Category: Stock Market

Leading fund manager Tim Carleton from Auscap Asset Management has outlined why ASX shares could be the best way to go right now.

Talking to Livewire, Carleton suggests that Australian shares have proven themselves over the long term. He says the lucky country could be the best place to invest over the United States and European markets.

How bullish should investors be about ASX shares?

Carleton suggests that investors should consider investing in Australian shares as much as possible. Livewire quoted him saying:

There is a massive push to diversify out of Australia, but I think you want to be as overweight Australia as you can possibly stomach for the rest of our lifetimes.

That’s certainly been the right way over the last 100 years, with the Australian market delivering the best returns of any developed market, at around 12% a year, and I see no reason for that to change and if anything, we’re in a better position now than we have been.

Rising inflation and worries regarding interest rates may be hurting the valuations of businesses overseas. But Australia’s inflation is currently lower, and wage growth may also be slower.

Australia has a number of advantages

According to Auscap, Australia has a number of useful advantages.

The first is the country’s “natural resource advantage”, which could help us in the transition to green energy. Some of the biggest ASX shares are resource giants like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).

Another advantage, according to Auscap, is the relatively strong population growth over the medium term.

Australia’s proximity to the “high growth and rapidly developing” Asian economies is another advantage.

The final advantage that Australia has is its democratic and rules-based political system including the protection of property rights. This is a reason to expect Australia will continue to provide one of the best investing environments in the world.

Which ASX shares does Auscap like?

Tim Carleton refers to four ASX shares that Auscap has invested in recently.

Macquarie Group Ltd (ASX: MQG)

Macquarie is a global investment bank that is well-liked. It makes profit from across the world, with more than two-thirds of earnings coming from international sources. It also has “exceptional returns on invested capital.” The company has achieved long-term earnings per share (EPS) and the fund manager thinks growth can continue.

Mineral Resources Limited (ASX: MIN)

Mineral Resources is an iron ore and lithium miner. According to Carleton, it’s the world’s fifth-biggest lithium producer and this could drive the company’s growth.

The fund manager referred to Albemarle’s prediction that demand for lithium is going to increase by 8x by the end of the decade.

Nick Scali Limited (ASX: NCK)

Nick Scali is one of Australia’s largest furniture businesses. This ASX share is Carleton’s favourite pick at the moment, referring to the company’s average return on equity (ROE) of over 50% in the past decade.

A key reason for the bullishness is the potential of the business to keep growing revenue and profit over the coming years through multiple avenues. Some of those ways to grow the business include a store rollout, e-commerce growth, and the ability to raise profit margins.

Nick Scali recently acquired the furniture business Plush-Think Sofas.

HomeCo Daily Needs REIT (ASX: HDN)

This business is a real estate investment trust (REIT) that has a portfolio of more than 50 homemaker centres in Australia. Its tenants are predominately ASX shares or large global names.

Carleton says that the business has a forecast dividend yield of 6.6%. It also has contracted rental growth built into its leases, at an average of 3.6%. This could provide a good starting point for returns, according to the fund manager. Carleton thinks the REIT can achieve above-market rental growth for quite a while.

Another interesting thing about this business for Auscap is that the ‘site coverage’ is only 38%. So there is more land that it can develop on. The business comes with a development pipeline of $500 million.

The post Be as overweight ‘as you can possibly stomach’ in ASX shares right now: fundie appeared first on The Motley Fool Australia.

More reading

• Is a bubble forming for ASX green metals shares?
• Mineral Resources share price leaps on ‘unprecedented’ lithium demand update
• 2 lithium ASX shares to buy in April 2022: experts
• Macquarie share price lifts despite ASIC legal action
• ASX 200 (ASX:XJO) midday update: IGO dealt blow, Block’s data breach, Xero jumps

Motley Fool contributor Tristan Harrison owns Fortescue Metals Group Limited. 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 Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

On Tuesday, shares of Amazon.com (NASDAQ: AMZN) fell by a little — about 2.3% as of 2:30 p.m. ET — on some big news. The company is, of course, most famous for its e-commerce business, though it actually makes far more of its profits from cloud computing. And now, it plans to spend billions of dollars to build another brand new business. 

In space.

So what

Let’s get specific.

Project Kuiper is Amazon’s plan to mimic SpaceX’s Starlink by putting a constellation of 3,000-odd small satellites into orbit that will allow it to sell broadband internet access from space.

