Category: Stock Market

At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) is still the most shorted share on the ASX despite its short interest easing to 14.6%. Concerns over the travel market recovery have been weighing on this travel agent’s shares.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise to 14.4%. Short sellers may be targeting this betting technology company due to intense competition in the industry and the lofty multiples its shares trade on.
• Block Inc (ASX: SQ2) has seen its short interest rise to 11.1%. Concerns over the prospect of a global recession and regulatory pressure in the BNPL industry could be putting pressure on its shares.
• Lake Resources N.L. (ASX: LKE) has short interest of 10.1%, which is down week on week. Doubts over this lithium developer’s DLE technology appears to be a key reason for the high level of short interest.
• Megaport Ltd (ASX: MP1) has seen its short interest rise to 10%. This may be due to valuation concerns and ongoing weakness in the tech sector.
• Magellan Financial Group Ltd (ASX: MFG) has entered the top ten with short interest of 8.3%. This fund manager has been bleeding funds under management this year. Short sellers don’t appear confident this trend will stop.
• Nanosonics Ltd (ASX: NAN) has short interest of 8.2%, which is up slightly week on week again. Short sellers have been targeting this infection prevention company due to a highly disruptive business model change in the key US market.
• Domino’s Pizza Enterprises Ltd (ASX: DMP) is a new entry in the top ten with 8.2% of its shares held short. Inflationary pressures have been weighing on the pizza chain operator’s performance this year.
• Breville Group Ltd (ASX: BRG) has seen its short interest rise to 7.9%. This high level of short interest may have been driven by concerns over what the uncertain economic backdrop could mean for consumer spending.
• Perpetual Limited (ASX: PPT) has seen its short interest rise to 7.7%. This fund manager’s shares have been hammered this year. Unfortunately, it appears as though short sellers see more pain ahead.

The post Here are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Down 50% so far this year, have Magellan shares got further to fall?
• 2 very exciting ASX growth shares experts rate as buys
• Why analysts say these excellent ASX growth shares are buys
• The Lake Resources share price was never far from the headlines in Q1, but has it paid off?

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 Betmakers Technology Group Ltd, Block, Inc., MEGAPORT FPO, and Nanosonics Limited. The Motley Fool Australia has positions in and has recommended Block, Inc. and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Dominos Pizza Enterprises Limited, Flight Centre Travel Group Limited, and MEGAPORT FPO. 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 Telstra Corporation Ltd (ASX: TLS) share price is an interesting one considering the telecommunications business has a reputation for being a defensive ASX share.

Why could it offer more stability than the S&P/ASX 200 Index (ASX: XJO)? Because its customers pay regularly, such as monthly or quarterly. Relatively consistent revenue can mean fairly consistent net profit after tax (NPAT) and cash flow. That’s the theory anyway.

Certainly, I think people will keep paying their phone bills over other spending categories.

So, how has the Telstra share price performed in recent times?

Recent performance

Since the beginning of 2022, the Telstra share price has declined by 9% while the ASX 200 has declined by 10.9%. The telco takes the win here, slightly.

Looking at the performances in the first quarter of FY23, Telstra shares were flat. The ASX 200 dropped by 1.4%. Another win for the telco.

In October, the Telstra share price is down 0.26%, while the ASX 200 is up 4.5%.

I’d suggest that much of the movement in share prices we’ve seen for Telstra — and many other ASX shares — could be pinned on inflation and rising interest rates. These two factors spark uncertainty. But, in terms of the telco being defensive, it did manage to provide less downside than the ASX 200.

What could have affected the Telstra share price?

Investors usually judge a company by looking at its net profit, growth, and outlook of the business.

The telco told investors that, on a guidance basis, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8.4% to $7.3 billion, underlying earnings per share (EPS) increased 48.5% to 14.4 cents, and free cash flow went up 5.9% to $4 billion. Total income dropped 4.7% to $22 billion.

A particular highlight was that the mobile business saw EBITDA growth of 21.2%. Meantime, postpaid handheld average revenue per user (ARPU) grew 2.9% with 6.4% mobile services revenue growth. Telstra also added 155,000 net retail postpaid handheld services.

In FY23, total income is expected to be between $23 billion to $25 billion. Underlying EBITDA is expected to be between $7.8 billion to $8 billion.

One of the most interesting things to me about the Telstra share price is that the company has announced it’s going to increase prices in line with CPI inflation. Not only can it grow revenue through 5G services, but it can grow its ARPU by increasing its prices. Indeed, it could increase prices each year.

