All eyes will be on the Xero Limited (ASX: XRO) share price next week.

This is because the cloud-based business and accounting software platform provider will be releasing its full year results on Thursday.

What is the market expecting from Xero?

This morning analysts at Goldman Sachs revealed what they are expecting from the company in FY 2021.

According to the note, the broker is forecasting sales growth of 16% to NZ$836 million for the 12 months. Goldman expects this to be driven by a 16% increase in ANZ sales and a 17% lift in International sales.

This is actually a touch under the market consensus estimate of NZ$854 million.

In respect to earnings, its analysts have pencilled in earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$218 million. This will be a 56% increase year on year and, once again, a touch short of the market consensus estimate of NZ$228 million.

On the bottom line, a net profit after tax of NZ$40 million is expected.

What about subs?

Goldman Sachs is expecting Xero’s positive momentum to continue and is forecasting 317,000 net subscriber additions in FY 2021.

This comprises 222,000 in the ANZ market and 95,000 internationally. The latter is expected to have been impacted by COVID-19 disruptions in the Northern Hemisphere.

And while the broker suspects that its average revenue per user (ARPU) metric may soften, it isn’t concerned by this.

It explained: “We forecast ARPU -2% to NZ$28.5, given geographic & sub mix shift, offset by solid underlying trends (noting the recent price rises will predominantly benefit FY22). We will focus on the growth in Xero platform revenues, which grew +21% in 1H21 but +50% when adjusting for Hubdoc reclassification. Our high frequency trackers show +25-32% annualized growth in the number of apps in Xero’s AU/UK/US ecosystems (as at early April), underpinning the value proposition.”

Is the Xero share price in the buy zone?

Goldman Sachs sees a lot of value in the Xero share price.

It currently has a buy rating and $153.00 price target on the company’s shares.

Based on today’s Xero share price, this implies potential upside of almost 15% over the next 12 months.

More reading

• ASX tech shares are in a world of pain. There might be more to come…
• 3 reasons why Xero (ASX:XRO) is such a high-quality ASX share
• One MASSIVE thing about Tesla and Afterpay that people forget
• 2 quality SaaS ASX shares to buy in May 2021
• Why the Xero (ASX:XRO) share price charged higher in April

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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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Finding ASX dividend shares with dividend yields over 6% today is still a hard task. With interest rates at near-zero levels, the market has rushed into dividend shares offering large, inflation-beating yields. After all, there are not too many other investments you can find out right now that offer such a return on your capital.

So here are 3 such ASX dividend shares, all of which are offering a fully franked yield of 6% or greater today

3 ASX dividend shares offering yields of 6% or more today

Telstra Corporation Ltd (ASX: TLS)

Telstra is the first dividend share that has a large dividend yield on offer today. The Telstra share price has actually had a top month or two, rising close to 14% since early March. Investors seem to be loving the idea of splitting up the telco – a plan Telstra announced in March. This share price rise has reduced Telstra’s trailing dividend yield somewhat, but even so, it still offers a relatively large yield compared with other S&P/ASX 200 Index (ASX: XJO) shares. This ASX telco has paid out 16 cents per share in dividends every year for a few years now. On current pricing, that would give us a yield of 4.6% today, or 6.57% grossed-up with Telstra’s full franking.

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

Investors finally got some clarity on ANZ’s dividend this week after more than a year of payout uncertainty thanks to the coronavirus pandemic. Shareholders might have been relieved by the bank’s 45% increase in profits to $2.94 billion that it reported. But I’m sure more attention was on the new ANZ dividend. And it didn’t disappoint. ANZ told the markets that it would be paying a 70 cent per share interim dividend in July, up from the 25 cents per share payout shareholders got in September last year. I’m going to cheat a little with this one. That dividend, if annualised, would give ANZ shares a forward dividend yield of 5.04%, or 7.2% grossed-up with full franking. Just on the bank’s trailing dividend yield, ANZ is offering a grossed-up yield of 5.4%.

AGL Energy Limited (ASX: AGL)

The AGL share price has been a very sad story over the past few years. The energy giant is now at a share price not seen for almost two decades. Concerns over a volatile electricity market, the future of coal and ageing infrastructure assets have all contributed to this brutal sell-off of AGL. But falling share prices has boosted the dividend yield one can expect from AGL today. On current pricing, AGL shares offer a trailing dividend yield of 9.26%. Now the company could well cut this dividend in the future if its cash position continues to deteriorate. But management has committed to paying out essentially all of AGL’s earnings as dividends over the next couple of years. So it seems as though investors will continue to see hefty dividends going forward.

