The Prospa Group Ltd (ASX: PGL) share price has shot higher at the open on Friday. Shares in the Aussie financials group are up 7.06% to $0.91 per share after the company’s latest quarterly update.

Why is the Prospa share price shooting higher?

Prospa reported total originations returning to their pre-COVID levels faster than anticipated. That includes a third quarter (Q3 2021) origination of $121.0 million, marginally higher than the $122.2 million posted in the December quarter. Originations also jumped 20% compared to the December second quarter figures of $100.7 million.

Prospa reported “strong month on month growth” in originations with $30.8 million, $39.9 million and $50.3 million in January, February and March, respectively. 81% of originations were small business loans with a further 19% in its Line of Credit product.

The Prospa share price has shot higher on the news with investors bullish on the latest update. Prospa said its New Zealand business continues to perform well including 11% quarter on quarter originations growth.

Average Gross Loans increased to $354 million in the quarter with an annualised yield stable for the financial year to date of 32%. Total revenue before transactions costs edged 3% higher to $28.5 million, up from $27.7 million in the December quarter. The company said that signals a “post-COVID turnaround point” for the business.

Prospa CEO Greg Mosahl said, “Prospa has seen better than anticipated growth in originations, driven by stronger economic confidence and investment within the SME sector”. “It is particularly encouraging to see such high levels of activity in the March quarter considering this is typically a quieter period than the busy December holiday season”, he added.

The Prospa share price has left 7.06% at the time of writing to $0.91 per share. That means the company now boasts a $138.8 million market capitalisation after this morning’s move.

The All Ordinaries Index (ASX: XAO) has edged 0.2% lower this morning in a soft start to the trading day.

More reading

• ABS data shows Australians maintained wealth during COVID
• ASX stock of the day: AnteoTech (ASX:ADO) shares top ASX
• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high
• What happened with the Betmakers (ASX:BET) share price this week?
• Why the Viva Leisure (ASX:VVA) share price is one to watch

Motley Fool contributor Ken Hall 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 WiseTech Global Ltd (ASX: WTC) share price has been a strong performer in recent weeks.

Since this time in March, the logistics solutions provider’s shares have risen by a solid 12.5%.

This compares favourably to a 4.5% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the WiseTech Global share price on form?

The catalyst for the strong gain by the WiseTech Global share price appears to have been a broker note out of Macquarie Group Ltd (ASX: MQG) last month.

That note reveals that the broker upgraded its shares to an outperform rating with a $33.00 price target.

Macquarie made the move on the belief that the worst of the pandemic is now behind the company and upgraded its earnings forecasts to reflect this.

With the WiseTech Global share price fetching $30.75 today, this implies potential upside of approximately 7.5% over the next 12 months.

What are other brokers saying?

This morning, Bell Potter gave its verdict on the WiseTech Global share price.

According to the note, the broker has held firm with its hold rating and lifted its price target to $31.50.

Bell Potter commented: “We believe there is upside risk to WiseTech’s FY21 revenue and EBITDA guidance for two key reasons: 1. Global trade volumes continue to rebound strongly post the impacts of the US-China trade war in 1HFY20 and COVID in 2HFY20; and 2. The AUD/USD exchange rate has averaged 0.77 so far this half whereas the guidance assumes an average of 0.79 in 2HFY21.”

“We also note the continued lack of any M&A activity this half which supports a strong EBITDA margin in 2HFY21 similar or better than the EBITDA margin in 1HFY21,” it added.

In addition, the broker believes that the resumption of the share sell down by its CEO is actually a positive.

The broker explained: “We also believe the flagged recommencement of Richard White’s sell down implies the company is at least on track to achieve its guidance as we doubt the CEO would be selling if the result was not going to be good.”

However, due to its valuation, it isn’t enough for the broker to upgrade its rating to buy just yet.

More reading

• ASX 200 up 0.6%: Zip rises, Resolute rockets, tech shares storm higher
• Why ASX 200 tech shares are vital to manufacturers’ reshoring plans
• 5 things to watch on the ASX 200 on Friday
• Top brokers name 3 ASX shares to buy today

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 WiseTech Global. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Trading in the Vitalharvest Freehold Trust (ASX: VTH) share price has been paused after an update today on its takeover battle between Roc Partners and Macquarie Agricultural Funds Management (MAFM).

