The Australian share market is home to a good number of shares offering attractive dividend yields.

But which ones should you buy over others? Here’s are two that analysts rate as buys right now:

Bapcor Ltd (ASX: BAP)

The first ASX dividend share to look at is Bapcor. It is the Asia Pacific’s leading provider of vehicle parts, accessories, equipment, service and solutions. It is also the name behind a number of retail brands such as Autobarn, Burson Auto Parts and Midas.

Thanks to the strength of these brands and strong demand for used cars, Bapcor was on form and delivered solid sales and profit growth in FY 2021. Looking ahead, the company appears well-placed for growth over the long term thanks to its strong market position and bold expansion plans overseas.

It is also worth noting that Bapcor’s shares were sold off last week amid the surprise announcement of the retirement of its long-serving CEO. And while this creates an air of uncertainty, this appears to be more than priced in following the 18% weekly Bapcor share price decline.

The team at Morgans is positive on Bapcor. The broker currently has an add rating and $8.45 price target on the company’s shares.

As for dividends, its analysts are forecasting fully franked dividends of 21 cents per share in FY 2022 and then 23 cents per share in FY 2023. Based on the current Bapcor share price of $6.76, this will mean yields of 3.1% and 3.4%, respectively.

Mineral Resources Limited (ASX: MIN)

Another ASX dividend share analysts have named as a buy is Mineral Resources.

It is a mining and mining services company with exposure to two commodities – iron ore and lithium. While the former is acting as a drag on its performance at present, sky high lithium prices are offsetting this thankfully.

It is because of the latter that the team at Macquarie remain very positive on Mineral Resources. Last week the broker reaffirmed its outperform rating and $72.00 price target.

The broker is also forecasting attractive dividend yields in the near term. Macquarie has pencilled in dividends per share of $1.34 in FY 2022 and then $1.85 in FY 2023. Based on the latest Mineral Resources share price of $43.53, this will mean yields of 3.1% and 4.25%, respectively, over the next two financial years.

The post 2 buy-rated ASX dividend shares appeared first on The Motley Fool Australia.

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• These are the biggest opportunities on the ASX in 2022: fund manager
• 3 top ASX shares named as buys
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• ASX 200 (ASX:XJO) midday update: BHP, Woodside rise, TechnologyOne falls

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 Bapcor. 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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Cloud software provider Xero Limited (ASX: XRO) has grown phenomenally since it started in 2006.

The business started in a tiny apartment in Wellington, New Zealand, where the first employees had to pinch wifi from the neighbouring cafe.

And now, it has a market capitalisation of $20.72 billion.

It started its publicly listed life on the NZX, but even just during its ASX life, Xero shares have returned an eye-watering 2,896%.

So has all the money been made now? It wouldn’t be outrageous to suggest all the decent growth is now behind it?

That’s the question The Motley Fool’s chief investment officer Scott Phillips and analyst Chris Copley set out to answer in a recent video.

How Xero grew from zero to hero

Although commonplace now, the idea of cloud-based accounting was revolutionary in the mid-noughties when founder Rod Drury decided to make it reality.

According to Copley, formerly an accountant, the company was “an early mover” in the cloud accounting industry.

“I used to train different clients on how to use some of these accounting platforms, and Xero was by far my favourite solution,” he said.

“We could teach them how to do the bookkeeping on Xero because it was so easy to do and that saved them costs.”

This ease of use, and the network effects of accountants actually recommending the software to their clients, propelled the incredible growth of Xero over the past decade.

Phillips said that the company’s origin and growth narrative was irresistible.

“It’s one of Australasia’s great success stories of the last 20 years.”

Plenty of reasons to continue growth

But investors must look forward, not backwards. 

Xero shares ended Friday at $139.30, which is a 9% drop over the month. Is the market starting to lose faith in the sustainability of its growth?

Copley said the global addressable market for cloud accounting is massive, and that Xero has only “scraped the surface” so far.

“Cloud adoption globally is really low relative to Australia and New Zealand.”