Brokers rate the Telstra share price as a buy

A number of brokers rate the telco as a buy.

For example, Morgan Stanley has an overweight rating on the business, with a price target of $4.60. It thinks that Telstra can benefit from subscribers who move to Telstra after the Optus data hack.

Morgans rates Telstra shares as add. One of the reasons it’s optimistic is that the telco’s assets may be undervalued. The broker has a price target of $4.60. Telstra shares closed trading on Friday at $3.84 apiece.

The post Have Telstra shares been a good investment so far this financial year? appeared first on The Motley Fool Australia.

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More reading

• Amid the doom and gloom, Pilbara Minerals shares delivered 100% gains in Q1. Here’s why
• 5 things to watch on the ASX 200 on Monday
• 4 investment truths that have been shattered in 2022
• Could oversold ASX growth shares now be a buying opportunity for value investors?
• Were ASX 200 bank shares a safe place to park cash in Q1?

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 positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price has been one of the best performers in the S&P/ASX 200 Index (ASX: XJO) over the last few months.

In the three months to 30 September 2022, the ASX lithium share has seen its share price gain 99%. Between 30 June 2022 to today, it’s up an impressive 137%.

What’s going on?

Many ASX shares saw their share prices plummet in the first half of 2022 as markets tried to work out what businesses were worth in this period of high inflation and rising interest rates.

Inflation can increase company costs and hurt demand. But why do interest rates matter? Billionaire Ray Dalio once said:

It all comes down to interest rates. As an investor, all you’re doing is putting up a lump sum payment for a future cash flow.

But while many ASX shares are fairly close to their June lows. The Pilbara Minerals share price has charged higher. For starters, it’s benefiting from the growing demand for electric vehicles.

I think there are key factors worth noting over the last few months.

Strong lithium price

The ASX lithium share has been utilising a digital auction platform called the Battery Material Exchange (BMX) to sell some of its production.

On 23 June 2022, just before the FY23 first quarter, it auctioned 5,000 dry metric tonnes (dmt) of spodumene concentrate and accepted a price of US$6,350 per dmt.

On 13 July 2022, it sold 5,000 dmt for a price of US$6,188 per dmt.

On 2 August 2022, it sold 5,000dmt for US$6,350 per dmt.

On 20 September 22, it sold 5,000dmt for US$6,988 per dmt.

Despite all the worries about the global economy, the lithium price has stayed strong in the first few weeks of the FY23 first quarter and then kept growing.

The commodity price is key for the business because a higher resource price can largely add straight onto its net profit after tax (NPAT) and cash flow. It costs roughly the same to produce the resource, so more revenue for that production is just extra money for the company.

I think this came through in the company’s FY22 result, which was another positive catalyst for (or supportive of) the Pilbara Minerals share price.

FY22 report

The ASX lithium share reported it shipped 361,035 of spodumene concentrate, representing a 28% year-over-year increase.

Revenue grew by 577% to $1.2 billion. The statutory NPAT jumped to $561.8 million, a huge increase from the FY21 statutory loss of $51.4 million.

The FY23 outlook was promising. The company has approved expansion to grow production by a further 100,000 tonnes per annum to a combined 640,000 tonnes to 680,000 tonnes per annum. It’s now also progressing towards a final investment decision to expand production to one million tonnes per annum.

The Pilbara Minerals managing director Dale Henderson said:

The business is in an enviable position, supplying product into a burgeoning growth market with a clear pathway for further production growth off a performing operating base. Further, chemicals participation with our downstream JV with [South Korean company] POSCO and our midstream project provides another extension of value creation for our shareholders. A very exciting future lies ahead for our business and our shareholders.

The post Amid the doom and gloom, Pilbara Minerals shares delivered 100% gains in Q1. Here’s why appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• 4 investment truths that have been shattered in 2022
• Could oversold ASX growth shares now be a buying opportunity for value investors?
• Were ASX 200 bank shares a safe place to park cash in Q1?
• Which has more upside, Allkem or Pilbara Minerals shares?

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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If you’re looking for additions to your income portfolio, then the two ASX 200 dividend shares listed below could be worth considering.

Both shares have been rated as buys by analysts and tipped to provide attractive yields in the coming years. Here’s what you need to know:

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX 200 dividend share for income investors to look at is the Charter Hall Social Infrastructure REIT.

This real estate investment trust is focused on investing in social infrastructure properties such as bus depots, government facilities, police and justice services, and childcare centres.