Shares in the Aussie real estate investment trust (REIT) closed at $1.215 per share on Thursday afternoon.

What’s with the Vitalharvest share price?

Vitalharvest is in the middle of a takeover tug of war between the two investment groups. This morning, the Aussie REIT received a further proposal from MAFM, the sixth of its kind. The Sixth MAFM Proposal is offering $1.24 per unit or $344.4 million for the Aussie agricultural REIT.

The latest MAFM update comes after Vitalharvest received an updated offer from Roc yesterday. The Fifth Roc offer valued Vitalharvest at $1.23 per unit or $342.55 million. That offer also changed the scheme implementation deed to reflect likely timing after 30 June 2021.

Both the latest Roc and MAFM proposals permit a 2.5 cents per unit distribution. That has been reflected in the Vitalharvest share price remaining below the headline offer price.

Vitalharvest requested a pause in trading before announcing the latest offer. Both Roc and MAFM appear willing to push their offers higher to acquire the agricultural REIT.

What does Vitalharvest do?

Vitalharvest is an Agricultural REIT that controls berry and citrus farms across Australia. The Aussie REIT has locations across New South Wales, South Australia and Tasmania that are currently leased to Costa Group Holdings Ltd (ASX: CGC).

Vitalharvest has been the target of the ongoing takeover war between the US-based Roc Partners and MAFM. The Vitalharvest share price has surged 24.5% higher since the start of the year on the back of the various proposals.

The Aussie REIT currently boasts a $222.9 million market capitalisation at a price to earnings (P/E) ratio of 18.2 times.

More reading

• Why the Vitalharvest (ASX:VTH) share price is on watch next week
• ASX 200 rises above 7,000, Resolute Mining soars, Galaxy jumps
• Why the Vitalharvest (ASX:VTH) share price is up 21% in 2021
• ASX 200 climbs 1%, Westpac rises, Western Areas jumps

Motley Fool contributor Ken Hall 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 CSL Limited (ASX: CSL) share price has been rebounding lately after hitting a 52-week low of $242.00 on 9 March. Since then, the company has gained 12.95%, with CSL shares currently trading at $273.35.

The global biotech has been busy producing the AstraZeneca COVID-19 vaccine while attempting to combat plasma collection concerns. Could this be the catalyst for its recent share price rise?

What’s driving the CSL share price higher?

Investors appear upbeat about the company’s progress to address its current issues as well as its attempts to open up new opportunities.

As announced on 14 April, CSL has been focused on increasing its plasma-protein production through its launch of a global challenge. The company is inviting members of the public to submit innovative ideas on how it can maximise its production of Human Immunoglobulins G (IgG). The person who wins will receive a $40,000 reward along with 1:1 mentoring sessions with CSL Behring.

CSL certainly appears to be thinking outside the box and actively pursuing creative programs to overcome its plasma concerns. This comes against the backdrop of a COVID-19-related reduction in the collection of plasma, which is vital for the company’s production of life-saving therapies.

In more recent news, the Australian Government’s push to locally manufacture mRNA coronavirus vaccines is gaining media attention. However, United States drug titan Pfizer has dashed any hopes of securing a licensing agreement to locally produce its COVID-19 vaccine here in Australia in the short term. The company said that it’s focused on existing vaccine manufacturing facilities across North America and Europe.

However, this hasn’t stopped the Victorian Government from pledging $50 million for a plan to create a local mRNA vaccine manufacturing ability in the future. This would protect national supply and eliminate shipment blocks such as the recent Italian fiasco. Developing such a capability could take less than a year, provided CSL was on board.

Currently, the Morrison government has placed an order for 40 million doses of the Pfizer vaccine which is expected to be fulfilled by the end of 2021. As the Pfizer vaccine trickles in, the doses will be distributed to people under the age of 50 years old. The AstraZeneca vaccine has now been allocated for use in patients over 50 years of age due to rare, blood-clotting side effects seen in some younger people.