He added that the business is still running in ‘capture market share’ mode, so it has room to improve its margins in the future.

Xero is also developing into a small business suite, through collaborative partnerships with non-accounting software. This makes the platform more “mission critical” for its customers, according to Copley, and more “difficult to leave”.

But there are risks for Xero shares

Having a small business clientele means Xero is exposed to the whims of the economy, according to Copley.

And the company doesn’t have the head-start in the expansion markets as it did in Australia and New Zealand 10 years ago.

“There are solutions in the US like QuickBooks Online, which is Intuit Inc (NASDAQ: INTU)’s cloud-based accounting software,” Copley said.

“It has quite a comparable solution to Xero but has a larger market share in the US, and the business is growing at a similar rate.”

Also, regardless of geography, Xero’s rivals have now woken up to the fact that cloud is the future. The likes of old desktop rivals MYOB and Reckon Limited (ASX: RKN) are fast developing competitive solutions.

“Xero will need to continue to innovate and continue to innovate its solutions.”

Are Xero shares worth it now?

Copley said that with the valuation so high now, one could not buy Xero shares now with the expectation that it would rise 729% like the last 5 years.

“There’s a lot of lofty expectations built into the share price that investors should be wary of when investing in Xero.”

But having said that, Copley still made the call that Xero shares are a “market beater”.

“It’ll continue to grow. It’ll continue to grow for a long period of time. Its tail is long, which means I think it can get double-digit growth for a long period of time,” he said.

“You really do need to look well long term into the future for this one because even in 3 to 5 years it’s still going to probably have quite a lofty multiple.”

The post Are Xero shares worth their $21bn valuation? Motley Fool analyst Chris Copley weighs in appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Tony Yoo owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. 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 could be a tough start to the weeks for energy shares such as Oil Search Ltd (ASX: OSH), Santos Ltd (ASX: STO), and Woodside Petroleum Limited (ASX: WPL).

This follows an oil price sell off on Friday night amid fears over the new Omicron variant of COVID-19.

What happened to oil prices?

Traders were selling off oil on Friday night in a panic, leading to prices having their worst day of the year so far.

According to Bloomberg, the WTI crude oil price sank a whopping 13.05% to US$68.15 a barrel and the Brent crude oil price has tumbled 11.55% to US$72.72 a barrel.

Traders are concerned that the new Omicron variant, which was discovered in South Africa, has the potential to put countries back into lockdown and derail the travel market. If this were to happen, it would hit demand for oil very hard, just as supply is about to increase.

John Kilduff, partner at Again Capital, told CNBC: “It appears that the discovery of a Covid-19 variant in southern Africa is spooking markets across the board. Germany is already limiting travel from several nations in the affected region. The last thing that the oil complex needs is another threat to the air travel recovery.”

Increasing supply

Last week the US Government announced plans to release 50 million barrels of oil from the Strategic Petroleum Reserve as a part of a global plan by energy-consuming nations to tame rising fuel prices.

China, India, Japan, South Korea, and the U.K. are also planning to release some of their reserves.

Analysts at Commerzbank commented: “This [sell-off] is attributable to concerns about a sizeable oversupply in early 2022 that is set to be brought about by the upcoming release of strategic oil reserves in the US and other major consumer countries, plus the ongoing steep rise in new coronavirus cases.”

“Furthermore, an even more transmissible variant of the virus has been discovered in South Africa, prompting a noticeable increase in risk aversion on the financial markets today,” it added.

All in all, Omicron looks set to make this another volatile period for energy shares.

The post ASX energy shares on watch after Omicron sparks oil price crash appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
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• Traditional owners seek stake in $16.8bn Woodside Pluto project
• 5 things to watch on the ASX 200 on Friday
• Santos (ASX:STO) share price dips despite progress on $21 billion merger

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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On Friday the S&P/ASX 200 Index (ASX: XJO) was sold off amid concerns over a new strain of COVID-19. The benchmark index sank 1.7% to finish the week at 7,279.3 points.

