Brainchip is also one of the ASX’s most short-sold shares right now, as my Fool colleague James recently reported. When a company has a high short-seller interest, it can dampen investor enthusiasm as well.

So the stars seem to have aligned for a rough day for the Brainchip share price this Wednesday.

The post Why is the BrainChip share price crumbling 7% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• Why Beach, Bellevue Gold, Block, and Brainchip shares are dropping
• The BrainChip CEO has sold $700,000 worth of his shares in a week. What’s going on?
• Why did the BrainChip share price smash the ASX 200 in November?
• Why are ASX tech shares having such a cracking run on Thursday?
• Best of a bad bunch: The 3 best-performing ASX 200 tech shares in November

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 positions in and has recommended Altium, Megaport, Pro Medicus, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Pro Medicus and WiseTech Global. The Motley Fool Australia has recommended Megaport and Technology One. 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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1) So much for the so-called Santa Rally…

In Wednesday’s trade, the ASX 200 has followed United States markets lower as a host of Wall Street executives warn of tougher times ahead.

Goldman Sachs’ CEO David Solomon said a US recession in 2023 is a possibility and that it should be no surprise that job cuts could be on the table.

JPMorgan Chase’s Jamie Dimon, in between having yet another dig at cryptocurrencies, likening them to pet rocks, warned of a mild to hard US recession next year.

Bank of America CEO Brian Moynihan said the bank has slowed hiring.

And Morgan Stanley said it will reduce its global workforce by about 2,000.

“We have not yet seen the bottom on equity prices,” said Lauren Goodwin, portfolio strategist at New York Life Investments on Bloomberg. “While this phase of equity market volatility is likely to end in the next few months, earnings have not yet adapted to a recessionary environment.”

The big US investment banks are about 10,000 miles away from the home of the ASX, but the old saying “when Wall Street sneezes, the ASX catches a cold” usually rings true. 

2) For a change, the stock market moved in response to the upcoming economic slowdown – something that will impact corporate earnings – rather than the move in bond yields, which in turn reflect future interest rate expectations.

Although there are the inevitable outliers, consensus is that central banks will be finished raising interest rates at or before the middle of next year. 

In other words, the heavy lifting on interest rates has already been done. Next up is estimating the impact it will have on corporate profitability.

You could argue/guess that most of the coming economic slowdown is already priced into many stocks. I’ve repeatedly used the example of high-quality retailer JB Hi-Fi Limited (ASX: JBH), which trades on a valuation that is expecting “bad things” ahead. 

3) The stock market looks forward, with discretionary consumer stocks like JB Hi-Fi likely to move higher before earnings have bottomed for this economic cycle.

As to where they will bottom – and the bottom could still be higher than current levels of profits – is the great unknown.

As to when they will bottom, the pundits are queuing up to take a guess.

Over in the US, quoted on Bloomberg, David Bailin, chief investment officer at Citi Global Wealth, said markets have never bottomed before a recession has begun. “If there is in fact going to be a recession next year, if we are going to see a period of unemployment rising in the country, then we would expect that markets would have to settle down from where they are today over the course of the next several months.”

Back in Australia, Bell Potter’s Richard Coppleson said on Livewire the bear market is not over yet. The worst is likely still ahead of us.

Coppleson said we could see a lot of market pain at the start of the year, with a low in mid-March 2023. 

“The patterns of the past suggest we’re coming close to the end of the current rate rise cycle and the bear market. If March 2023 becomes the final market low, and the start of the bull market run, investors may find opportunities there. They’ll need to have a strong stomach though. The evidence for a change will take time to appear. Bear markets don’t last forever after all.”

Writing in its November 2022 monthly report, the 1851 Emerging Companies Fund believes we will not see a hard landing for the consumer during 2023, and in a contrarian bet, has been progressively increasing its weighting to the retail sector.

“Our expectation is better days lie ahead for the Australian small cap market and we are progressively rotating the portfolio to take advantage as we enter 2023.”

They are definitely getting in ahead of the game… which is the game when it comes to stock picking.

4) So what’s an investor to do?