More reading

• ASX tech shares are in a world of pain. There might be more to come…
• ASX 200 up 0.45%: Macquarie full year results & REA Group Q3 update
• Brokers name 3 ASX shares to buy now
• Macquarie (ASX:MQG) share price on watch after posting $3bn profit and 86% dividend increase
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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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Funds management business, Magellan Financial Group Ltd (ASX: MFG) provided its monthly update on the group’s funds under management (FUM) at the end of April. Despite total funds increasing month over month, shares have moved to the downside.

At the time of writing, the Magellan share price is down 0.7% to $46.76 per share.

Which alone is fairly uninteresting. But the news is paired with nearly two weeks of on-market purchases by Magellan’s chair, chief investment officer, and lead portfolio manager – Hamish Douglass.  

Money where the mouth is

Over the last two weeks, Mr Douglass has loaded up on units in two of Magellan’s listed investment funds. These funds are the Magellan Global Fund (ASX: MGF) and the Magellan High Conviction Trust (ASX: MHH), both of which he manages.

It certainly instils confidence in investors when a portfolio manager is practising what they preach. Prior to the recent splurge, Mr Douglass was already a top shareholder in both funds.

So, just how much has he gobbled up? Well, I took the liberty of adding it all up. Across 10 days of purchasing, the respected investment manager has bought $3.19 million worth of units.

Additionally, the split between the funds was $1.72 million in the Global Fund and $1.47 million in the High Conviction Trust. Such numbers sound like big positions (they are), but it only represents roughly a 5% lift in his prior holding.

Buying while Magellan underperforms ASX

It seems Hamish Douglass is following the great Warren Buffett’s mantra: “Be fearful when others are greedy and be greedy when others are fearful.” The value of units in both funds has substantially underperformed the market over the last year.

The Magellan Global Fund has lost 6% over the past 12 months. A repercussion of half the fund’s portfolio held in cash and defensive equities. That positioning held back gains from its top holdings such as Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG), and Facebook Inc (NASDAQ: FB).

On the positive side, with the recent tech sell-off, Magellan is well-capitalised to load up on some growth companies at a discounted rate. This is exactly what other investors are doing, based on Magellan’s FUM for April.

Most of the $4.373 billion added in the last month went towards Magellan’s global equities. Nearly $3.6 billion went into the group’s global equity investments.

More reading

• 2 reliable ASX 200 shares offering good income
• Top brokers name 3 ASX shares to sell today
• 2 of the best ASX 200 blue chip shares to buy today
• Are ASX ETFs killing the managed fund?
• Could value finally be emerging for the embattled AMP (ASX:AMP) share price?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Mitchell Lawler owns shares of Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (C shares), Facebook, and Microsoft. The Motley Fool Australia has recommended Alphabet (C shares) and Facebook. 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 fund manager has pointed out a very common trap that investors fall into when evaluating shares to buy.

Price-to-earnings (PE) ratio is a metric regularly used by professional and retail investors to determine whether a stock is fairly priced.

The ratio has blown out in the past 10 to 12 years since the global financial crisis, especially among fast-growing growth stocks which have seen their share prices skyrocket.

A classic example of this is REA Group Limited (ASX: REA), which now has a PE ratio of almost 150 after its share price grew from less than $10 eleven years ago to now $156.70. 

Compare this to a value share such as Westpac Banking Corp (ASX: WBC), which is currently going for a PE ratio of around 21.

Over in the United States, electric car maker Tesla Inc (NASDAQ: TSLA) is trading with a PE ratio of more than 660.

So investors could understandably think REA and Tesla shares are very expensive. They would worry how long it would take for earnings to ‘catch up’ with the stock value.

Using PE ratios is ‘lazy’

Forager chief investment officer Steve Johnson warned that PE ratios can be hopelessly “flawed” when analysing rapidly growing companies.

“‘Rocket to the Moon’ trades at 40x earnings, therefore it is expensive: It’s a lazy conclusion (I’ve been guilty),” Johnson posted on Livewire.

“And it can be very wrong.”

Heuristics are mental shortcuts humans use to make judgment easier and less overwhelming. But they can lead us to the wrong answer.

“All of these heuristics, or rules of thumb, have assumptions behind them that need to be probed,” said Johnson.

“Under what scenario is 40 times earnings expensive? What would it take for 40 times earnings to be cheap?”

Businesses that grow for many years can make PE ratios look silly, Johnson added.