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

ASX 200 expected to sink again

The Australian share market looks set to start the new week the same way as it ended the last one. According to the latest SPI futures, the ASX 200 is expected to open the day 104 points or 1.4% lower this morning. This follows a selloff on Wall Street on Friday which saw the Dow Jones fall 2.5%, the S&P 500 drop 2.3%, and the Nasdaq tumble 2.2%. The Dow had its worst day of the year.

Oil prices crash

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) are likely to start the week deep in the red after oil prices crashed on Friday night. According to Bloomberg, the WTI crude oil price sank 13.05% to US$68.15 a barrel and the Brent crude oil price has dropped 11.55% to US$72.72 a barrel. Oil had its worst day of the year amid concerns the new omicron strain of COVID-19 could hit demand just as supply increases.

ANZ shares rated as a buy

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price could be in the buy zone according to the team at Bell Potter. This morning the broker retained its buy rating and $31.00 price target on the banking giant’s shares. Bell Potter notes that there are significant opportunities from decarbonising the economy and the bank is well positioned to facilitate to net zero emissions.

Gold price rises

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could start the week on a positive note after the market selloff boosted safe haven assets. According to CNBC, the spot gold price rose 0.45% to US$1,792.30 an ounce.

Iron ore prices fall

BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) shares could start the week in the red after iron ore prices tumbled on Friday night. According to Metal Bulletin, the benchmark 62% fines fell US$5.68 or 5.5% to US$96.67 per tonne. Things were even worse for low grade iron ore, which dropped US$5.31 or 7.1% to US$69.60 per tonne.

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

More reading

• Why are BHP (ASX:BHP) shares more shorted right now than ever before?
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• Leading broker names 2 ASX energy shares to buy
• These were the best performing ASX 200 shares last week

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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If you have room for some new portfolio additions, then it could be worth considering the three ASX shares listed below.

Here’s why analysts at Morgans are bullish on these shares:

QBE Insurance Group (ASX: QBE)

Morgans is feeling positive about this insurance giant’s shares. It currently has an add rating and $13.70 price target on them.

The broker believes QBE’s shares are trading at an attractive level. Particularly given its balance sheet and the outlook for premium increases.

It said: “We see QBE as likely having positive underlying momentum into next year. QBE has been putting through top-line rate increases of around 9%, which should assist margin expansion into FY22. With QBE’s balance sheet recently reset, pricing tailwinds evident and the stock relatively inexpensive trading on ~12.9x FY22F PE.”

ResMed Inc (ASX: RMD)

Morgans is a fan of ResMed. Its analysts currently have an add rating and $40.80 price target on its shares.

The broker likes ResMed due to its very positive medium to long term outlook, which is being underpinned by its digital platform.

Morgans commented: “While we believe the next few quarters will likely be volatile, as COVID-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift, nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.”

Sonic Healthcare (ASX:SHL)

Finally, this healthcare share is another that Morgans rates highly. The broker currently has an add rating and $47.05 price target on its shares.

Morgans is positive on Sonic due largely to its belief that COVID testing will remain strong for the foreseeable future. It also notes that its strong balance sheet opens up M&A opportunities.

Its analysts explained: “We see COVID-19 testing continuing into the foreseeable future, with growth potential in COVID serology testing. SHL’s global base business is increasingly resilient, benefitting from geographical diversity. Strong B/S (gearing 21.6x; A$1.3bn headroom) opening the door to acquisitions, contracts and JVs [joint ventures].”

The post Why a leading broker is bullish on these 3 ASX shares 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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. and Sonic Healthcare 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 is getting closer to Christmas. Could the Woolworths Group Ltd (ASX: WOW) share price be an opportunity in the leadup to the festive season?

Woolworths has been through a fairly volatile period over the last couple of years. There was the pantry stocking at the start of the COVID-19 pandemic. Long lockdowns in Victoria and NSW also led to elevated demand for supermarket food.

What do analysts think of the Woolworths share price?

Some analysts are felling pretty negative about the business at the moment.