Analysts at Goldman Sachs are very positive on the company due to its solid outlook, sky high occupancy rate, and long leases. They have put a conviction buy rating and $4.20 price target on its shares.

The broker is expecting this to underpin growing dividends in the coming years. For example, it is forecasting dividends per share of 17.3 cents in FY 2023 and 18 cents in FY 2024. Based on its current share price of $3.23, this implies yields of 5.35% and 5.6%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Another ASX 200 dividend share that has been tipped as a buy is QBE. It is of course one of the world’s largest insurance companies.

Analysts at Morgans are very positive on the company due to rising premiums and cost reductions. It recently retained its add rating with a $14.93 price target on its shares.

Morgans notes that with “strong rate increases still flowing through QBE’s insurance book, investment yields improving and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years.”

It also expects this to lead to a big increase in dividend payments from next year. Morgans is forecasting a 41.5 cents per share dividend in FY 2022 and then a 76.5 cents per share dividend in FY 2023. Based on the latest QBE share price of $11.73, this equates to yields of 3.5% and 6.5%, respectively

The post Why analysts say these ASX 200 dividend shares are buys appeared first on The Motley Fool Australia.

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More reading

• Brokers say these ASX 200 dividend shares are buys
• Experts name the top ASX dividend shares to buy now
• 5 things to watch on the ASX 200 on Thursday
• These ASX 200 dividend shares just paid out. Here’s how much
• Top broker names 2 ASX dividend shares to buy

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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The S&P/ASX 200 Index (ASX: XJO) retail shares have suffered a sell-off during 2022. But, could FY23 be the year of opportunistic bargain-hunting?

Let’s have a look at some of the declines we’ve seen so far this calendar year.

Performance so far this year

The Wesfarmers Ltd (ASX: WES) share price has fallen by more than 25% this year, though it’s up 6.4% since the end of June 2022.

The JB Hi-Fi Limited (ASX: JBH) share price is down 17.6% in 2022, but it’s 4.6% higher in FY23.

The Harvey Norman Holdings Limited (ASX: HVN) share price is down 17.5% for the year yet it has risen 12% from the end of June 2022.

The Woolworths Group Ltd (ASX: WOW) share price has fallen 13% in 2022 and is down 6.3% in FY23.

The Premier Investments Ltd (ASX: PMV) share price has fallen 21% in 2021 but it’s up 25% since 30 June 2022.

How does the ASX 200 Index compare to all of these numbers? In 2022 to date, it’s down by 10.9%. Since 30 June 2022, it’s up by 3%. So, largely, ASX 200 retail shares have performed worse in 2022 but have done better over the past three and a bit months.

Should investors be looking at ASX 200 retail shares?

That’s the big question.

There are plenty of other retailers outside the ASX 200 that have also suffered sizeable falls like Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH), Universal Store Holdings Ltd (ASX: UNI), Best & Less Group Holdings Ltd (ASX: BST), and Shaver Shop Group Ltd (ASX: SSG).

Yet every retailer is different. The revenue and net profit after tax (NPAT) growth performance of Wesfarmers is likely to be quite different to JB Hi-Fi’s.

I also think it’s likely that FY23 and perhaps FY24 won’t show the strength that FY20 and FY21 did. Households may not have as much money to spend in the retail sector because of the impacts of inflation and rising interest rates.

However, some of these retailers have seen their share prices drop 30%, 50%, or even more.

Businesses are naturally going to try to find ways to protect and grow their profits. Same-store sales may decline, but retailers can open new stores which might lessen the overall blow. They can also sell more items online. Retailers can expand their ranges and look to grow internationally. They may be able to find ways of being more efficient with costs.

It’s possible that retail sales may not fall as much as some investors are expecting.

Another thing that could work in retailers’ favour this year is that many of them could report strong growth in the first half of FY23. Don’t forget, a year ago, a substantial portion of the Australian population was under lockdowns. This also meant that many retail stores faced restrictions.

Currently, we’re seeing good trading updates from businesses for the first few weeks of FY23. Examples include Wesfarmers, Premier Investments, and Shaver Shop.

So, in summary, I think that generally, ASX 200 retail shares could be long-term opportunities. However, there could still be plenty of volatility and FY23 may well show sizeable profit declines for a number of them. But I think we may have already seen the worst of the share price pain.

The post Have ASX 200 retail shares been worth buying so far in FY23? appeared first on The Motley Fool Australia.