“When a company compounds earnings exponentially, the fair value can be a seemingly absurdly high multiple of early-year earnings.”

Companies that always looked expensive via PE ratio

Johnson took the example of Cochlear Limited (ASX: COH) — a company he dismissed in the past, based on a high PE ratio.

Twenty years ago, the medical device firm was trading around the $35 to $40 range, giving it a PE ratio of more than 30.

Cochlear has since grown 15% per annum, according to Johnson. The stock is going for $218.81 on Friday afternoon.

“With the benefit of hindsight, you could have paid 150 times earnings and have still generated a 10% annual return (including dividends).”

Fellow ASX healthcare darling CSL Limited (ASX: CSL) has gone through a similar journey, with investors ignoring it for decades with a perception that it’s ‘expensive’.

But then after persistent growth over many years, 2016 to 2017 saw a change in public opinion.

“Conversation shifted from ‘expensive’ to ‘you pay up for quality’; and more and more investors, both professional and retail, joined the fan club,” said FNArena editor Rudi Filapek-Vandyck last month.

“What helped growing enthusiasm was that CSL shares kept on keeping on. First past $100, then $200, and even $300 was not a bridge too far.”

More reading

• ASX 200 up 0.45%: Macquarie full year results & REA Group Q3 update
• REA (ASX:REA) share price on watch after third quarter results
• Appen (ASX:APX) share price: Is the disruptor becoming the disrupted?
• Macquarie (ASX:MQG) share price on watch after posting $3bn profit and 86% dividend increase
• 2 stellar ASX growth shares rated as buys

Tony Yoo owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and REA 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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ASX tech shares are in a world of pain today. We are seeing substantial sell-offs in most of the dominant tech shares on the market as we wade through Friday trading. Take Pro Medicus Limited (ASX: PME). Its shares are leading the S&P/ASX 200 Index (ASX: XJO) losses today, down a hefty 8.53% today to $42.03. Or Afterpay Ltd (ASX: APT), which is selling off with a 5.85% loss to $93.59 a share. Xero Limited (ASX: XRO) has lost 2.41% today, whilst WiseTech Global Ltd (ASX: WTC) is down 1.75%. Bucking the trend is Zip Co Ltd (AX: Z1P), whose shares are actually in the green today, up 1.4%. As well as Appen Ltd (ASX: APX), which is enjoying a hefty 5.3% gain today. Saying that Appen dipped to a multi-year low yesterday after a 20% sell-off, so that’s not as good as it seems for Appen shareholders.

So why such a brutal sell-off today for ASX tech shares?

Well, it appears to have been somewhat sparked by a savage sell-off overnight for certain tech shares on the US markets. Shopify Inc (NYSE: SHOP) was down 2.6% last night. Square Inc (NYSE: SQ) lost 3.4%, while Palantir Technologies Inc (NYSE: PLTR) lost 5%, and Coinbase Global Inc (NASDAQ: COIN) shed close to 6%.

So what’s going on here?

ASX tech shares in savage sell-off

Well, it could be a result of renewed inflation concerns. Inflation has been back at the centre of the investing world of late, given the robust economic recovery that many countries, including the United States and Australia, are currently enjoying. Even Warren Buffett mentioned inflation in his recent annual meeting for Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B).

Buffett didn’t mince words, saying: “We’re seeing very substantial inflation… It’s very interesting. We’re raising prices. People are raising prices to us and it’s being accepted”.

So why are these kinds of ASX tech shares feeling the pain today, while at the same time the ASX 200 is rising? Well, with inflation usually comes interest rate rises. And these companies are by far the most vulnerable to that paradigm, should it occur. That’s because they are still well within their ‘growth phases’. These tech companies typically have a lot of debt and very little present cash flow. That’s fine of course, they are investing for future growth and cash flow.

But right now, with interest rates to near-zero, debt is essentially free. If inflation comes and rates rise, it will no longer be free. That might be what has gotten the market worried about these ASX tech shares today.

More reading

• The Afterpay (ASX:APT) share price breaks below $100
• Why Adore Beauty, Appen, HUB24, & News Corp shares are charging higher
• ASX 200 up 0.45%: Macquarie full year results & REA Group Q3 update
• Brokers name 3 ASX shares to buy now
• Appen (ASX:APX) share price: Is the disruptor becoming the disrupted?