A few weeks ago, Woolworths released its trading update for the first quarter of FY22.

Both Credit Suisse and UBS rate the supermarket business as a sell after seeing that update.

UBS thinks that there is a slowing down of conditions for the supermarket giants in Australia.

Both Credit Suisse and UBS thinks that costs are going to increase and this could impact profitability.

Price targets on the Woolworths share price

Of the two bearish brokers I’ve mentioned, UBS has a price target of $37 on Woolworths.

Credit Suisse is much more negative. Its price target is just $31.84 – that implies a possible decline of around 20% over the next year if the broker is right.

But not every broker is so negative on the business. Some brokers have price targets that are higher than where it’s currently trading at.

One of the most positive is Ord Minnett, which has a price target of $43 on the Woolworths share price – more than 6% higher than today. The broker still feels the medium-term looks solid for the company.

Differences in profit expectations

How much profit Woolworths is expected to make can lead to a big difference to how much analysts are prepared to say it is worth today and what the price target is.

Using those profit projections, Credit Suisse reckons that the Woolworths share price values it at 34x FY22’s estimated earnings and 31x FY23’s estimated earnings.

But Ord Minnett is much more optimistic, the broker puts Woolworths shares at 30x FY22’s estimated earnings and 26x FY23’s estimated earnings.

FY22 first quarter

We’ve heard what analysts think, but it’s a good idea to know about the actual numbers that Woolworths is reporting and what the company is saying.

In the 14 weeks to 3 October 2021, group sales were up 7.8% to $6.07 billion, whilst total e-commerce sales were up 53.5% to $1.88 billion.

There was quite a large difference in performance between the main divisions.

Australian food saw sales growth of 3.9% year on year. Australian ‘B2B’ (business to business) saw growth of 196.4%, which included the acquisition of PFD Food Services as well as the recognition of Endeavour Group (ASX: EDV) partnership revenue. New Zealand food, in Australian dollars, was up 12.9% and Big W sales were down 17.5%.

In October, Australian food sales had “slowed” as lockdown restrictions eased, but Big W sales had improved.

The post Is the Woolworths (ASX:WOW) share price a buy in the lead up to Christmas? appeared first on The Motley Fool Australia.

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• Why is the Woolworths (ASX:WOW) share price growing greener today?
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• These ASX 200 shares could be set to face fresh pressure over climate action

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 Bruce Jackson.

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A record number of investors are shorting BHP Group Ltd (ASX: BHP) shares following the company’s upcoming structural change. The world’s second-largest miner has seen its shares tank around 30% from an all-time high of $54.55 in August.

At Friday’s market close, BHP shares added further pain to investors finishing the day down 1.53% to $38.03.

Short-sellers weigh in on BHP shares

Short-sellers are cashing in on quick money as BHP is finding itself caught between the group’s dual-listed company structure.

As reported by the Australian Financial Review (AFR), investors are taking advantage of the company’s recently announced plan to end its United Kingdom-listed PLC (public limited company) shares.

The 20-year-old dual-listed company structure began when BHP Ltd merged with Billiton PLC. The corporate structure enabled both companies to amalgamate without legally acquiring or merging, creating a tax-efficient business structure.

Between the pair, the shares are not transferable. The dividend payment amount and voting rights are equal. However, the ASX and UK-listed shares trade differently. The Australian shares command a higher price. This is because of Australia’s much-loved franking credits available to BHP Ltd shareholders.

Since August, hedge funds have heavily shorted the ASX-listed BHP shares and picked up the group’s cheaper PLC shares. In fact, almost 210 million BHP shares, or 7.1% of its entire issued capital, are shorted.

The dual-listing company structure will eventually collapse, leading to a 1-for-1 swap of PLC shares to BHP shares. Undoubtedly, big firms such as UBS, Morgan Stanley and Credit Suisse will be booking huge profits following repatriation day.

About the BHP share price

Since the beginning of the year, results have been disappointing for BHP shareholders, the share price falling by more than 10%. The company’s share price trekked higher until August before plummeting to 2020 lows this month.