So far, almost 1.8 million Australians have received their first jab of the COVID-19 vaccine. CSL is contracted to fill a government order of 50 million doses of the AstraZeneca vaccine. It hopes to achieve local production of 1 million vials per week.

Foolish takeaway

It’s been an eventful 12 months for the CSL share price, which has moved in peaks and troughs across the period. The company’s shares rose to a high of $322.75 last April, before falling to 2019 lows of $242.00 this year.

Year-to-date performance has seen CSL shares register a drop of just 4% due to an uptick in investor sentiment. Over a 12 month period, its shares have slightly improved to record a fall of around 11%.

As the ASX’s third-largest company by market capitalisation, CSL is worth $123.22 billion.

More reading

• Wesfarmers’ (ASX:WES) Bunnings open to hosting COVID vaccine hubs
• AUSSIE-FIRST: How to buy a fraction of an ASX share
• Aussie dollar shoots higher! Here are some ASX winners
• CSL (ASX:CSL) share price wobbles on plasma and vaccine update
• Why the CSL (ASX:CSL) share price might be headed for more trouble

Aaron Teboneras owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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.

The post Why the CSL (ASX:CSL) share price has rebounded 13% since March appeared first on The Motley Fool Australia.

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Australia’s top brokers have been busy adjusting their estimates and recommendations once again. This has led to the release of a number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of UBS, its analysts have retained their buy rating and NZ$16.00 (A$14.86) on this fresh milk and infant formula company’s shares. The broker acknowledges that the short term could be difficult and its earnings are at risk from weakness in the daigou channel. However, it believes longer term things are more positive thanks to a recovery in indirect infant formula sales and market share gains in the Chinese offline retail channel. The a2 Milk share price is fetching $7.39 on Friday.

Audinate Group Ltd (ASX: AD8)

Analysts at Morgan Stanley have retained their overweight rating and $10.00 price target on this audio networking solutions provider’s shares. This follows the release of Audinate’s solid third quarter update this week. According to the note, the broker was pleased with the company’s performance during the quarter. It notes that Audinate’s revenue of US$7 million was another quarterly record. Looking ahead, the broker believes the company is well-placed to benefit from a rebound in demand from the higher education and corporate markets. The Audinate share price is trading at $8.15 today.

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

A note out of Morgans reveals that its analysts have retained their add rating and lifted their price target on this banking giant’s shares to $33.50. According to the note, the broker believes that the upcoming updates out of the banks have the potential to surprise to the upside. It feels this could lead to increasing confidence in the sector, potentially driving the shares of the big four higher. Furthermore, ANZ is now the broker’s top pick in the sector. This follows upgrades to its earnings estimates to account for lower credit impairment charges. The ANZ share price is trading at $28.61 this morning.

More reading

• These are the latest ASX shares to be downgraded by brokers today
• Top brokers name 3 ASX shares to sell today
• Why the A2 Milk (ASX:A2M) share price hit a multi-year low today
• Audinate (ASX:AD8) share price climbs on Q3 update
• 2 highly rated ASX dividend shares with generous yields

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 AUDINATEGL FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended AUDINATEGL 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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Many ASX shares have reported quarterly updates this week. Broadly speaking, an initial read of these results might tick all the boxes with solid growth across key performance metrics.

However, the market response has appeared very critical of slight headwinds contained in the updates. As a result, some of these beloved ASX growth shares have experienced sharp selloffs this week. 

Let’s take a look at 3 of them.

ASX shares sent into free-fall this week

Redbubble Ltd (ASX: RBL) 

The Redbubble share price took a 23% tumble to $4.24 on Thursday after a seemingly positive third-quarter update. 

The update represents a classic case of a richly valued growth story delivering a reasonable result with a slight tweak of plans. The company said that its earnings before interest, tax, depreciation, and amortisation (EBITDA) margins were going to take a small hit from 9.5% to mid-single digits. It was also going to ramp up marketing and headcount to drive customer acquisition and awareness. 

The increase in costs and lower margins will likely mean a reduction in earnings forecasts, and we all know what happens to growth stories when earnings recede. 

