For ASX investors, June wasn’t exactly a great month to have money tied up in the share market. Over the month just gone, the S&P/ASX 200 Index (ASX: XJO) ended up losing a painful 8.9%. That looks more like a one-year loss than a one-month loss, but that’s just life on the ASX.

With a one-month loss like that, you might be forgiven for thinking that investors were staying well away from ASX shares in June. But new data shows that was not the case.

According to a new report from global managed fund network Calastone, it was a tough quarter for Australian managed funds, with net outflows of $2.05 billion across all asset classes. That represents the largest quarterly outflow since Calastone began collecting records in 2019.

However, despite these outflows, inflows into ASX shares were positive, the only sector to stay in the green. Here’s some of what the report said:

Investors were negative on every category of equity fund in June, except Australian equities. Funds focused on all different regions of the world, sector–focused funds, even ESG, all saw outflows in June. Global funds bore the brunt of the selling, with outflows of A$120m, while specialist sector funds, which mainly focus on infrastructure assets were also hard hit…

By contrast, Australian equities were a beacon of relative stability. Net inflows in June totalled
A$36m, though this was around one tenth of the average monthly inflow over the last two years.

So why were investors selling everything from ethical investments and infrastructure to bonds and international shares, but not ASX shares?

Why were investors chasing ASX shares in June?

Here’s how Calastone managing director Teresa Walker explained it:

The relative resilience of Australian equities reflects the commodity and banking bias on the
market. The Australian stock market is one of the highest yielding in the world and that has proven a big draw in times of rising inflation and interest rates.

So it’s dividends that have kept investors coming back to ASX shares, it seems. This isn’t hard to understand. There’s arguably no time that investors appreciate the certainty of yield in the form of direct cash payments more than when volatility is spiking and share prices are jittery.

That certainly describes the ASX investing environment rather accurately over the past few months.

There are also the unique benefits of franking that our ASX dividend shares offer too that might have further enticed investors.

The past 12 months have also seen many ASX dividend shares up their game when it comes to their payouts. We’ve seen big dividend increases from ASX banks like Commonwealth Bank of Australia (ASX: CBA) for one. In CBA’s case, this ASX bank paid out a total of $2.75 in dividends per share over FY2022. That was a pleasing increase over the $2.48 it doled out in FY2021.

Not only have the banks been upping their dividends, but so have the ASX’s biggest miners. Both BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) forked out the largest annual dividends in their history over FY2022. Even today, Fortescue shares have a trialling dividend yield of 17.58% on current pricing.

So considering all of that, it’s perhaps no surprise that investors were looking to ASX shares above other asset classes last month.

The post Investors were seeking out ASX shares in June. Here’s why appeared first on The Motley Fool Australia.

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More reading

• Are falling BNPL shares pushing the ASX banks higher today?
• Down 9%, can CBA shares bounce back in FY23?
• Where is the BHP dividend heading through to FY25?
• Here are the 5 best ASX 200 bank shares of FY22
• ASX 200 mining shares glide lower as expert reduces commodity targets

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 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 Zelira Therapeutics Ltd (ASX: ZLD) share price was put on ice in mid-afternoon trading on Tuesday after it rocketed 28.57%.

It followed the company’s request that its shares be placed in an immediate trading halt.

Shares in the medicinal cannabis company were frozen at $1.98 apiece.

Why is the Zelira share price halted?

In a statement to the ASX, Zelira advised it is preparing to make an important announcement to investors.

This is in relation to the receipt of results from Germany’s health regulator, BfArM.

Zelira requested the trading halt remain in place until Thursday 14 July or when the announcement is made, whichever comes first.

A brief rundown on Zelira

Founded in 2003, Zelira is a biopharmaceutical company focused on researching, developing, and commercialising clinically-validated cannabinoid medicines.

The company has a pipeline of cannabinoid-based medicines undergoing clinical development that are waiting for access to the German market.

This includes two products that Zelira launched in 2020, both of which are available in Australia.

The first is its HOPE product which aims to improve the health of people with autism spectrum disorder.

And the other product is Zenivol which helps people with chronic sleep disorder (insomnia).

Zelira share price snapshot

Despite today’s euphoric gains, Zelira shares have lost almost 80% since this time last year.

When looking at year-to-date, the company’s shares are down around 65%.

Notably, Zelira shares hit a multi-year low of 90 cents apiece last month before storming higher.

Based on valuation grounds, the company presides a market capitalisation of roughly $18.9 million.