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More reading

• Where is the Wesfarmers share price headed in October and beyond?
• 3 ASX shares I’d buy with $500
• Experts say these ASX dividend shares with 7% yields are buys
• Down 9% in a month, could the Woolworths share price turn around in October?
• Own Wesfarmers shares? Here’s some good news on your dividends

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 positions in and has recommended ADAIRS FPO and Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Harvey Norman Holdings Ltd., and Wesfarmers Limited. The Motley Fool Australia has recommended JB Hi-Fi Limited and Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished an improved week with a day in the red. The benchmark index fell 0.8% to 6,762.8 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to edge higher

The Australian share market looks set to start the week deep in the red. This follows another selloff on Wall Street on Friday night. According to the latest SPI futures, the ASX 200 is expected to open the day 61 points or 0.9% lower this morning. On Wall Street, the Dow Jones was down 2.1%, the S&P 500 dropped 2.8%, and the NASDAQ tumbled 3.8%. Strong US employment data has given rate hike bets a boost.

Oil prices jump

Energy producers such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a great start to the week after oil prices jumped on Friday night. According to Bloomberg, the WTI crude oil price was up 4.2% to US$92.64 a barrel and the Brent crude oil price rose 3.5% to US$97.92 a barrel. This was an increase of approximately 15% and 10%, respectively, for the week. OPEC’s massive production cut plan was behind the rise.

Tech shares to fall

It could be a very difficult day for tech shares such as Block Inc (ASX: SQ2) and Xero Limited (ASX: XRO) on Monday. This follows a selloff on the tech-focused NASDAQ index on Friday night after the release of US employment data. The Block share price on the NYSE ended the session down by over 7%. This doesn’t bode well for its ASX shares today.

Seek rated as a sell

The Seek Limited (ASX: SEK) share price could be overvalued according to analysts at Goldman Sachs. This morning the broker has slapped a sell rating and $20.70 price target on the job listings giant’s shares. It said: “[W]e continue to believe that Seek is the most cyclical of our classifieds coverage, with a downturn in volumes likely to drive lower depth adoption.”

Gold price falls

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price dropped on Friday. According to CNBC, the spot gold price was down 0.7% to US$1,709.3 an ounce during the session. Strong US jobs data spurred Fed rate hikes bets and put pressure on gold.

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

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More reading

• 4 investment truths that have been shattered in 2022
• Why analysts say these excellent ASX growth shares are buys
• Could oversold ASX growth shares now be a buying opportunity for value investors?
• Were ASX 200 bank shares a safe place to park cash in Q1?
• How big will the Woodside dividend be in 2023?

Motley Fool contributor James Mickleboro has positions in SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re a fan of small cap ASX shares, then you may want to add the two shares listed below to your watch list.

Here’s what you need to know about these buy-rated small cap ASX shares:

Readytech Holdings Ltd (ASX: RDY)

The first ASX small cap share to look at is Readytech. It is an enterprise software provider with a focus on underserved market verticals such as higher education and local government.

Demand for its sticky software continues to grow and has been underpinning strong recurring revenue growth in recent years.

This continued in FY 2022, with Readytech reporting revenue of $78.3 million. This was up 16.8% on a like-for-like basis and ahead of its guidance of mid-teens organic growth.

The good news is that Goldman Sachs is expecting more of the same in the coming years. It is expecting Readytech to “continue to grow mid-teens organically while making accretive acquisitions.”

In light of its bullish view, Goldman currently has a buy rating and $4.60 price target on its shares.

Silk Laser Australia Limited (ASX: SLA)

Another small cap ASX share that has been tipped as a buy by brokers is Silk Laser.

It is the operator of one of Australia’s largest specialist clinic networks, offering consumers a range of nonsurgical aesthetic products and services. These include laser hair removal, cosmetic injectables (botox etc), skin treatments, body contouring, and skincare products.

Demand for Silk’s services has been strong in recent years and continued during the pandemic and then in FY 2022. This and recent acquisitions helped the company deliver a 91% increase in sales to $162.7 million.

And while the current economic environment could be difficult for consumer spending, management remains positive on the future and “expects to continue its growth trajectory in FY23.”

Wilsons is a fan of the company. The broker currently has an overweight rating and $3.62 price target on its shares.

The post Brokers name 2 growing small cap ASX shares to buy appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs names the ASX tech shares to buy now
• Experts reveal 2 ASX shares primed for growth despite a slowing economy
• Why brokers say these ASX growth shares are buys
• 2 growing small cap ASX shares analysts rate as buys
• 2 top ASX growth shares that experts say are buys

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

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If you’re wanting to invest in the tech sector before the market rebounds, then the exchange traded funds (ETFs) listed below could be worth considering.