In an attempt to restore near-term confidence, the update highlighted an aspiration goal to more than double revenues and improve EBITDA margins to 10-15% by CY24. Despite a strong aspiration goal, the market was near-sighted and concerned with the potential damage short term earnings might take. 

Lynas Rare Earths Ltd (ASX: LYC) 

The Lynas share price has taken a similar downturn, diving 16% in the past three trading sessions. Again, the company delivered a seemingly positive March quarter update with stronger operational and financial metrics across the board. 

However, the update also observed that Chinese rare earth producers were planning to increase production in response to robust demand. And among them was Northern Rare Earth, a mining giant that accounts for some 60% of China’s total rare earth production and plans to double production within the next three years. 

China accounts for more than half the world’s rare earth output, so for a company of that size to double production within three years, it could have a significant negative impact on rare earth prices. 

From what looked like blue skies ahead, the market now has to digest a potential influx of Chinese material in the near term. 

Splitit Ltd (ASX: SPT) 

The Splitit share price has dropped 10% this week, down to a 16-month low of 79.5 cents. The company delivered a positive first-quarter update that revealed classic triple-digit buy now pay, later growth (on the prior corresponding period) across key metrics such as revenue and merchant sales volume. However, from a quarter-on-quarter perspective, growth was actually slowing down. 

While seasonality could be a contributing factor, BNPL majors Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) both reported continued momentum across key metrics. 

More reading

• ASX 200 recovers, Redbubble sinks, Megaport jumps
• 2 exciting e-commerce ASX shares growing rapidly
• Redbubble (ASX:RBL) share price crashes 20% on increased investments
• Why AMP, Challenger, Pilbara Minerals, & Redbubble shares are tumbling lower
• Splitit (ASX:SPT) share price edges higher on new product launch

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 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 Antisense Therapeutics Limited (ASX: ANP) share price is surging today after the company released a positive report regarding Phase II trials for one of its drugs with the United States Food and Drug Administration (FDA).

The Antisense share price is up 7.5% at the time of writing, trading at 21.5 cents per share.

Antisense is an Australian publicly listed biotechnology company and drug manufacturer, developing and commercialising antisense pharmaceuticals for large unmet markets in rare diseases. 

Its products are in-licensed from a US-listed company, Ionis Pharmaceuticals, an established leader in antisense drug development. 

In medical parlance, antisense refers to drugs that inhibit the RNA strand of human DNA, preventing human genes from undertaking the purpose that they are genetically programmed to perform.

This is a particularly effective way of combatting serious genetic disorders, and in Antisense Therapeutics’ case, it’s currently tackling muscular dystrophy.

Antisense’s FDA update

Today, Antisense advised that its guidance meeting with the FDA was held to discuss the further development of the company’s trial drug, called ATL1102, in preventing Duchenne muscular dystrophy (DMD), in the US.

Antisense expects to provide further details about the meeting to its investors, after it receives the official minutes of the meeting from the FDA in late May 2021.

Antisense said the meeting was constructive and provided clarification on a path towards initiating a Phase IIb/III study in the US. Non-clinical requirements for trialling its drug is to be “further reviewed and agreed with the FDA to assess if and how they may impact on the timing of clinical study initiation”.

The feedback will be reviewed by Antisense’s internal team and incorporated into its global clinical development and commercialisation plans.

What management said

Antisense Therapeutics CEO Mark Diamond said Antisense was already acting on the meeting.

Based on the guidance meeting with the FDA, together with prior feedback from EMA and world-leading DMD experts, we are reassured that the data from our Phase II study is encouraging and that it is reasonable and appropriate to advance the program towards potentially pivotal clinical studies.

It is our goal to bring this medication to as many DMD patients worldwide as possible.

Antisense share price snapshot

The Antisense share price has been rising across the board, up 65% so far in 2021 and 347% higher over the past 12 months.