I’d suggest four things…

1. Keep a healthy cash balance. These days you get paid for waiting. Plus, it helps you sleep well at night. I’m quite cashed up having recently received funds from a company that was bought out, I have more to come from my Nearmap Ltd (ASX: NEA) shares (also acquired), plus even more to come from my MSL Solutions Ltd (ASX: MSL) shares (in the process of being acquired).
2. Don’t sell out of any existing positions just because you think markets might tumble further between now and March 2023. Jumping in and out of the market only makes money for your broker. You’ll very likely get the timing very wrong.
3. Keep adding to existing positions – or take out starter positions in new holdings – if you think are well placed to weather an economic slowdown, and trade on modest valuations. Easier said than done but hey, that’s investing.
4. There’s unlikely to be a time when you should go “all in” on a stock or indeed into the market. But you can certainly look to put more money to work should the market fall another say 10% to 20% from here. The problem is, when it happens, that’s hard to stomach, because inevitably, you can’t pick the bottom, and new money invested in the market can quickly be in the red. 

The time to commit to such a course of action is now, when things are relatively calm. Something like, if the markets fell by say 20% from here, committing to invest at least 50% of your cash balance into stocks. It’ll be scary, but in five years time, it’ll very likely look a brilliant move.

The post As 2 experts predict the stock market is yet to bottom, here are 4 things every investor can do now to prepare for the worst appeared first on The Motley Fool Australia.

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More reading

• 7% dividend yield! One ASX 200 share to buy in December and hold for 10 years
• It took me years to realise I’m no investing genius like Warren Buffett
• Almost ready to retire? Why I’d buy undervalued ASX dividend shares right now
• Top ASX shares to buy in December 2022
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bruce Jackson has positions in Msl Solutions and Nearmap. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended JPMorgan Chase and Nearmap. The Motley Fool Australia has recommended Jb Hi-Fi. 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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An S&P/ASX 200 Index (ASX: XJO) stock capable of providing $800 of passive dividend income every month with just 1,000 stocks? Sign me up!

It might sound like a pipedream, but it’s on offer right now on the Aussie bourse.

The company behind the whopping figure is, of course, Rio Tinto Limited (ASX: RIO). The ASX 200 iron ore share has paid out nearly $9.61 per share in regular dividends – not counting special offerings – in 2022.

That figure also includes a whopping 52% cut to its interim dividend. But Rio Tinto’s payouts might be too good to be true.

All dividends offered by Rio Tinto in 2022

ASX 200 iron ore giant Rio Tinto has paid out $9.61 per share in regular dividends to Aussie investors this year despite tumbling demand for the steel-making commodity.

That means someone holding 1,000 shares in the miner would have received $9,610 in regular passive income – or $800.83 per month. And that’s before considering special dividends.

Though, past performance is not indicative of future performance, as I will get to in a moment.

Here’s a breakdown of all the offerings put on the table by Rio Tinto over the last 12 months:

Rio Tinto dividend value	Type	Month payable
$5.7704	Final	April 2022
$0.858	Special	April 2022
$3.837	Interim	September 2022

Building $800 of monthly passive income from the ASX 200 stock

So, how much would an investor have to fork out to buy 1,000 Rio Tinto shares and take advantage of its current 8.23% trailing dividend yield?

Well, with each share in the ASX 200 stock going for $116.20 at the time of writing, such a parcel would set a buyer back $116,200. If you’re anything like me, that figure is far from pocket change.

So, how would I work my way up to holding 1,000 securities? If that were my aim, I would invest a set amount each month and take advantage of Rio Tinto’s dividend reinvestment plan (DRP) to compound my holding.

For instance, if I had around $500 per month to invest in Rio Tinto shares, I could buy four each month and still have change (or extra to cover brokerage fees). That’s assuming the company’s share price stays exactly where it is right now.

If the Rio Tinto dividend yield also stayed put, I could bank 1,000 shares in around 12 years using the power of compounding.

Of course, in the real world, I would work to build a more diverse portfolio to better protect my investments.

Too good to be true?

However, this is where I might disappoint some readers.

As an ASX 200 materials share, Rio Tinto’s earnings, and therefore its dividends, are nearly entirely reliant on commodity prices, and that of iron ore in particular.

Unfortunately, some experts are bearish on the future of certain companies involved in the steelmaking ingredient.

Goldman Sachs, for one, is tipping Rio Tinto’s earnings to slump in coming years, as my Fool colleague James reports.