The post Zelira shares rocket 28% before being placed on ice. Here’s the latest. appeared first on The Motley Fool Australia.

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More reading

• Investors were seeking out ASX shares in June. Here’s why
• Why did ASX coal shares leap today?
• Here’s the outlook for the Rio Tinto share price in FY23
• Here are the top 10 ASX shares today
• Own Telstra shares? Here are details on the telco’s 2,000 new Australian call centre workers

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 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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ASX coal shares jumped today amid supply concerns in global markets.

New Hope Corporation (ASX: NHC) shares lifted 3.45%, while the Whitehaven Coal Ltd (ASX: WHC) share price closed 1.78% higher. Yancoal Australia (ASX: YAL) shares also jumped 1.96%.

In earlier trade, New Hope shares surged more than 6%, while Whitehaven shares rose nearly 5%. For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) closed up 0.17% today.

So what happened to ASX coal shares today?

Coal prices rise

Coal prices jumped 1.7% in a day to US$419 per tonne, Trading Economics data shows. The coal price has gained more than 7% in a month and 194.55% in a year.

The coal price surged to record highs amid high demand from Europe, the Washington Examiner reported. A ban on coal imports from Russia to Europe will take effect by the second week of August. This is driving up demand from other countries, including Australia.

Whitehaven, New Hope, and Yancoal are all coal exporters

In India, thermal coal imports hit a record in June, Reuters reported today. The nation brought in more than 25 million tonnes of thermal and coking coal last month. This was a third more than the same time last year.

Shipments from Australia to India were higher than in May, but lower than the same time last year, it’s reported.

European nations including Germany, the Netherlands, and Austria have recently lifted coal production restrictions amid the Russian invasion of Ukraine.

Share price snapshot

Yancoal shares have gained 144% in the past year, while the New Hope share price has leapt nearly 110%. Meanwhile, the Whitehaven share price has surged 152% in the past 12 months.

For comparison, the ASX 200 Energy Index has leapt 18% in the past year, and nearly 24% in the year to date.

The post Why did ASX coal shares leap today? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• What’s the outlook for ASX 200 energy shares in FY23?
• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• Here are the top 10 ASX shares today
• Why Althea, AnteoTech, New Hope, and Omni Bridgeway shares are pushing higher

Motley Fool contributor Monica O’Shea 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 Rio Tinto Ltd (ASX: RIO) share price was rangebound on Tuesday, closing 0.05% in the green at $95.41.

Rio shares have traced a series of falling peaks since dropping from their high of $127.85 apiece on 3 March.

This has been in almost direct unison with the S&P/ASX 300 Metals and Mining Index (ASX: XMM) over the past six months, as illustrated below.

What’s in store for the Rio share price in FY23?

Pushing the Rio Tinto share price lower is pressure from the iron ore and copper markets these past few months.

Copper, in particular, has fallen drastically from its former highs, after a spectacular run in 2020.

Last week, copper futures fell to their lowest level in 20 months as fears of a global recession continue to grow.

According to commodity strategists at Saxo Bank in Copenhagen, the recent moves in copper came from “[US] dollar strength…that came on top of the recent recession fears, pulling the rug from under the market”.

Meanwhile, iron ore prices continue to plummet, having topped highs of US$159 per tonne in March – around the same time as the Rio share price peaked.

Iron ore now trades at US$112 per tonne. Head of commodity strategy at ING Warren Patterson said this comes as both China and “ex-China steel output has also struggled this year”.

Below is a graph charting the Rio Tinto share price against the prices for both iron ore (brown) and copper (teal):

Other challenges for the Rio share price

Adding further pressure is a recent wave of COVID-19 lockdowns in China, amid a fresh spike in global cases.

Analysts say this has impacted the iron ore price substantially as China enforces strict lockdowns, affecting demand.

“Relentlessly negative COVID headlines out of Gansu, Guangdong, Henan, Macau, Shanghai and Zhejiang over the weekend will pour ice-cold water over sentiment from Monday onwards,” Navigate Commodities said in a note.

The downside in these base metals has also been a net negative for the Rio share price.

Meanwhile, analysts at UBS are neutral on Rio, valuing the miner at $98 per share. Goldman Sachs, on the other hand, is baking in some hefty forward dividends for the company, as my Fool colleague James has reported.

The broker forecasts a $12.55 per share dividend in FY22 from Rio, dropping marginally to $12.25 per share in FY23.