More reading

• Pentanet (ASX:5GG) share price jumps after news of 5G deal
• Why the Douugh (ASX:DOU) share price will be in the spotlight
• What Biden’s capital gains tax changes could mean for the ASX 200
• Oil Search (ASX:OSH) share price lower on first quarter update
• AMP (ASX:AMP) share price charges higher on demerger plans

Motley Fool contributor Lucas Radbourne-Pugh 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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Pentanet Ltd (ASX: 5GG) shares are on the move today following news the company has secured an exclusive licence to provide high band 5G services. In early trade, the Pentanet share price jumped almost 6% to 93 cents before partially retreating. At the time of writing, the company’s shares are trading at 90 cents, up 2.27% on yesterday’s close.

According to the company, for the next 15 years, Pentanet can exclusively offer its Western Australian customers access to high-performance transmission “at the forefront of the delivery of millimetre wave fifth generation (5G) wireless broadband services”.

Let’s take a closer look at what’s soon to be Pentanet’s newest offering.

A “once in a generation” opportunity for Pentanet

The Pentanet share price is responding positively after the Perth-based telco announced it has been awarded an exclusive license to transmit 5G services on the 26 GHz range. It says the licence will allow it to provide multi-gigabit broadband to any customer in its service area.

Pentanet’s managing director Stephen Cornish said securing the exclusive licence is a “once in a generation” opportunity. 

According to Pentanet’s release, the 26GHz band is the best way to transmit 5G.

The company can now provide broadband to customers within 5 kilometres of any 5G tower, rather than the 250 metres it was previously banking on. Customers will be able to access Pentanet’s 5G service in Perth, Mandurah, Bunbury and Margaret River.

For 15 years of exclusive use of the technology, Pentanet will pay $8 million dollars. It will do so in annual instalments over 5 years. $1.6 million will be paid this financial year out of the company’s existing cash reserves.

The telco won the licence to use the high-band spectrum in an auction conducted by the Australian Communications and Media Authority.

Commentary from management

Cornish commented that the 5G spectrum will speed up the deployment of its Terragraph service and extend its network coverage. He said:

Having access to our own 5G licensed spectrum elevates us to a new height as a telecommunications carrier. We went into the auction unsure if we would be able to compete with the larger players, but our team was able to strategically secure a meaningful allocation at a price point that made sense for our use-case.

Pentanet share price snapshot

Pentanet floated on the ASX in January of this year and, since then, its share price has been performing well.

Currently, the Pentanet share price is trading around 50% higher than the day of its initial public offering.

Pentanet has a market capitalisation of around $154 million, with approximately 263 million shares outstanding.

More reading

• Why this ASX share bull market could run for longer
• What’s happening with the Pentanet (ASX:5GG) share price today?
• 3 top ASX small cap shares that delivered for this fund’s portfolio

Motley Fool contributor Brooke Cooper 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 Douugh Ltd (ASX: DOU) share price will be in the spotlight during morning trade. This comes after the fintech company launched another feature on its wellness app.

At yesterday’s market close, the Douugh shares ended the day at 16.5 cents.

Let’s take a closer look at what the company announced.

Douugh enhances app offering

Douugh shares will be on the radar today after the company launched another feature to reduce customer wait times.

According to its release, Douugh advised it has rolled out an ‘instant bank account’ funding feature in partnership with Stripe.

Founded in 2010, Stripe is an Irish-American financial service and Software-as-a-Service (SaaS) company. The group specialises in online payment processing platforms, allowing businesses to send and receive payments online.

The new feature enables customers to connect their pre-existing bank Mastercard and Visa debit cards to the Douugh platform. In turn, customers can access and top up their Douugh bank account instantly. This is opposed to waiting for 3 days for the funds to settle. To access this feature, however, Douugh is charging a 3% fee to customers for the convivence.

It’s no secret the company is making strides to encourage customers to pay their salary into their Douugh bank account. It believes by making continuous improvements to its app, customers will make the switch, unlocking the full benefits.

Management commentary

Stripe head of Americas, revenue and growth, Jeanne DeWitt Grosser commented:

We are delighted to be partnering with Douugh, helping them fulfill their mission to foster financial wellness. This partnership allows Douugh customers to more quickly begin their journey of better managing and growing their finances by cutting unnecessary wait times.