Sebastian Bowen owns shares of Coinbase Global, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd., Shopify, and Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd, Palantir Technologies Inc., WiseTech Global, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Pro Medicus Ltd. 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 Magnum Mining and Exploration Ltd. (ASX: MGU) share price is one of the better performers on the ASX today. This comes after the company announced a successful placement and released its corporate presentation.

During early afternoon trade, the mineral miner’s shares are swapping hands for 17.5 cents, up 12.9%.

Details of the placement

Investors are buying Magnum shares in droves following the company’s two positive releases.

In its first announcement, Magnum advised it has raised $6 million through a private placement. The offer received strong interest from institutional and sophisticated investors, in which the company was forced to scale back applications.

Subject to shareholder approval, the placement will issue 40 million new ordinary shares at a price of 15 cents apiece.

Magnum directors, Matt Latimore and Don Carroll also took part in the capital raise, both investing up to $250,000 each.

Mr Dano Chan, Magnum managing director commented on the placement, saying:

I am very happy with the results Magnum has achieved in this private placement. It is a very successful one that means we can accelerate our activities to become a cash flow generating mine quickly with Direct Shipping Ore whilst working on our growth opportunities through production of HBI and Pig Iron for the US market.

The company stated it is working with New York-based advisors, RK Equity Advisors LLC and Pickwick Capital Partners LLC. It hopes to undertake a cross-listing on the NASDAQ International sometime in the second-half of 2021. This will allow investors in the United States to easily transact with the company.

The sole lead manager of the placement, Shape Capital Pty Ltd, will receive a 6% capital raising fee of all funds. In addition, 2 tranches will also be allocated to Shape that includes the following:

• 6 million unlisted options with a 3-year expiry at a strike price of 20 cents;
• 9 million unlisted options with a 3-year expiry at a strike price of 20 cents, subject to shareholder approval.

What did Magnum highlight in its presentation?

In further news boosting Magnum shares, the company underscored its strategy in becoming a leading iron ore exporter and green steel producer.

It explained that its well-positioned to capture domestic United States market demand. Furthermore, Magnum will seek to export iron ore and hot briquetted iron (HBI) to Asia Pacific markets during Q4 FY21.

In the year ahead, the company is looking at capitalising on the long-term opportunity for green steel. Its Green Hydrogen plant is scheduled to be built, with the production of HBI and pig iron slated for Q2 FY22. A recent agreement with M Resources was also executed to market Magnum’s iron ore and green steel products.

About the Magnum share price

Over the last 12 months, the Magnum share price has gained over 330%, with year-to-date performance sitting above 230%. The company’s shares reached an all-time high of 21 cents late last month.

Based on the current share price, Magnum has a market capitalisation of roughly $74 million.

More reading

• Here’s why the Magnum (ASX:MGU) share price is rising 6% today
• Why the Magnum (ASX:MGU) share price soared 16% today

Motley Fool contributor Aaron Teboneras 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 Afterpay Ltd (ASX: APT) share price has sunk below the iconic $100 level, down 4.50% at the time of writing to $95. Its shares are down more than 25% in the last 14 trading sessions to levels not seen since November 2020.

Why is the Afterpay share price free falling?

Watching a growth powerhouse such as Afterpay shed 25% in value in a short span of time can be a tough pill to swallow. But the weakness in the Afterpay share price extends beyond its operational and financial performance. Here are some reasons that might explain why the market darling is facing a reality check. 

A move away from BNPL shares 

The Afterpay share price is swimming against the tide as the buy now, pay later (BNPL) sector comes under fire. 

Large-cap BNPL shares including Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL) have been able to hold up relatively well year-to-date and stay within positive territory. 

While small-cap players that lack an international footprint including Splitit Inc (ASX: SPT), Openpay Group Ltd (ASX: OPY), Humm Limited (ASX: HUM) and Laybuy Group Holdings Ltd (ASX: LBY) are all approaching one-year lows, or a decline of more than 50% since their February highs. 

The broader weakness across BNPL shares signals a move away from the sector, with the smaller, less established companies bearing the brute of the selloff. 

Sharp fall in the ASX tech index 

To add further insult to injury, the S&P/ASX200 Info Tech (INDEXASX: XIJ) is down some 12% since last Friday. Conversely, the S&P/ASX 200 Index (ASX: XJO) is up 0.80% over the same period. 

There appears to be a clear rotation from tech and growth-related sectors into value and cyclical sectors such as financials and materials. 

Foolish takeaway

Afterpay is still a growth powerhouse with triple-digit growth across its key North American and European regions. However, the recent weakness and rotation of our tech shares combined with the significant underperformance in BNPL shares could spell trouble for the market darling. 