The broker also rates Rio a buy and values the share at a $131 price target. At the current Rio share price, that represents roughly 38% return potential.

The post Here’s the outlook for the Rio Tinto share price in FY23 appeared first on The Motley Fool Australia.

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More reading

• ASX 200 mining shares glide lower as expert reduces commodity targets
• Is this a good time to go digging for ASX 200 mining shares for FY23?
• Own BHP shares? Top broker warns of looming oversupply of iron ore in 2H 2022
• Rio Tinto shares avoid a rocky Friday amid US$220 billion commodity stimulus rumours
• Own Rio Tinto shares? Here’s the outlook for July

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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Tuesday turned out to be a mixed bag for S&P/ASX 200 Index (ASX: XJO) shares, with the consumer staples and healthcare sectors outperforming while the materials sector struggled. The index closed today’s session 0.06% higher at 6,606.30 points.

Its rise came despite Westpac Banking Corp (ASX: WBC) finding that consumer confidence fell 3% in July on the back of rate hikes and inflation. Meanwhile, National Australia Bank Ltd (ASX: NAB) found that business confidence fell to below average levels in June.

Despite such sentiment, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) and S&P/ASX 200 Health Care Index (ASX: XHJ) rose more than 1% today.

The former gained amid the release of the ABS’ latest household spending data, which showed spending in May was 7.9% greater than it was at the same point of last year.

Meanwhile, the healthcare sector was driven higher by shares in CSL Limited (ASX: CSL) and ResMed Inc (ASX: RMD).

The S&P/ASX 200 Materials Index (ASX: XMJ) suffered a 1.1% downturn on Tuesday, with lithium shares among its biggest weights. Commodity prices also likely dragged the sector lower.

The price of copper and aluminium fell overnight amid new COVID-19 restrictions in China, which could impact demand. Iron ore futures also slipped 1.9% to US$111.65 a tonne in similar fears.

At the end of Tuesday’s session, five of the ASX 200’s 11 sectors were trading higher.

So, which ASX shares bested the rest to record the biggest gains today? Read on to find out.

Top 10 ASX shares countdown

Infratil Ltd (ASX: IFT) came out on top of all its peers in ASX’s top 200 biggest companies by market capitalisation on Tuesday.

Shares in the renewable energy company lifted around 4%. Read all about Infratil and what it does here.

Today’s top 10 biggest gains were made by these ASX shares:

ASX-listed company	Share price	Price change
Infratil Ltd (ASX: IFT)	$7.34	3.97%
New Hope Corporation Limited (ASX: NHC)	$3.905	3.58%
Eagers Automotive Ltd (ASX: APE)	$10.91	3.31%
NIB Holdings Limited (ASX: NHF)	$7.68	3.09%
Amcor Plc (ASX: AMC)	$18.55	2.66%
Zimplats Holdings Ltd (ASX: ZIM)	$22.88	2.42%
Coronado Global Resources Inc (ASX: CRN)	$1.55	2.31%
APA Group (ASX: APA)	$11.685	2.23%
Skycity Entertainment Group Limited (ASX: SKC)	$2.33	2.19%
Woolworths Group Ltd (ASX: WOW)	$37.17	2.06%

Data as at 4:09pm AEST.

Our top 10 ASX shares today countdown is a recurring end-of-day summary to ensure you know which companies were making big moves on the day. Check in at Fool.com.au after the market has closed during weekdays to see which stocks make the countdown.

The post Here are the top 10 ASX shares today appeared first on The Motley Fool Australia.

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More reading

• ASX 200 supermarket shares lead as household spending jumps
• What’s the outlook for ASX 200 energy shares in FY23?
• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• These were the best (and worst) performing ASX 200 sectors of FY22

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 positions in and has recommended CSL Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended APA Group, Amcor Limited, and ResMed Inc. The Motley Fool Australia has recommended NIB Holdings Limited and Westpac Banking Corporation. 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 Corp Ltd (ASX: TLS) share price is slightly in the red today.

Telstra shares are down 0.77% and are currently trading at $3.86 apiece. For perspective, the S&P/ASX 200 Communication Services Index (ASX: XTJ) is also 0.77% lower at the time of writing.

Let’s take a look at what is happening at Telstra.

New Australian call centre workers

Telstra CEO Andy Penn has revealed the company has hired a large number of new call centre workers.

In a blog post today, Penn said 2,000 new team members have been taken on to answer calls within Australia.

Penn said the staff are located all over the country, including regional hubs from Bunbury to Bathurst to Maryborough.