BHP presides a market capitalisation of roughly $113.93 billion, and has approximately 2.95 billion shares outstanding.

The post Why are BHP (ASX:BHP) shares more shorted right now than ever before? appeared first on The Motley Fool Australia.

More reading

• Morgans rates these ASX 200 shares as buys
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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 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 Rio Tinto Limited (ASX: RIO) share price could be one to watch in the near term. This comes as the mining giant’s CEO, Jakob Stausholm, attended a meeting with Mongolia’s Prime Minister Oyun-Erdene Luvsannamsrain.

At the closing bell on Friday, Rio Tinto shares finished down 2.25% to $94.46 apiece.

What happened?

In an effort to smooth tensions over Rio Tinto’s Oyu Tolgoi copper and gold mine, the 2 heads met together this week. The project has suffered major setbacks and cost overruns which have resulted in production delays.

Construction on the mine commenced back in 2010, touted as one of the world’s safest and most sustainable mines. The company leveraged new technologies and mechanical equipment to carry out more efficient mining operations.

First production was originally forecast to begin in late 2020, but geotechnical difficulties and COVID-19 pushed this date back. Rescheduled for October 2022, Rio Tinto has again moved the timeline to January 2023 because of cost blowouts.

The Mongolian government threatened to tear up the 2009 investment agreement, in which it has a considerable stake. An independent review rejected Rio Tinto’s explanation for the project’s delays and climbing costs.

Canadian-listed Turquoise Hill Resources, the other major shareholder in the project, advised it needed US$3.6 billion in further funding. Rio Tinto holds a 50.8% interest in the mineral exploration and development company.

However, the Mongolian government’s stance is that Rio Tinto should cover any additional costs.

Some believe that concessions could be made to the Mongolian government to reset relations and complete the project.

Once online, the mine will produce around 560,000 tonne of copper resources per year at full operational capacity. This is forecasted to occur sometime no earlier than 2025.

Should everything run according to plan, the Oyu Tolgoi project could be the world’s fourth-largest copper mine by 2030.

Rio Tinto share price summary

Over the past 12 months, Rio Tinto shares have fallen 8% despite hitting a 52-week low of $87.28 in mid-November. When looking at 2021 alone, its shares have plummeted by almost 20%.

Rio Tinto commands a market capitalisation of roughly $35.87 billion with approximately 371.22 million shares outstanding.

The post Own Rio Tinto (ASX:RIO) shares? Why the CEO met with the Mongolian Prime Minister this week appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Thursday
• Here’s why Macquarie sees 39% upside in the Rio Tinto (ASX:RIO) share price
• Only a few ASX 200 companies have received this honour and Scentre (ASX:SCG) just joined them
• Why this mining analyst is upbeat on the iron ore price forecast

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 Bruce Jackson.

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If you’re looking to bolster your portfolio with some new ASX 200 shares in December, then you may want to consider the two listed below.

Both have recently been named as buys by the team at Morgans. Here’s what they have to say about these ASX 200 shares:

BHP Group Ltd (ASX:BHP)

If you’re happy to invest in the resources sector, then BHP could be an ASX 200 share to consider according to Morgans. Its analysts believe the company is a relatively low risk option in the sector and see a lot of value in its shares at the current level.

Morgans has an add rating and $45.70 price target on BHP’s shares.

The broker commented: “We view BHP as relatively low risk given its superior diversification relative to its major global mining peers. The spread of BHP’s operations also supplies some defence against direct COVID-19 impact on earnings contributors.”

“While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile,” it added.

Treasury Wine Estates (ASX:TWE)

Another ASX 200 share to consider is Treasury Wine. Morgans believes the wine giant’s shares are undervalued, particularly given its recent restructuring. And while it acknowledges that it will take time to recover its lost earnings in China, the broker remains positive on the future.

Morgans has an add rating and $14.06 price target on the company’s shares.