Well, on Tuesday morning, Amazon announced plans to kick Project Kuiper into high gear, revealing it had signed contracts with Arianespace (largely owned by Airbus and Safran), United Launch Alliance (a joint venture of Boeing and Lockheed Martin), and Blue Origin (led by Amazon founder Jeff Bezos). Together, the three will provide up to 83 rocket launches that will put Amazon’s satellites into orbit.  

The press release was a bit short on details. There was no specific date given for the first satellite launch, for example, nor did the company mention the cost of all these rocket launches it’s buying. Commenting on the news, however, our friends over at Ars Technica speculated that “Amazon is likely paying at least $10 billion for these launches.”

Now what

Is that a lot of money, or a little? Investors selling off Amazon stock Tuesday may think it’s a lot — but when you consider that the company earned more than $33 billion in profits last year alone, I’d argue that $10 billion is actually a relatively small amount for a company of its size. That’s especially true given that the rocket launches in question are expected to be spread out over five years — and $2 billion a year would amount to only about 6% of Amazon’s annual profits.

Of more concern to me is the fact that Amazon has made deals to send its satellites to space aboard rockets that mostly don’t exist yet — or, at least, haven’t yet been proven able to fly successfully. According to the press release, Amazon plans to hire rides on:

• Arianespace’s Ariane 6 (which has never yet flown);
• United Launch Alliance’s Vulcan Centaur (which likewise has never flown);
• And, of course, Blue Origin’s New Glenn (and not only has that one never flown, Blue Origin has yet to put any rockets at all into Earth orbit).

Granted, I expect that if given enough time, most of these rockets will eventually be proven spaceworthy and reach orbit, such that they’ll eventually be able to help Amazon out with its new space project. Still, it’s more than a little strange that Amazon is strapping such a high-profile project to the backs of unproven launch vehicles. That doesn’t bode well for the chances of Project Kuiper coming to fruition anytime soon.

Then again, if that means Amazon might not actually end up spending $10 billion on rocket launches, investors might decide that’s actually good news. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Amazon stock rocketed off course today appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lockheed Martin. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Vulcan Energy Resources Ltd (ASX: VUL) share price is pushing higher on Wednesday morning.

At the time of writing, the lithium developer’s shares are up 3% to $10.50.

Why is the Vulcan share price rising?

Investors have been bidding the Vulcan share price higher today following the announcement of a new offtake agreement.

However, this offtake agreement isn’t for lithium as you might expect. Rather, it is for renewable heat from its geothermal wells.

According to the release, Vulcan and MVV Energie AG have executed a 20-year binding purchase agreement for at least 240 gigawatt hours per year of renewable heat.

MVV is the largest municipal energy supplier in Germany and generates an annual revenue of 4.1 billion euros.

The agreement with MVV commences in 2025 and includes the supply of a minimum of 240,000MWh per year to a maximum of 350,000MWh per year to households in Mannheim, outside of Frankfurt, Germany.

Vulcan advised that this heat will be supplied from the company’s planned geothermal wells in the area surrounding the City of Mannheim. Heat will be transferred via heating grids and a series of underground pipes that deliver hot water or steam to buildings in the local community.

Vulcan is developing its Mannheim licence as part of a planned larger Phase 2 of the Zero Carbon Lithium Project.

Management commentary

Vulcan’s Managing Director, Dr Francis Wedin, was pleased with the agreement and believes it will help Germany transition away from Russian gas. He commented:

“Vulcan is committed to playing a leading role in Germany’s “Wärmewende”, or heat transition as the country looks to reduce its reliance on Russian energy. This agreement represents a real and immediate step taken by a German energy utility to achieve energy security whilst not compromising on climate goals.

“We believe that Geothermal renewable energy on a mass scale, combined with lithium extraction from the same deep geothermal source, can and will play an important part in achieving Europe and Germany’s energy security and independence. We are proud to partner with MVV, a leader in German energy supply, dedicated to making a lasting and sustainable contribution to the local community through the provision of renewable energy and heat.

Our binding offtake agreement for regional geothermal energy positions MVV to deliver secure, sustainable, economical and environmentally friendly heating for its industrial, commercial and private household customers. Vulcan intends to build several further distributed geothermal renewable energy plants across the Upper Rhine Valley region and we are in discussions with other regional communities regarding additional heat offtake agreements.”