The broker expects the company to offer US$4.80 per share in dividends this financial year – $7.16 Australian at the current exchange rate.

That’s forecast to fall to $6.24 in financial year 2024 and to $6.18 in financial year 2025.

Still, if the broker’s forecasts prove accurate, 1,000 shares in the ASX 200 stock could provide more than $500 per month in passive income in a few years’ time.

The post I’d buy 1,000 shares of this ASX 200 stock for $800 in monthly passive income appeared first on The Motley Fool Australia.

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More reading

• Which ASX mining shares have had their dividend yields slashed the most in 2022?
• ASX 200 tech shares deep in the red today. Here’s why
• ASX 200 correction: A once-in-a-lifetime chance for supercharged passive income!
• Why is the CSL share price in the spotlight on Wednesday?
• 5 things to watch on the ASX 200 on Wednesday

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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Not too long ago, ASX mining shares were heralded as dividend royalty on the Aussie share market. However, times have changed since 2020 and 2021. Commodity prices are not as shiny as they once were, putting pressure on those supersized payouts.

Instead, the baton has been passed on to oil and gas companies this year, as the world became desperate for energy in the face of crimped supply.

Due to the essential nature of energy, prices for these commodities ballooned throughout the year — with crude oil reaching US$130 per barrel after starting the year below US$50. ASX energy companies able to capitalise on the demand have witnessed eye-popping changes to their bottom lines and payouts.

Meanwhile, investors in ASX mining shares have watched on as their dividend yields have been — in many cases — squashed.

It might be painful, but let’s find out which mining companies have been dealt the biggest blow to their passive income potential.

ASX mining shares with detonated dividend yields

Before we unearth the harrowing tales of dividend disappearance, it should be said that changes in the dividend yield are a function of two variables. Either the dividend per share (DPS) paid by the company has altered, or the share price may have moved — or some combination of the two.

The worst outcome as an income investor is for your juicy yield to go from hero to zero. According to data from S&P Global Market Intelligence, five ASX mining shares have succumbed to this grim fate.

Comparing the dividend yield as of 31 December 2021 to today, the following companies have experienced a 100% reduction in their yield.

Company	Dividend yield on 31 December 2021	YTD share price performance
SSR Mining Inc CDI (ASX: SSR)	1.1%	-6.7%
Sandfire Resources Ltd (ASX: SFR)	5.2%	-19.6%
Perenti Ltd (ASX: PRN)	4.3%	19.4%
Mount Gibson Iron Limited (ASX: MGX)	4.7%	14.4%
St Barbara Ltd (ASX: SBM)	2.7%	-55.7%

While the above five ASX mining shares take the crown for the biggest reduction in dividend yield, there are several other large names that have experienced substantial yield suppression in 2022.

Which others have been hurt?

For example, Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) received a respective 55% and 29% yield slashing. Both companies feeling the effects of an iron ore price now half its 2021 highs.

Likewise, Newcrest Mining Ltd (ASX: NCM) and Evolution Mining Ltd (ASX: EVN) have taken 37% and 29% hits to their dividend yields.

According to the latest Janus Henderson Global Dividend Index report, dividends from basic materials companies globally fell 21.8% year-on-year in the third quarter.

The post Which ASX mining shares have had their dividend yields slashed the most in 2022? appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price jumps amid Twiggy’s $4b renewables takeover
• 5 things to watch on the ASX 200 on Wednesday
• What’s the outlook for the iron ore price in 2023?
• Why Beach, Block, Magellan, and St Barbara shares are dropping
• Fortescue share price dips despite green hydrogen milestone ‘worth celebrating’

Motley Fool contributor Mitchell Lawler 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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The S&P/ASX 200 Index (ASX: XJO) is out of form on Wednesday. In afternoon trade, the benchmark index is down 0.6% to 7,247.8 points.

Four ASX shares that aren’t letting that hold them back today are listed below. Here’s why they are charging higher:

Coronado Global Resources Inc (ASX: CRN)

The Coronado share price is up 4.5% to $2.09. Investors continue to buy coal miners due to the high prices that the black gold is commanding right now. In addition, it is worth noting that earlier this week, Macquarie slapped an outperform rating and $3.10 price target on its shares. This implies potential upside of almost 50%.