More reading

• Brokers name 3 ASX shares to buy now
• Sezzle (ASX:SZL) share price sinks 5%: Time to buy?
• Is the Afterpay (ASX:APT) share price a buy at $100?
• Laybuy (ASX:LBY) share price slides despite ‘record Mania sales’
• Why the Afterpay (ASX:APT) share price is sliding 5%

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle Inc. 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 Kinetiko Energy Ltd (ASX: KKO) share price is rocketing today. At the time of writing, shares in the gas explorer, based in Australia and operating in South Africa, are trading for 13 cents – up 18.18%.

Today’s price rise comes as the company announces it has acquired 100% of a South African gas project.

Let’s take a closer look at today’s update.

What’s up with the Kinetiko share price?

In a statement to the ASX, Kinetiko says it has acquired “the remaining 51% of Afro Energy (Pty) Ltd, making [Kinetiko] the 100% owner of all South African exploration rights and production approvals.” The previous joint-owner was Badimo Gas.

Afro Energy was founded 6 years ago as a joint venture between Kinetiko and Badimo. Kinetiko claims the ownership model was affecting the efficiency of the business and “causing delays in exploration and development programs.” The company believes these inefficiencies will be eliminated by the takeover. Investors seemingly agree, judging by the huge jump in the Kinetiko share price today.

Kinetiko will issue Badimo 595 million shares in its company in exchange for its share in Afro Energy. The statement also says the sale is at a discount due to debt owed to Kinetiko. Badimo will own 46% of share capital in Kinetiko once the transaction is completed, according to the company.

The deal is conditional on the following:

• Afro Energy holding 100% of the exploration rights at the Amersfoort Project.
• Kinetiko receiving ministerial consent for the purchase, under South African law.
• Meeting additional regulatory approvals and receiving adequate tax advice.

Management commentary

Kinetiko executive chair Adam Sierakowski said:

This union between the historic joint venture partners represents the achievement of a major milestone for the de-risking of the development of what is potentially the largest on shore gas project in South Africa. Years of significant cooperation between the Badimo and Kinetiko teams have enabled this acquisition to be realised and will result in delivering substantial shareholder value.

Badimo Gas executive chair Don Ncube added:

We have worked for over a decade to explore and develop a significant onshore non-fracking gas project in the Mpumalanga, Orange Free State and Kwazulu-Natal regions of South Africa. The creation of a project which delivers abundant clean energy will greatly assist South Africans whose economy faces an energy crisis.

This merged entity will now be able to raise capital for accelerated exploration, production and downstream development in international markets. Such foreign direct investment was previously not available to Badimo and this merger facilitates and reinforces the foreign direct investment initiative of our President. It will provide new employment opportunities and development of technical skills in the regions where such gas production is established. It will also contribute to the reduction of harmful polluting carbon dioxide emissions.

Kinetiko share price snapshot

Over the past 12 months, the Kinetiko share price has increased by an amazing 233%. It reached a 5-year record of 16.5 cents in December last year.

Kinetiko has a market capitalisation of around $65 million.

More reading

• A2 Milk (ASX:A2M) share price falls as China suspends dialogue
• Why Adore Beauty, Appen, HUB24, & News Corp shares are charging higher
• Here’s why the Noxopharm (ASX:NOX) share price is flying 16% today
• The Cannindah (ASX:CAE) share price is up 6% today. Here’s why
• Here’s how much Macquarie’s (ASX:MQG) dividend is worth now

Motley Fool contributor Marc Sidarous 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 A2 Milk Company Ltd (ASX: A2M) share price is taking a hit on the ASX, down 3.10% at $7.20 at yesterday’s close and falling again in trade today. 

It’s the same story for other ASX companies with major trade deals in China as the People’s Republic suspends all talks with Australian trade and economic officials, including ministers.

Shares in Treasury Wine Estates Ltd (ASX: TWE), heavily engaged in trade with China, and others including Blackmores Limited (ASX: BKL), Bubs Australia Ltd (ASX: BUB) are all falling.

Let’s take a closer look at the developments and what they mean for the A2 milk share price, and others.

China suspends all activities under China-Australia Strategic Economic Dialogue

In a rare public statement, issued on Thursday, the Chinese National Development and Reform Commission said it would suspend indefinitely all activities under the China-Australia Strategic Economic Dialogue.

Citing Australia’s “Cold War mindset” and “ideological discrimination”, the Chinese agency took the dramatic step of ending all talks with Australian economic and trade ministries, effective immediately.