Here’s why they could be great options right now:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first tech ETF to look at is the BetaShares Asia Technology Tigers ETF. It gives investors easy access to ~50 of the largest technology companies that have their main area of business in Asia.

These companies, that are known known as Tigers (hence the ETF’s name), include well-known players such as Alibaba, Baidu, Infosys, JD.com, Samsung, and Tencent Holdings. In addition, there are lesser known companies (to Westerners) such as Kuaishou Technology, Meituan Dianping, and Pinduoduo included in the fund that make many Australian tech companies look absolutely tiny.

Pinduoduo, for example, is an e-commerce platform that connects distributors with consumers directly through an interactive shopping experience. This allows shoppers to team up to buy items in bulk at lower prices. It has an active customer base closing in on 1 billion.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another tech ETF to consider next week is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors exposure to many of the largest companies involved in video game development, eSports, and gaming related hardware and software.

There are a number of high quality, growing companies that you’ll be owning with the fund. These include game developers Activision Blizzard, Roblox, Take-Two, and Electronic Arts, and graphics processing unit (GPU) developer Nvidia.

In respect to Roblox, it is the game developer behind the eponymous Roblox online metaverse platform and game creation system. At the last count, Roblox had 52 million daily active users.

The post 2 exciting tech ETFs for ASX investors to buy before the market rebounds appeared first on The Motley Fool Australia.

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More reading

• Should you really be buying ASX shares in this market?
• This ETF could be compelling for gaining exposure to a $200 billion industry
• 2 excellent ETFs for ASX investors to buy now
• Down 30% in 2022, what’s next for the BetaShares Asia Technology Tigers ETF?
• 2 high quality ETFs for ASX investors in September

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 recommended BetaShares Asia Technology Tigers ETF and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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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Crypto investors managed to escape much of the pain in the last quarter that afflicted the market in the first six months of the year as markets repriced in the face of fast-rising inflation and interest rates.

Not that most digital tokens shot the lights out.

But many, like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), did manage to outperform the S&P/ASX 200 Index (ASX: XJO) in Q1 FY23.

Of course, that’s all virtual water under the bridge.

The question on cryptocurrency investors’ minds now is what to expect in the quarter ahead.

The biggest concern for crypto investors

For some expert insight into that answer, we turned to Josh Gilbert, market analyst at eToro, and Ray Brown, head of marketing at CoinSpot.

Josh Gilbert said that inflation figures out of the United States, the world’s biggest economy, will play a critical role in determining the returns from cryptos in Q2.

“The biggest concern for crypto investors moving into this quarter is that inflation continues to stay at stubbornly high levels,” he told The Motley Fool.

“If this is the case, the US Federal Reserve will likely hike rates more aggressively in November and December or continue raising rates into 2023.”

The pain in crypto and equity markets from the aggressive central bank tightening to bring down inflation, however, comes with a virtual silver lining.

Gilbert said this is “expected to de-risk markets” and “hopefully allow more volatile assets like cryptos to perform better”.

However, until the market has some clear indications of an improving macro picture, he expects cryptos will “continue trading in the tight range we have seen in the last month”.

Institutional support

Despite a big retrace in digital token prices in the first half of the calendar year, corporate interest in the space remains fairly robust.

According to Gilbert:

Institutional investment into crypto and blockchain technology is still happening, despite market weakness. The bear market may have stopped enterprises from adding crypto to their balance sheets, yet we continue to see names from Blackrock to Gucci and tech behemoths such as Alphabet investing billions into blockchain, Web 3.0 and DeFi innovation.

He added that “the foundations are being laid even during a bear market to help these assets thrive when the market upturn eventually arrives”.

Mainstream crypto adoption on the radar

Ray Brown agreed that the outlook for crypto in Q2 will be heavily influenced by rates.

“Factors like high inflation and continued interest hikes could see investors remain conservative,” he told us.

“But if practical uses for the new, environmentally-friendly Ethereum blockchain continue to appear – and gain mainstream adoption – investors hope to see movement in the market.”

Ethereum, if you’re not aware, underwent a major change in September, switching from a proof-of-work to a proof-of-stake protocol. This sees the blockchain using 99% less electricity.