The post Vulcan share price up on new offtake agreement appeared first on The Motley Fool Australia.

More reading

• March was a stellar month for the Vulcan Energy (ASX:VUL) share price. Here’s why
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• Experts name 3 of the best ASX lithium stocks to buy now
• Here’s why the Vulcan (ASX:VUL) share price is charging higher today
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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 Bruce Jackson.

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It’s no secret that we’re in the midst of a commodities super-cycle in 2022.

Experts agree that the upside’s been spurred on by a pipeline of macroeconomic catalysts – and this pipeline isn’t carrying gas or oil.

Sanctions on Russian exports, loose-running inflation, COVID-19, supply chain bottlenecks, conflict in Europe, commodity shortages, electric vehicle demand – can we name any more? – have all weighed into spot markets this year. This has resulted in price surges.

However, we are now presented with a mix of events that many haven’t seen in a lifetime.

As Russia attempts to avoid default on its debt obligations – an event that sent global markets into shakedown when it last happened in 1998 – the US Treasury has dealt its hand once more.

Bloomberg reports the US Treasury has opted to halt dollar-denominated debt payments from Russia’s accounts at US banks, further complicating its efforts to meet coupon payments on its bonds.

Here’s the take of Gary Kirk of TwentyFour Asset Management (as quoted by Bloomberg):

Clearly the latest announcement by the US Treasury is designed to put additional pressure on the Russians.

The alternative payment methods are significantly more punitive and more challenging for Russia and hence it does increase the chance of a technical default.

What’s the fallout from the commodities surge?

The momentum has carried well for those investors tied into ASX 200 commodity shares.

As TMF reported this week, most of the upside for Aussie listed miners in March “was underscored by roaring commodity markets that have continued to surpass all expectations”.

“The spillover is set to produce hefty free cash flow yields and potentially record dividends and/or buybacks for ASX miners and their shareholders.”

Iron ore has priced at an average US$118 per tonne in 2022 so far, Bloomberg data shows, only marginally down on last year’s entire result.

LNG exports are also expected to more than double in Australia this year to $70 billion. Spot prices are likely to remain frothy as well.

Australia could be a benefactor from this surge, not to mention ASX players such as Rio Tinto Ltd (ASX: RIO) and Santos Ltd (ASX: STO).

Their share prices have surged 20% and 28% respectively in 2022 so far. Meanwhile, the sector has seen heavy inflows to exchange-traded funds (ETFs) focused on resources exposure.

The  Betashares Australian Resources Sector ETF (ASX: QRE) and Vaneck Australian Resources ETF (ASX: MVR) have also spiked to similar levels and are well in the green.

Not only that, but the price of coal has bottomed for now after lunging to 10-year highs in February. It has since cooled off but ASX coal miners have clipped gains across the board.

As well, investors continue backing ASX coal mining shares as the EU considers a ban on fuel imports from Russia, Bloomberg reports.

Russia supplied around 18% of global coal exports in 2020, it says, and Europe was the largest buyer of its black rock.

Yancoal Ltd (ASX: YAL) has spiked 77% since January 4 whereas Whitehaven Coal Ltd (ASX: WHC) is up nearly 60% at the time of writing.

Meanwhile, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) has powered 17% higher this year to date and is up another 5% in the past month of trade.

The post ASX 200 commodities players were the major winners in March. Take a look appeared first on The Motley Fool Australia.

More reading

• Why now is the time to sell Santos shares: fund manager
• 5 things to watch on the ASX 200 on Wednesday
• Here are the 5 best-performing ASX exchange-traded funds over the March quarter
• Here’s what drove the Santos share price 6% higher in March
• 3 ASX shares to buy in the hottest sector right now: experts

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 Bruce Jackson.

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The Weebit Nano Ltd (ASX: WBT) share price is charging higher for a second day in a row.

In morning trade, the memory technology developer’s shares are up 8% to $3.15.

This means the Weebit Nano share price is now up 20% in the space of two days.

Why is the Weebit Nano share price shooting higher?

The catalyst for the rise in the Weebit Nano share price on Wednesday has been the release of a promising announcement.

According to the release, demo chips integrating its embedded Resistive Random-Access Memory (ReRAM) module have successfully completed their functional testing phase. Management notes that this is a key step towards delivering a commercial product.

Testing included programming and reading of the entire ReRAM array using smart algorithms, error correcting code, and various data manipulations. It also included testing the operation of the complete sub-system, comprising all communication interfaces and system peripherals.