GQG Partners Inc (ASX: GQG)

The GQG share price is up over 1% to $1.45. This morning this fund manager released its monthly funds under management update. GQG had a strong month and saw its funds under management rise 8.2% to US$90.7 billion from US$83.8 billion. However, it’s unclear how much of this increase was driven by financial markets having a stellar month.

Patriot Battery Metals Inc (ASX: PMT)

The Patriot Battery Metals share price is up 95% from its listing price to $1.17. This North America-based lithium developer listed on the Australian share market today following an IPO. Patriot’s flagship asset is the 100% owned Corvette Property, located near the Trans-Taiga Road and powerline infrastructural corridor in the James Bay Region of Québec.

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is up 7% to 36.5 cents. This morning this energy company announced that it has increased its stake in Warrego Energy Ltd (ASX: WGO) to 19.9%. Beach Energy Ltd (ASX: BPT) and Gina Rinehart’s Hancock Energy are currently in a bidding war for the energy explorer.

The post Why Coronado, GQG, Patriot Battery Metals, and Strike shares are pushing higher appeared first on The Motley Fool Australia.

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More reading

• Why Beach, Bellevue Gold, Block, and Brainchip shares are dropping
• Why is Clough’s collapse wreaking havoc on the Beach Energy share price?
• Strike Energy share price soars following Warrego buy up
• 5 things to watch on the ASX 200 on Wednesday
• Here’s how I’d invest $5,000 in ASX dividend shares to earn a second income

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 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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What makes a stock a ‘Warren Buffett-style’ stock? That’s a good question.

Warren Buffett is without a doubt one of the greatest investors of all time — and a living legend. Over the past 60 or so years, he has turned Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) from a failing textiles mill into the US$678 billion conglomerate it is today, achieving a compound annual return of around 20% per annum on average along the way.

What’s in a MOAT?

So what kind of companies does Buffett typically invest in? Well, they usually have one thing in common: a moat. A moat is an investing concept coined by Buffett himself. Here’s how he described the concept in his 2007 annual letter to shareholders of Berkshire Hathaway:

It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone. A truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business ‘castle’ that is earning high returns.

Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with ‘roman candles’, companies whose moats proved illusory and were soon crossed.

Looking at Berkshire Hathaway’s current holdings, we see plenty of moats. Companies like Coca-Cola and American Express, long-term Berkshire holdings, possess some of the most powerful brands in the world. Amazon.com is one of Berkshire’s more recent holdings. But there’s no doubt Amazon has one of the globe’s best pricing moats.

And Apple, Berkshire’s largest holding, is one of the most dominant companies on the planet with its brand, management team, and scale.

Berkshire doesn’t own any ASX shares at present, so it’s hard to know what kind of Australian companies Buffett might go for today. But there is one ASX investment that hones in on Buffett’s concept of a moat. And it’s an exchange-traded fund (ETF) that I personally own.

The VanEck Vectors Wide Moat ETF (ASX: MOAT) is a fund that focuses on only holding US shares that display characteristics of Buffett’s moat concept. These are selected by Morningstar, which looks for companies with “sustainable competitive advantages”.

This ETF’s current portfolio includes names like Microsoft, Alphabet, Kellogg, and Disney. Berkshire’s holding Amazon is also present, as are Berkshire Hathaway shares themselves.

Why I will never sell this Buffett-style ASX ETF

So we know that this ETF attempts to invest like Buffett does by looking for companies with moats. But does it have the numbers to back it up?

Well, this ETF has returned an average of 14.72% per annum over the past five years. That beats its S&P 500 benchmark, which has returned an average of 13.19% per annum over the same period.

Since the fund’s inception in mid-2015, the VanEck Wide Moat ETF has averaged an annual return of 14.88%, again beating the S&P 500 which averaged 12.78%.

Here’s a look at this ETF’s unit price to illustrate:

So we have a Buffett-style investment that has consistently outperformed the market. That’s enough to earn this ETF a place in my own portfolio. And enough for me to never want to sell this ASX investment.