The move is the latest by China in the ongoing trade dispute between the East Asian giant and Australia. China has placed tariffs on Australian wine, barley, and beef, and blocked the importation of all Australian coal. Australia has passed foreign interference laws, blocked Chinese state-owned Huawei from accessing Australia’s 5G network, cancelled the Victorian government’s Belt and Road MoU with China and led the charge for an independent inquiry into the origins of the virus that causes COVID-19.

Companies like Treasury Wines have suffered greatly under the Chinese measures. While China has not targeted dairy, the A2 Milk share price has been suffering under Australia’s border closures. When the borders open, fears the China market may not be the same could be exacerbated by the recent developments.

The trade concerns have been simmering for some time now. As far back as May 2020, Australian ministers admitted their Chinese counterparts were not even returning their phone calls.

A2 Milk share price falls

So, could fears over Australia’s trade relations with China not returning to normal be impacting the A2 Milk share price?

A2 Milk’s premier sales product is its infant formula. In its half-year report for FY19 (pre-pandemic), the powdered product made up around 82% of all sales. Just under half of sales went directly to Asia. Sales in Australia and New Zealand were spurred on by the daigou market, which then on-sold the products to China.

A suspension of that trade and uncertainty over Sino-Australian relations is likely to take its toll on the A2 Milk share price, along with Blackmores, Bubs, and others highly exposed to the Chinese market.

But while China has put tariffs on many Australian industries, there is one sector it relies heavily upon and has not restricted: iron ore.

BHP Group Ltd (ASX: BHP), the largest iron ore exporter in Australia to China, is currently trading at $49.96, up 16% year-to-date.

At the time of writing, is A2 milk share price is trading at $7.13, down $39% since the start of 2021.

More reading

• Why ASX miners are cheering record high shipping costs
• Top brokers name 3 ASX shares to buy today
• The ASX 200 is within an arms reach of all-time record highs
• These ASX uranium shares are surging this year. Here’s why
• Is it time to give the A2 Milk (ASX:A2M) share price another chance?

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk, Blackmores Limited, and Treasury Wine Estates Limited. The Motley Fool Australia has recommended BUBS AUST FPO. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. At the time of writing, the benchmark index is currently up 0.3% to 7,082.5 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Adore Beauty Group Ltd (ASX: ABY)

The Adore Beauty share price is up over 8% to $4.02. Investors have been buying the online beauty retailer’s shares following the release of clarification on its active customer numbers. The Adore Beauty share price crashed lower on Thursday after it revealed that active customers were 687,000. This was down from 777,000 at the end of the first half. However, it turns out that this number is reflective of a 9-month period, rather than a 12-month period. Therefore, there was actually a 69% increase when compared to the 9 months to 31 March 2020.

Appen Ltd (ASX: APX)

The Appen share price has bounced back from yesterday’s selloff with a gain of 5% to $12.23. Mixed messages from a presentation on Thursday led to the Appen share price crashing 21% lower. This morning Bell Potter retained its hold rating but slashed its price target by 32% to $13.25. While this is a huge cut, it is still higher than where its shares trade today.

Hub24 Ltd (ASX: HUB)

The HUB24 share price is up 5% to $23.94. The wealth management platform provider’s shares came under pressure on Thursday amid concerns over AMP Limited (ASX: AMP) cutting the price of its platform. However, its shares are bouncing back today after Citi suggested that the action will not result in a price war. It also believes HUB24 will not lose market share to AMP due to the quality of its platform.

News Corp (ASX: NWS)

The News Corp share price is charging 4% higher to $32.02. This follows the release of a strong third quarter result this morning. According to the release, the media company has continued its impressive recovery during the quarter. For the three months ended 31 March, News Corp reported revenue growth of 3% and EBITDA growth of 23%. On the bottom line, the company posted a third quarter profit of $96 million. This compares to a loss of $1 billion a year earlier.

More reading

• ASX 200 up 0.45%: Macquarie full year results & REA Group Q3 update
• Brokers name 3 ASX shares to buy now
• News Corp (ASX:NWS) share price rises on latest results
• Why the Adore Beauty (ASX:ABY) share price is rebounding 7% today
• Appen (ASX:APX) share price: Is the disruptor becoming the disrupted?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and Hub24 Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Adore Beauty Group Limited. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Adore Beauty, Appen, HUB24, & News Corp shares are charging higher appeared first on The Motley Fool Australia.

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