Positively, the entire chip is performing as expected.

Weebit Nano’s ReRAM is aiming to address the growing need for significantly higher performance and lower power memory solutions in a range of new electronic products such as Internet of Things (IoT) devices, smartphones, robotics, autonomous vehicles, 5G communications and artificial intelligence.

What’s next?

As a result of the above, potential customers can now use the demo chips to test Weebit’s ReRAM technology ahead of commercial orders and volume production.

Ahead of potential orders, chips based on a similar design are currently being prepared for fabrication in SkyWater Technology’s US production fab.

Once the module is qualified at SkyWater, volume production can commence. The transfer of Weebit’s embedded ReRAM technology to SkyWater’s production fab is progressing on schedule.

Weebit Nano’s CEO, Coby Hanoch, said: “Our team tested the complete demo chip including the full memory array, the advanced features of our memory module, and the entire system, and confirmed that it functions as expected. This is the first time we can see Weebit’s innovative memory technology operating live in a fully functional chip. We are now moving into a new phase of our roadmap during which customers can confidently begin designing Weebit ReRAM into their SoCs. The characterisation process is now underway and will be immediately followed by full qualification.”

The post Weebit Nano share price jumps 8% on ReRAM update appeared first on The Motley Fool Australia.

More reading

• Why is the PolyNovo share price surging 13% higher today?
• Are Woolworths shares positioned for ‘a long-term, post-COVID trend?’
• Why the Flight Centre share price travelled 12% higher in March
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• Own ASX renewable energy shares? Here’s why ‘the energy transition will be good for us’

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 Bruce Jackson.

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The PolyNovo Ltd (ASX: PNV) share price is on the rise on Wednesday morning.

At the time of writing, the medical device company’s shares are up 13% to $1.22.

Why is the PolyNovo share price on the move?

Investors have been bidding the PolyNovo share price higher following the release of a third quarter update.

According to the release, PolyNovo delivered unaudited revenue of A$12.26 million during the third quarter of FY 2022. This represents a 59.3% increase on the revenue of A$7.69 million reported during the prior corresponding period.

This reflects a 79.4% increase in US sales to a record US$6.89 million (A$9.53 million) and an 81.9% lift in ANZ sales to A$1.16 million. It also includes income of A$1 million relating to BARDA and A$0.1 million from a Victorian State Government grant.

This means that PolyNovo’s year to date revenue is now A$30.4 million, which implies an annual run rate of A$48 million.

PolyNovo’s Chair, David Williams, explained that this result was driven by an increase in its salesforce and easing COVID-19 headwinds.

He said “More sales reps equals a wider geographical footprint and increased sales. More reps and the diminishing effects of Covid, have driven record sales in US, UKI and Australia.”

What else?

One thing that has been weighing on the PolyNovo share price this year has been concerns over its dwindling cash balance and the potential requirement of a capital raising in the near future.

Positively, the heavily shorted company’s cash balance increased during the third quarter even before taking into account the sale of its Lorimer Street property.

At the end of March, PolyNovo had cash of A$3.8 million, which was up A$0.5 million since the end of December. This will soon be boosted by a further A$6.35 million from the Lorimer Street property sale when the process completes in June.

Finally, management advised that its clinical trial programmes remain on track. This includes recruitment for the pivotal burn trial and enrolment of the first patients for the DFU trial.

PolyNovo is also on track to file for the 510K approval for the Matrix product during this financial year and work on the prototypes for Hernia development and new designs for BTM are also on track.

The post Why is the PolyNovo share price surging 13% higher today? appeared first on The Motley Fool Australia.

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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. owns and has recommended POLYNOVO FPO. 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 Bruce Jackson.

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Shares in Woolworths Group Ltd (ASX: WOW) have staged a comeback in March and rallied almost 5% in that time. The retail giant is set to open higher again today. On Tuesday, it finished the session with a splash in the green at $37.14.

Cyclical names such as Woolworths are clawing back gains after a frosty start to the year. In the last 12 months, the share price has gained just 3%. But with a recent shift in market tone, it appears investors are prepared to throw risk on the table once more.

How did Woolworths go in March?

Analysts at UBS say that with the economy reopening again, consumer confidence for the next 12 months has touched record levels.

Findings from its 11th quarterly Evidence Lab consumer survey demonstrate that cost pressures are rising for consumers, despite growth in savings and asset values.