Brown also pointed to the crypto trial program the Reserve Bank of Australia (RBA) is launching in the last month of Q2 as something that could impact the market:

The RBA is in the process of identifying a use case for a central bank digital currency in Australia. A trial program is commencing in December 2022 that will continue through to Q4 of the 2023 financial year.

It’s unclear what the precise outcome of this pilot will be. But the growing volume of research into crypto use cases, coupled with inevitable regulatory changes, seems to indicate further adoption of cryptocurrency-based solutions in Australia is on the horizon.

Then there’s the world’s richest man. Elon Musk, known to have a major influence on crypto prices like Dogecoin (CRYPTO: DOGE) with a single tweet, again looks locked into buying Twitter.

“With Elon Musk also returning to his US$44 billion Twitter deal and his support towards investing in crypto, there is also speculation that he will add tipping and payment functions to Twitter, enabling users to send crypto,” Brown said.

The post This is the biggest concern for crypto investors heading into the new quarter appeared first on The Motley Fool Australia.

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More reading

• Did the Bitcoin price outperform the ASX 200 in the first quarter?
• What can crypto investors expect from the Bitcoin price in October?
• Why Bitcoin and Ethereum are rising today
• Why did the Bitcoin price outperform the NASDAQ in September?
• Is now the time to buy Ethereum after The Merge?

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 positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. 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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After a shocker year, shares of Magellan Financial Group Ltd (ASX: MFG) are on the precipice of falling even further.

The share finished the session on Friday at $10.67, bringing losses for the year to date to 50%, and 67% for the past year.

As such Magellan has failed to recover its pandemic losses and now trades at its lowest mark in almost 10 years, as seen below.

Also shown is Magellan’s performance against the benchmark S&P/ASX 200 Index (ASX: XJO) over the same time period.

Note, in particular, the split in performance between Magellan and the benchmark from the onset of the pandemic in February 2020.

Is there more downside for Magellan?

Magellan shares were initially rocked by the shock double-departure of the company’s CEO Brett Cairns, followed by co-founder and director Hamish Douglass.

After an internal crisis period, a new CEO and a fresh set of strategies emerged, including a strategic review, and a planned share buyback to prop up the share price.

Despite the efforts, monthly outflows from Magellan’s various investment vehicles have remained high over the past year.

In its funds under management (FUM) update released yesterday, the group reported $3.2 billion in institutional outflows from 31 August–30 September 2022.

Notes show one client redeeming $1 billion of capital alone. This was coupled with a $1.8 billion outflow of retail investment funds as well.

In fact, Douglass had even sold more than 760,000 of his Magellan shares by July 2022, according to mandatory filings made with the Australian Securities and Investment Commission (ASIC).

Adding to that, the fund’s performance has been lumpy, with the previously outperforming infrastructure fund falling behind its benchmark by 1.7% in September.

Those at investment bank UBS have been following the fund’s numbers and reckon there’s more downside to come.

UBS analysts, led by Shreyas Patel, trimmed the broker’s price target by another 5% to $9.80, reiterating their sell rating on Magellan in the process.

According to Patel, Magellan’s “core global equity business is at risk of rebasing [down] further”, despite the firm’s upcoming AGM in October.

UBS joins a number of other firms in its posture on Magellan, with 7 out of 10 brokers rating it a sell right now, with the remaining 3 saying to hold, per Refinitiv Eikon data.

The following table summarises the progression of analyst coverage and consensus price target over the past 3 months, with data provided by Refinitiv Eikon.

Recommendation	07-Jul-2022	07-Aug-2022	07-Sep-2022	Current
Buy
Hold	2	3	3	3
Sell	7	6	6	7
Price Target	07-Jul-2022	07-Aug-2022	07-Sep-2022	Current
Consensus	$12.40	$11.50	$12.00	$10.90
Change month to month		-7.2%	4.3%	-9.1%

The current consensus price target from this list is $10.62, suggesting there’s a little more downside expected for Magellan shares.

In the meantime, investors lay in wait patiently for the firm’s AGM to be presented later this month. As to whether this will provide any form of retribution on the charts, we will have to wait and see.

The post Down 50% so far this year, have Magellan shares got further to fall? appeared first on The Motley Fool Australia.

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More reading

• Why Appen, De Grey Mining, Magellan, and Zip shares are dropping today
• Why is the Magellan share price sinking like a stone today?
• 3 ASX 200 shares soundly beating the market on Thursday
• Why is the Magellan share price underperforming the ASX 200 this week?
• Why is the Magellan share price higher on Tuesday?

Motley Fool contributor Zach Bristow 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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