It commented: “TWE has the China reallocation risk and it will take 2-3 years to recover these earnings in new markets. However, outside of China, its key markets, particularly the US, are recovering faster than expected from COVID.”

“The new business units centred around the brands, are now fully in place and we are excited to see what they can earn with TWE effectively creating the benefits of a demerger without the extra costs. It also demonstrates that the SOTP is worth materially more than the whole. It shines a light on Penfolds and its best-in-class margins and may ultimately lead to corporate activity in some form in the future. We rate this management team highly,” it concluded.

The post Morgans rates these ASX 200 shares as buys appeared first on The Motley Fool Australia.

More reading

• Is the BHP (ASX:BHP) share price great value today?
• Are BHP (ASX:BHP) shares a compelling opportunity in the decarbonisation era?
• Top brokers name 3 ASX shares to buy today
• These top brokers say the BHP (ASX:BHP) share price is a bargain buy
• Cheers! Morgans tips Treasury Wine (ASX:TWE) share price to rise 19%

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 Treasury Wine Estates 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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Investors in the BetaShares Asia Technology Tigers ETF (ASX: ASIA) would be fairly used to getting a performance that bests the S&P/ASX 200 Index (ASX: XJO). After all, this is an ASX ETF that has managed to give investors an average return of 24.4% per annum over the past 3 years. In contrast, the iShares Core S&P/ASX 200 ETF (ASX: IOZ), an index fund that tracks the ASX 200, has returned an average of 22.8% per annum over the same period.

Over November thus far, the ASX 200 has gone backwards by roughly 0.6%. So we can see this trend continuing somewhat, seeing as the ASIA ETF has given its investors a return of 1.42% over the same period. But it hasn’t all been smooth sailing. ASIA spent the first half of the month giving its investors the kind of returns they might be used to, shooting up more than 7% by 17 November.

But since then, it has been a different story. At the end of that particular Wednesday, ASIA units closed at a price of $10.55. On Friday, those same units ended the day at $9.99. That’s a slide of around 5.3%. So it’s fair to say this ETF has spent a good chunk of November on struggle street.

So what might we blame this performance on?

ASIA ETF struggles in November

Well, to dig into that question, let’s check out what kind of investments underpin ASIA’s investing portfolio. Like all share-based ETFs, ASIA is a fund that invests in underlying shares. Unlike an index fund though, this ETF holds a relatively concentrated portfolio of 50 companies. According to BetaShares, these are selected to give investors exposure to “the 50 largest technology and online retail stocks in Asia (ex-Japan).”

So ASIA’s current largest holdings (and their fund weightings) are as follows:

1. Taiwan Semiconductor Manufacturing Company Ltd, with a weighting of 10.9%
2. Samsung Electronics, with a weighting of 10.1%
3. Tencent Holdings Ltd, with a weighting of 9.8%
4. Alibaba Group Holding Ltd, with a weighting of 8.7%
5. Meituan, with a weighting of 6.7%

As you can see, even though ASIA already has a relatively concentrated portfolio, its 5 largest holdings make up almost half (46.2%) of this ETF’s portfolio. That means they have a massive influence on how this ETF performs.

So, let’s check out how these stocks have been travelling over November so far.

Taiwan Semiconductors has put on roughly 3% since the end of October.

Samsung is up 3.58%.

Tencent is down 3.66%.

Alibaba has lost a nasty 19.15%.

And Meituan has lost 2.2%.

As you can gather, it’s the Chinese e-commerce giant Alibaba that we can probably blame for ASIA’s struggles over November (particularly the back half of the month). A near-20% decline of an ETF’s fourth-largest holding is going to put a dent in its performance, especially if the other major holdings don’t have an explosive month of gains to make up for it. This is the most probable reason why ASIA has had such a lukewarm month.

The BetaShares Asia Technology Tigers ETF charges a management fee of 0.67% per annum.

The post Why is the BetaShares Asia Technology Tigers ETF (ASX:ASIA) struggling this month? appeared first on The Motley Fool Australia.

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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 recommended BetaShares Asia Technology Tigers ETF. 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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