Curiously, the firm noted that the best avenue for investors to get position to reflect consumer behaviour is are young affluent types in the large city areas of Australia.

That’s important for Woolworths as retailers are more exposed to this kind of consumer, with the conglomerate front and centre on many levels through its offering.

With a string of recent portfolio updates, the group isn’t showing any signs of slowing operations either. It recently unveiled its $184 million Heathwood Distribution Centre (DC), located a short way from the Brisbane CBD.

The venture is set to create more than 200 jobs during construction, Woolworths reports, plus approximately 300 jobs for Queenslanders, it says.

What’s the outlook

Sentiment is mixed on the stock but tilted towards a buy right now. Exactly 50% of analysts covering it urge clients to buy, Bloomberg data shows. The remainder either say to hold or sell, whilst the consensus price target is $37.03.

Analysts at JP Morgan are bullish on the stock and rate it a buy to clients. It has four catalysts that it feels will form the bedrock of Woolworths’ growth in the coming years.

With inflation rearing its head in just about every pocket of the market, perishables like food are set to produce high operating cash flows for Woolworths, the broker says.

It also likes the group’s Everyday Needs segment, whilst Big W and the online platform are equally attractive catalysts to move the needle, it argues.

The firm values Woolworths at $39.50 per share which suggests more than a $2 per share upside if its thesis comes through.

Meanwhile, Mohsen Crofts, analyst at Bloomberg Intelligence, submits that Woolworths’ revenue is “set to establish long-term, post-Covid trend” in a recent note.

“Woolworths’ grocery-segment growth has been elevated during the Covid period but now looks set to normalize around its long-term trend of about 4% a year,” the analyst wrote.

“This represents population expansion of 1-1.5% and food-price inflation of about 2.5-3%,” he added.

“In the next two to three years, more competition from new entrants such as Aldi and Costco, and Amazon.com’s move into packaged food, have further potential to curb store-sales growth”.

The post Are Woolworths shares positioned for ‘a long-term, post-COVID trend?’ appeared first on The Motley Fool Australia.

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• Do Woolworths shares pay dividends?

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 Bruce Jackson.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price headed north last month, recording a 12% gain.

This is despite the company navigating through a series of events such as the global pandemic and the Russian-Ukrainian war.

At Tuesday’s market close, the travel agent’s shares finished 1.81% higher to $19.74.

What has happened to Flight Centre shares lately?

The company has kept a relatively low profile since announcing its half-year results to the market in late February.

Nonetheless, the Flight Centre share price has continued to track since the beginning of last month.

This could be due to the company reporting strong top-line growth with a favourable outlook in FY23.

Flight Centre achieved revenue of $315.7 million in H1 FY22, up 98.1% over the prior corresponding period. This was underpinned by a significant rebound in sales after the Delta variant spike in August/September 2021.

On the bottom line, Flight Centre reported an underlying loss of $188 million, up 4% year-on-year. Management advised that this was driven partly by the prior corresponding period benefiting from $65 million of government subsidies.

Furthermore, the company is hoping to achieve profit by this month and a return to pre-COVID TTV [total transaction value] levels in FY23.

Are Flight Centre shares a buy?

A couple of brokers weighed in on the Flight Centre share price following the company’s financial scorecard.

The team at Bell Potter raised its 12-month price target by 2.5% to $20.50 for Flight Centre shares. Based on the current share price, this implies a potential upside of around 4% for investors.

On the other hand, Goldman Sachs cut its rating on the company’s shares by 4.4% to $19.50 apiece. Its analysts believe that the travel agent share is fully-valued at this point in time.

Flight Centre share price summary

It’s been a challenging 12 months for Flight Centre shareholders, despite advancing 10% over the period.

The company’s share price reached a 52-week high of $25.28 in early October when Australia had managed the pandemic. However, since the outbreak of the Omicron variant, its shares struggled to regain composure until now.

On valuation grounds, Flight Centre presides a market capitalisation of roughly $3.94 billion, with approximately 199.7 million shares outstanding.

The post Why the Flight Centre share price travelled 12% higher in March appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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 Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It feels like 2022 is definitely different to what ASX investors have experienced the previous few years.

High inflation is sticking around and interest rates will no longer remain at an almost-zero level. The hot property market is already cooling down.

So what does this mean for our portfolio of ASX shares?

Saxo Australian market strategist Jessica Amir has some ideas.