He said Telstra heard “loud and clear” that consumers want a change in the way calls are answered, adding “so we did it”. He said:

This change is all part of our T22 strategy, designed to make life better for our customers.

Now that we have completed T22, our new T25 strategy will build on the work we’ve already done, and continue to improve the way we serve you. 

Penn will step down as CEO of the company in September. He will be replaced by Vicki Brady.

In other news, the Australian Communications and Media Authority has launched new rules to protect Australians from scammers.

Under the changes, telecommunications providers need to trace, identify, and block SMS scams. Fines of up to $250,000 can be handed out for telcos that breach these directions.

Telstra share price snapshot

The Telstra share price has jumped nearly 4% in the past year although it has shed nearly 7% year to date.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has lost nearly 10% in a year.

Telstra has a market capitalisation of nearly $45 billion based on the current share price.

The post Own Telstra shares? Here are details on the telco’s 2000 new Australian call centre workers appeared first on The Motley Fool Australia.

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More reading

• How big will the Telstra dividend yield be in FY23?
• Here’s why brokers rate these ASX dividend shares as buys
• Telstra share price in the red despite taking out green crown
• What’s the outlook for ASX 200 dividend shares in FY23?
• Why did the Telstra share price beat the market in FY22?

Motley Fool contributor Monica O’Shea 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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S&P/ASX 200 Index (ASX: XJO) supermarket shares are taking off on Tuesday amid the release of the latest household spending data.

The Australian Bureau of Statistics (ABS) found household spending rose in May, lifting 7.9% higher than it was at the same time last year.

The news might have increased sentiment for ASX 200 supermarket shares. They’re currently leading the S&P/ASX 200 Consumer Staples Index (ASX: XSJ). In turn, the consumer staples sector is out in front of the broader market.

Let’s take a closer look at what’s going on with ASX 200 supermarket shares today.

ASX 200 supermarket shares outperform

ASX 200 favourites Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) are outperforming most of their peers on Tuesday.

The Woolworths share price is currently leading the company’s home sector with a 2.2% gain. That brings the stock up to trade at $37.23 apiece.

Meanwhile, the Coles share price is coming in second best with a gain of 2.05%. It’s trading at $18.69.

Their gains have helped boost the consumer staples sector into the top spot. The sector is up 1.33% at the time of writing. For comparison, the ASX 200 is up just 0.12% right now.

The latest news from the ABS may have boosted the market’s interest in the supermarket giants.

Though, the Woolworths share price might be being lifted by its addition to Goldman Sachs’ conviction list.

The broker likes the supermarket giant’s core business, adjacent revenues, and valuation, my Fool colleague James reported earlier today.

The consumer staples sector is also being driven higher by shares in Endeavour Group Ltd (ASX: EDV) – which hit a new 52-week high today, Graincorp Ltd (ASX: GNC), and Elders Ltd (ASX: ELD).

They’ve gained 0.7%, 0.3% and 0.3% respectively at the time of writing.

The post ASX 200 supermarket shares lead as household spending jumps appeared first on The Motley Fool Australia.

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More reading

• Why Eagers Automotive, Viva Energy, Woolworths, and Zip shares are rising
• Why Goldman Sachs added Woolworths shares to its conviction list
• Here’s why the Coles share price had a volatile FY22
• 5 things to watch on the ASX 200 on Monday
• Why ‘superior operations’ puts Woolworths shares in this broker’s buy basket

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 positions in and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended Elders 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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Looking for some growth shares to buy this week? Then take a look at the three listed below that are rated as buys.

Here’s what you need to know about these growth shares:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX growth share to look at is Aristocrat Leisure. It owns a portfolio of popular world class poker machines and mobile games. In addition, management is planning an expansion into the potentially lucrative real money gaming market. Combined with its share buyback, this all bodes well for its earnings per share growth in the coming years.

Morgans is a fan of the company and has an add rating and $43.00 price target on its shares. The broker said: “It has delivered revenue growth of 17% pa over the past five years and 80% of revenue in FY21 was recurring. We expect ALL to continue to take market share in all its product segments.”

Life360 Inc (ASX: 360)

Another ASX growth share that has been tipped as a buy is Life360. It is the company behind the popular Life360 app, which is the world’s leading real time, location-sharing app used by families to stay safe and communicate. At the last count, there were over 30 million monthly active users on its platform.