The post One Warren Buffett-style stock I’m ‘never’ selling appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. American Express is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon.com, American Express, Apple, Berkshire Hathaway, Coca-Cola, Microsoft, VanEck Morningstar Wide Moat ETF, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Apple, Berkshire Hathaway, Microsoft, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, long January 2024 $145 calls on Walt Disney, long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway, short January 2023 $265 calls on Berkshire Hathaway, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Berkshire Hathaway, VanEck Morningstar Wide Moat ETF, and Walt Disney. 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 afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another disappointing decline. At the time of writing, the benchmark index is down 0.75% to 7,236.2 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Beach Energy Ltd (ASX: BPT)

The Beach Energy share price is down 8% to $1.67. This follows a series of negative developments for this energy producer all hitting at once. These include oil prices sinking overnight, Morgans downgrading its shares to a hold rating, and Beach being exposed to the Clough collapse. Clough was working on the Waitsia Stage 2 gas plant.

Bellevue Gold Ltd (ASX: BGL)

The Bellevue Gold share price is down 12% to $1.06. This has been driven by the gold miner completing its institutional placement this morning. According to the release, Bellevue Gold raised $60 million at $1.05 per new share. This represents a discount of 13.2% to its last close price. Proceeds will be used to accelerate underground development and exploration at the Bellevue Gold Project in Western Australia.

Block Inc (ASX: SQ2)

The Block share price is down almost 3% to $92.26. This follows a poor night of trade for the payments company’s NYSE listed shares overnight. The Block share price came under pressure on Wall Street following a tech selloff amid concerns over rising interest rates.

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price has sunk almost 9% to 62 cents. Once again, weakness in the tech sector is partly to blame for this. In addition, the loss-making semiconductor company has been targeted by short sellers recently. So much so, at the last count, it had a rather devilish 6.66% of its shares held short. Short sellers appear to believe Brainchip doesn’t justify a $1.1 billion market capitalisation given its pitiful revenue generation.

The post Why Beach, Bellevue Gold, Block, and Brainchip shares are dropping appeared first on The Motley Fool Australia.

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More reading

• Why is Clough’s collapse wreaking havoc on the Beach Energy share price?
• ASX 200 tech shares deep in the red today. Here’s why
• Strike Energy share price soars following Warrego buy up
• 5 things to watch on the ASX 200 on Wednesday
• Why is the Bellevue Gold share price on ice today?

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 Block. The Motley Fool Australia has positions in and has recommended Block. 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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Is the SPDR S&P/ASX 200 Fund (ASX: STW) an ASX exchange-traded fund (ETF)? That’s a good question.

The SPDR S&P/ASX 200 Fund certainly doesn’t have ‘ETF’ in its name. Most ETFs on the ASX, such as the Vanguard Australian Shares Index ETF (ASX: VAS), do.

But that doesn’t mean much, to be frank. So for a fund to be an ETF, it needs to be two things. Firstly, a fund (the F in ETF). This, the SPDR S&P/ASX 200 Fund is, as its name implies. Secondly, an ETF needs to be ‘exchange-traded’ (the ET in ETF).

Since the SPDR S&P/ASX 200 Fund can indeed be traded on the ASX under the ticker code ‘STW’, and is a fund, we can conclude that it is indeed an ETF.

Not just any ETF though. This fund has the unique distinction of being the oldest ASX-tracking index fund on the share market. Yes, it has an inception date of 27 August 2001.   

By contrast, the Vanguard Australian Shares ETF, which is by far the most popular ETF on the market, only opened its doors in May 2009. Another popular option is the iShares Core S&P/ASX 200 ETF (ASX: IOZ) which began in December 2010.   

So the SPDR ASX 200 Fund certainly has a lot of runs on the board.

How is the SPDR S&P/ASX 200 Fund different to other ASX ETFs?

But this fund is very similar to other ASX index funds. It closely tracks the S&P/ASX 200 Index (ASX: XJO), which in itself represents the largest 200 shares on the ASX by market capitalisation. The iShares Core ASX 200 ETF does exactly the same thing.

You’ll find BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and CSL Limited (ASX: CSL) amongst both ETFs’ top holdings. As well as other major ASX 200 shares like the other ASX banks, Woolworths Group Ltd (ASX: WOW), Telstra Group Ltd (ASX: TLS) and Fortescue Metals Group Limited (ASX: FMG).

The Vanguard Australian Shares ETF is slightly different, tracking the largest 300 ASX shares, rather than the largest 200.