Get out of these ASX sectors. Now

In her latest quarterly update, Amir urged investors to consider selling out of real estate investment trusts (REITs) and consumer discretionary stocks.

Why? Because inflation is affecting building materials as much as groceries and petrol.

“It’s not just the cost of chicken, beef, oil and bread that are rising – so too is lumber,” said Amir.

“It’s flowing to builders, squeezing their profits, while higher house and construction prices are being passed to consumers. This has started to cause cracks in the property market.”

The scary thing is that this is happening even before Australian interest rates have risen.

“This has big knock-on effects,” said Amir.

“In Q1, ASX-listed property stocks have collectively fallen 8% and ASX consumer discretionary spending stocks are down 12%.”

She warned that more losses are expected in these categories in the current quarter and third quarter.

“Why? Australia’s debt-to-income ratio climbed to 185%,” said Amir.

“After an expected rate rise in May, mortgage repayments will rise and cost of living will go up, resulting in decreased consumption and a slowdown in property demand.”

Overseas money to flow into ASX 

Despite the drag from two sectors, Amir is bullish on the local market.

She reckons foreign investors will be increasingly attracted to the ASX this year, because of Australia’s dominant resources sector and buoyant economy.

“Australia boasts one of the highest trade surpluses in the G20 countries – meaning it earns more money [than it spends],” Amir said.

“It’s also likely to have one of the strongest economic growth rates in the G20 (4.3% GDP) and one of the best employment rates – just 4% unemployment this year and 3.9% next year.”

Major contributors to Australia’s exports are mineral and agricultural products. Commodity prices are surging, and inflation may push up even further.

“The iron ore price is up 28% so far this year, oil is also up 36% and wheat is up 41%, as at March 29. Australia’s exports surged to $49.3 billion in January, so you can bet that Australian exports will climb further in March,” said Amir.

“On top of this, prices are poised to rise over the longer term, amid anaemic supply and roaring demand, further benefiting Australia. This will attract more foreign money.”

The post Sell your ASX shares in these sectors now: expert appeared first on The Motley Fool Australia.

More reading

• Why the Flight Centre share price travelled 12% higher in March
• Own ASX renewable energy shares? Here’s why ‘the energy transition will be good for us’
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• The CSL dividend is being paid today. Here’s what you need to know

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Bruce Jackson.

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Markets are rangebound this week with the S&P/ASX 200 Index (ASX: XJO) up 156 basis points at 7,527 at the open of trade on Wednesday.

Whilst commodity sectors continue to book record gains in 2022, renewables have somewhat been left on the backburner (emissions free, of course).

Investing in green or renewables based companies has been somewhat of a love affair for investors ever since the theme popped onto the scene a few years ago now.

The theme of Environmental, Social and Governance (ESG) has now become an investment factor to which portfolio and asset managers weight their holdings towards (or not).

With the recent commodities supercycle, it’s no wonder to see some renewables focused shares make a sharp u-turn in 2022, as the market digests a number of macroeconomic factors.

Green is good, yes?

There’s a lot of debate out there, but one argument is that Australia could be a huge benefactor to the shift into renewables.

“We are probably the richest, the most regionally endowed nation in lithium, cobalt, rare earths, palladium, copper and nickel, all of which are somewhere between 200 and 1000 per cent under-supplied,” The Australian reports.

“If you join the dots…the energy transition will be good for us. While our balance sheet’s terrible, it’s better than anyone else in the world,” he added.

Elsewhere, Australia has made “significant strides” in its offshore wind industry in recent weeks, according to analysis from Herbert Smith Freehills LLP.

“On 4 March 2022, the Victorian Government announced Australia’s first offshore wind energy targets of 2GW of offshore wind energy production by 2032,” they wrote.

“According to the Paper, winds off Victoria’s coastline are among the best not only in Australia, but also on a global scale, with the potential for Gippsland and Portland regions to support 13GW of capacity using fixed platforms in shallow waters,” they added.

The Paper indicates a strong intention by the Victorian Government for Victoria to be the leader in the Australian offshore wind market, an industry that is developing rapidly internationally, and for which competition for investment is strong.

Meanwhile, shares in renewable energy companies were a mixed bag during the previous quarter, with several names expanding up to 96%, whilst others lagged substantially.

The post Own ASX renewable energy shares? Here’s why ‘the energy transition will be good for us’ appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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