Bell Potter is positive on Life360 and has a buy rating and $7.50 price target on its shares. It notes that the company “has the potential to leverage its large and growing user base to enter new markets and disrupt the legacy incumbents.” This includes “insurance, item & pet tracking, senior monitoring, home security and/or identity theft.”

Nitro Software Ltd (ASX: NTO)

Another ASX growth share that analysts rate highly is Nitro Software. It is a technology company that provides businesses of all size with integrated PDF productivity and eSignature tools via the Nitro Productivity Suite.

Goldman Sachs is very bullish on Nitro due to its strong growth potential. As a result, it currently sees “NTO as an attractive long-term growth opportunity at a discounted valuation.” Goldman has a buy rating and $2.35 price target on the company’s shares.

The post Here’s why analysts are tipping these ASX growth shares as buys appeared first on The Motley Fool Australia.

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More reading

• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
• Why is the Life360 share price soaring 12% today?
• Here are 3 excellent ASX growth shares for investors to buy in July
• 2 appealing ASX All Ords growth shares getting discounted today
• Could there be another 19% upside to the Aristocrat Leisure share price?

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. The Motley Fool Australia has recommended Nitro Software 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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ASX 200 energy shares were the clear winners in FY22. Prices for energy commodities and raw materials were sent to record highs amid a number of external catalysts.

In particular, Brent Crude oil nudged multi-year highs of US$123 per barrel back in March. It has been in sideways territory since.

Meanwhile, energy’s darling child – natural gas – is buoyantly trading well above historical averages.

The European TTF Dutch gas contract has increased 375% year over year. UK gas is up 162%. Not to mention coal, which has gained 194% in 12 months.

More upside for ASX 200 energy shares in FY23?

Michael Cembalest is the chairman of market and investment strategy at JP Morgan. He recently released his annual commentary on the future of the energy market.

In it, Cembalest noted that while there’s somewhat of a paradigm shift occurring in energy markets, beneath the surface, all might not be that different.

Cembalest notes fossil fuel’s share of global primary energy is declining slightly faster than previously. This is partially due to “large investments in wind and solar power used for electricity generation”.

“Even so … fossil fuel reliance across the developed and developing world is still high.”

The International Energy Agency also projects that 66% of the world may be reliant on fossil fuels by 2050.

“[G]lobal gas and coal consumption in 2021 were already above pre-COVID levels, and global oil
consumption should surpass pre-COVID levels sometime next year,” Cembalest added.

“Looking further out, some forecasts of oil demand in 2030 and 2040 are not that different from today.”

That looks like bullish sentiment for the ASX 200 energy sector, that’s for sure.

Fossil fuels fill the energy gap

Dr Phillip Hofflin of Lazard Asset Management echoes this sentiment.

Hofflin notes that modern renewable energy represents only 6% of the global supply. This leaves a large gap that fossil fuels currently fill.

“[W]hat attracted us to the sector … was really a combination of, firstly, the very low prices … and secondly, the fact that there was just no CAPEX around the world in energy,” he told Livewire.

Hofflin likes energy giants Woodside Energy Group Ltd (ASX: WDS) and Whitehaven Coal Ltd (ASX: WHC).

However, many ASX 200 energy shares such as Santos Ltd (ASX: STO), Yancoal Australia Ltd (ASX: YAL), and Beach Energy Ltd (ASX: BPT) are also positioned to benefit from a strengthening energy market.

Bell Potter named Beach Energy a speculative buy in a recent note. The broker valued it at $2 per share.

The broker said:

BPT should continue to benefit from elevated crude prices in the short term, though operating leverage from its Western Flank asset will shrink as gas and LNG production from its growth projects ramp up over the next two years.

Shown below is a graph comparing the share price growth of several ASX 200 energy shares.

The post What’s the outlook for ASX 200 energy shares in FY23? appeared first on The Motley Fool Australia.

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More reading

• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Worley shares dip despite deal with Santos
• These were the best (and worst) performing ASX 200 sectors of FY22
• What were some of the key lessons for ASX investors in FY22?

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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FY22 was a year to forget for ASX tech shares investors, with the S&P/ASX All Technology Index (ASX: XTX) falling about 35% compared to the S&P/ASX 200 Index (ASX: XJO), which fell about 10%.

The big question is, when does this trashing of ASX tech shares turn into a buying opportunity?

Have ASX tech shares bottomed yet?

If we take a look at the past four weeks, we see that ASX 200 shares have continued to fall by 1.1%. But the tech index is up 4%. What does that mean?