Douugh founder and CEO, Andy Taylor went on to add:

This initiative, alongside the recent release of instant push provisioning of the virtual Douugh Mastercard debit card straight into Apple Wallet, ensures we can minimise the time it takes a customer to become setup on the platform and extract the benefits.

About the Douugh share price

Since its listing in early October, the Douugh share price has exploded to almost 900% higher. The company’s shares reached a high of 49 cents in November, before falling back down after some profit-taking.

On valuation grounds, Douugh commands a market capitalisation of around $60 million, with 367 million shares on issue.

More reading

• Why the Douugh (ASX:DOU) share price is up 6% today
• Zip (ASX:Z1P) eyes potential stock and crypto trading services
• Douugh (ASX:DOU) share price races 6% on performance update
• The Douugh (ASX:DOU) share price is up 12% this morning. Here’s why
• Douugh (ASX:DOU) share price dips on remedial action completion

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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What could Joe Biden’s latest proposal mean for the S&P/ASX 200 Index (ASX: XJO)? Bloomberg is reporting US President Joe Biden wants to practically double the top capital gains tax rate in the country from its current rate of 20% to 39.6%. With an additional 3.8% Obamacare surcharge, the top rate would be 43.4%.

New York and California residents who earn over US$1 million in capital gains could see rates as high as 52.2% and 56.7%, respectively.

The news sent US stocks tumbling overnight, Australian time. The S&P 500 Index (SP: .INX) ended the day 0.9% lower. The index was relatively stable in morning trade before seeing a precipitous fall in the afternoon after the tax news became public.

Many are sceptical the changes can pass the US Congress, even though Joe Biden’s Democrats control both chambers. A hedge fund manager told Reuters the index would have fallen 2,000 points if investors believed it could pass.

For owners of ASX 200 shares, capital gains are treated as taxable income in Australia. The exception to this is that for any shares owned for at least a year, the net gain is discounted by half for individuals and a third for self-managed super funds. There is no discount for companies. As well, shareholders may be entitled to a franking credit refund if they were paid any fully franked dividends, depending on individual circumstances.

What, if anything, does The President’s latest proposal, and the reaction to it from US investors, mean for the ASX 200?

Tax changes in the US and the ASX 200

Motley Fool Australia’s own chief investment officer, Scott Phillips, says there may be some pain for shareholders in the short term.

“I think it’s common for the ASX to follow US markets, almost slavishly,” Phillips said. “The old saying is when America sneezes, Australia catches a cold.”

Phillips also pointed out there are a few ASX 200 companies that have operations and investments in the US. As well, he says large US investors hold shares in Australia and may offload them with their US stock. When there are more shares being sold than bought, it brings down prices. In economics, this is called the law of supply and demand.

In the long-term, however, Scott Phillips says ASX shareholders should have little to worry about over last night’s US market sell-off.

“There is no real fundamental basis [for the capital gains tax changes] to impact Australian equity markets.”

“There is little chance of these changes having a long-term impact [on ASX 200 shares],” he added.

Mr Phillips did add that any changes to the corporate tax rate in the US could be “more impactful” to Australian shareholders than possible changes to US capital gains tax.

President Biden and Senate Democrats have raised the idea of increasing the corporate tax rate from its current 21%. The floated tax rate of anywhere between 25-28% would still be lower than the 35% corporate rate that was in place in 2017.

More generally, Phillip’s believes any changes to capital gains taxes shouldn’t be a hindrance to investing in shares.

“[Capital gains] is taxed on profits after they’re realised. You’re still going to make a profit. You may not like paying the tax, but it’s not going to stop people from investing.”

More reading

• 2 strong ASX 200 shares offering good income
• 5 things to watch on the ASX 200 on Friday
• ASX 200 recovers, Redbubble sinks, Megaport jumps
• Wesfarmers’ (ASX:WES) Bunnings open to hosting COVID vaccine hubs
• ASX 200 up 0.2%: AMP sinks, Redbubble crashes, Megaport jumps

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.

The post What Biden’s capital gains tax changes could mean for the ASX 200 appeared first on The Motley Fool Australia.

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