The only real difference between the iShares ASX 200 ETF and the SPDR ASX 200 Fund is the fees they charge investors. Here, the iShares ETF has a slight advantage, charging a management fee of 0.09% per annum. That’s $9 a year for every $10,000 invested.

By contrast, the SPDR S&P/ASX 200 Fund charges 0.13% per annum or $13 a year for every $10,000 invested. Vanguard’s Australian Shares ETF charges 0.1% per annum.

So the SPDR S&P/ASX 200 Fund is indeed an ASX ETF, despite the absence of ‘ETF’ in its name. But, despite its pedigree as the first ASX ETF, it is just one of many on the ASX today.

The post Is the SPDR S&P/ASX 200 Fund (STW) an ETF? appeared first on The Motley Fool Australia.

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• If you bought 100 shares of CSL 10 years ago, this is how much you would have today
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Motley Fool contributor Sebastian Bowen has positions in CSL, Telstra Group, and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Telstra Group. 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 Novonix Ltd (ASX: NVX) share price is trading 2.91% down at $2.00 during Wednesday afternoon trading.

This week, the lithium battery materials company has lost 13.5% of its value on the ASX.

That’s even more concerning when you consider that over the entire month of November, Novonix shares fell 16%, which made them among the worst-performing ASX 200 shares of the month.

With no news from the company so far in December, this week’s losses are likely a hangover from November. The likely reason for the Novonix share price tumble last month is two-fold.

Firstly, there was probably some profit-taking after the Novonix share price gained 50% in October.

The gains followed news that the United States Department of Energy had awarded Novonix a US$150 million grant for the expansion of its anode materials plant in Tennessee.

The second is China’s COVID-zero policy and lockdowns. This has wreaked global economic havoc and impacted many businesses associated with the global electric vehicle (EV) market.

Why is the Novonix share price so volatile?

As my colleague Brooke recently reported, investors have been turning their backs on unprofitable companies during these tough economic times. They’re not so keen on ASX tech stocks either.

This is because inflation is going up, which means younger companies not yet making a profit are facing major cost headwinds.

On top of that, interest rates are going up. Younger companies typically have more debt to finance their growth and development, so investors are wary of them right now, too.

That’s why the S&P/ASX 200 Information Technology Index (ASX: XIJ) has lost more than a third of its value in the year to date. The tech sector in Australia is in its infancy compared to the US.

But there’s more to Novonix’s volatility than macro issues.

A warning bell for Novonix shareholders was rung in September when the company’s auditors, PriceWaterhouseCoopers (PWC) said “a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern”. Eek.

In its 2022 annual report, Novonix reported a loss after tax of $71 million and about $40 million in net cash outflows.

PWC also noted that Novonix “remains dependent upon raising additional funding to finance its ongoing expansionary activities”.

Yeah, this makes Novonix shares not so appealing for the moment, especially for risk-averse investors.

In addition, Novonix is a small-cap share. It goes without saying that smaller companies typically experience more volatility than established blue-chip shares because they simply don’t have the same level of investor support.

What’s the latest at Novonix?

Novonix is a battery materials and technology company. It’s figured out a way to produce synthetic graphite anode material for lithium-ion batteries. It says this is safer and more environmentally friendly than naturally occurring graphite.

Novonix says demand for its anode material is increasing in the US. This is largely due to the growing local EV market and the US’s desire not to be so reliant on Chinese graphite producers.

Novonix hopes to become a major alternative local supplier. It has multiple facilities in Chattanooga, Tennessee and is trying to scale up production as fast as possible.

The US grant, announced in October, will be used to support this goal.

Novonix aims to increase production capacity to 10,000 metric tonnes of synthetic graphite per annum (tpa) by 2023. It is targeting 40,000 tpa by 2025 and 150,000 tpa by 2030.

Novonix expects to spend about US$1 billion on its expansion between 2023 and 2025.

The post The Novonix share price has crashed another 14% already this week. What’s going on? appeared first on The Motley Fool Australia.

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More reading

• Why did the Novonix share price crash 16% in November?
• These were the worst performing ASX 200 shares in November
• Here are the top 10 ASX 200 shares today
• Why has the Novonix share price crumbled 19% in 2 weeks?
• Will ASX 200 tech company Novonix deliver a profit in 2023?

Motley Fool contributor Bronwyn Allen 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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