It may simply be a blip, or it could indicate a lift in confidence. Perhaps it’s even a sign that the bottom for ASX tech shares has been reached — and passed? Draw your own conclusions.

There are other positive indicators, too.

As my Fool colleague Zach reported last week, government bond yields are inversely related to the valuation of risk assets like ASX shares. As yields fall, valuations increase.

In addition, these yields are often interpreted as a reflection of financial investors’ attitudes towards risk.

Yields on long-dated bonds have wound back in recent weeks. This has led to a re-rating of tech shares in the near term, according to Zach.

The United States treasury note 10-year yield finished at 2.96% overnight, down from a high of 3.44% on 14 June. The Australian 10-year yield is 3.44%, also down from 4.09% in mid-June.

So, that’s all very interesting…

Overarching themes for ASX tech share investing in FY23

Investors brave enough to consider buying ASX tech shares in today’s volatile market could probably use some advice.

Alex Pollak is the founder and chief investment officer at Loftus Peak. The company is a specialist investor in global industry disruption and runs a listed managed fund on the ASX.

While Pollak’s commentary in a recent article published on the ASX website focuses on international tech stocks, his broader advice has relevance for ASX tech shares investors, too.

Go for quality in tech shares

Pollak says:

In today’s macroeconomic environment, company quality is key. Companies with strong balance sheets, good cashflows and current earnings are poised to best tolerate the high interest-rate environment. 

Quality in tech companies also distinguishes today’s market from that of 2000 during the dot-com bubble. 

Go for size in tech shares

Pollak also says that investing in large tech companies is likely to provide more safety in today’s macroeconomic environment.

That’s one of the reasons why he likes global companies, which are typically listed on overseas exchanges.

Pollak says:

As monetary policy tightens and interest rates rise, economic growth will temper while the cost of capital for companies increases. This can be a lethal combination for smaller tech companies that have yet to establish their business models or a path to profitability, because plugging the funding gap with fresh debt and equity will become much more costly. 

Pollak points to the 17.8% underperformance of the Russell 2000 against the S&P500 over the past year. The Russell 2000 is an index of small to mid-cap US companies.

He says: “Quality companies will more easily pass on to consumers the cost increases caused by inflation and supply-chain disruption.”

Go for growth and disruption in tech shares

Pollak likes tech shares that are well-positioned to benefit from long-term industry disruption.

He says: ” … the promising outlook of quality global technology companies benefitting from secular trends remains a hard act to follow”.

Pollak explains:

Where quality mitigates the effect of the inflation and supply-chain disruption, positive secular industry trends provide a path onwards and upwards. 

During the GFC, a number of key disruptive trends were working their way through the economy. Smartphones were becoming ubiquitous, the fledgling e-commerce sector was growing strongly, online advertising was taking shape and TV, movie and music streaming began to benefit from faster download speeds. 

In the end, the disruptive secular trends benefiting these companies outstripped the macroeconomic headwinds. This resulted in stock outperformance. 

The secular trend in technology today is towards increased computational power — that is to say, semiconductor devices, solid-state storage and networking products. 

In terms of best tech share picks, Pollak highlights three international companies, Nvidia Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and the Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM).

He likes them because they have strong balance sheets and cash flow, do not require additional financing, and are buying back their own shares.

What about ASX tech shares?

Here are some recent recommendations on ASX tech shares from a couple of expert brokers.

As we reported last week, Citi says the two ASX 200 tech shares likely to navigate a softening economy and demand weakness best are NextDC Ltd (ASX: NXT) and WiseTech Global Ltd (ASX: WTC).

Bell Potter’s best ASX tech share picks are TechnologyOne Ltd (ASX: TNE), Life360 Inc (ASX: 360), and Nitro Software Ltd (ASX: NTO).

Let’s go back to that four-week patch test for ASX tech shares. How are these picks doing to date?

• NextDC share price up 9.4%
• WiseTech share price up 11.8%
• TechnologyOne share price up 2.1%
• Life360 Inc share price up 28.6%
• Nitro Software share price up 6.9%.

Make of this what you will.

The post Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23 appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• These were the best (and worst) performing ASX 200 sectors of FY22
• What were some of the key lessons for ASX investors in FY22?
• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• Broker gives its verdict on the WiseTech share price

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 positions in and has recommended Advanced Micro Devices, Life360, Inc., Nvidia, Taiwan Semiconductor Manufacturing, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Nitro Software Limited, Nvidia, and TechnologyOne 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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