If you’re aiming to build a balanced portfolio, having a few blue chip ASX shares in there could be a smart move.

But which blue chip ASX 200 shares should you buy? Two that are highly rated are listed below:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share to look at is biotechnology giant CSL.

CSL has a focus on rare and serious diseases through its CSL Behring business and influenza vaccines through its Seqirus business.

CSL Behring has a wide range of innovative therapies. These are used to treat immunodeficiencies, bleeding disorders, hereditary angioedema, Alpha 1 antitrypsin deficiency, and neurological disorders. Whereas Seqirus has a broad range of flu products meeting the needs of different populations around the world.

While COVID-19 has impacted its plasma collections and could weigh on its margins in the near term, the long term looks extremely positive. Especially given its burgeoning R&D pipeline and the increasing demand for plasma-based products.

This morning, analysts at Credit Suisse upgraded CSL’s shares to an outperform rating with a $315.00 price target.

Ramsay Health Care Limited (ASX: RHC)

Another ASX 200 blue chip share to look at is Ramsay Health Care. It is a leading private healthcare company with operations across the world.

While the pandemic hit Ramsay hard and led to a significant drop in elective surgeries, trading conditions have improved greatly in recent months. As a result, Ramsay looks well-placed to benefit from a backlog in surgeries in the near term and increased demand for healthcare services over the long term. 

Macquarie is positive on the company. Earlier this week its analysts retained their outperform rating and $75.00 price target on Ramsay’s shares.

The broker has been pleased with recent activity trends and feels the company is well-positioned for growth over the long term.

More reading

• Top brokers name 3 ASX shares to buy today
• Down 18%: Is the CSL (ASX:CSL) share price a buy?
• 8 ASX 200 shares rated as ‘outperform’ by brokers
• Is now the time to invest into the CSL (ASX:CSL) share price?
• How to counter the ASX 200’s Achilles heel

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 CSL Ltd. The Motley Fool Australia has recommended Ramsay Health Care 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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Mesoblast Limited (ASX: MSB) shares were dropping again today and, with no news from the company, the question is why? By the market’s close, the Mesoblast share price was trading at $2.39, down 3.24% from yesterday’s close. This compares to the S&P/ASX 200 Index (ASX: XJO), which was up 0.5% today.

The stem cell focused biotech company is listed on both the ASX and Nasdaq and its ASX share price has fallen by 51.32% over the last 6 months.

Let’s look further into what’s been happening for Mesoblast.

Recent share price fluctuations

The Mesoblast share price had an eventful 2020, which included steep falls in December after trials for some of the company’s new products delivered disappointing results.

On 15 December, the company announced that while its phase 3 trial of REVASCOR for advanced chronic heart failure showed good results, it did not achieve the objectives of the trial. This less than pleasing news saw Mesoblast shares plummet by more than 45% in one day.

Then, only days later, Mesoblast announced its randomised controlled trial of remestemcel-L in ventilator-dependent patients with moderate to severe acute respiratory distress syndrome due to COVID-19 had also not achieved its objectives. Remestemcel-L had not proven to be as effective in preventing death as it was predicted to be.

The company stated the failed remestemcel-L trial was due to improvements in other COVID-19 treatments having been made in the time between gathering the initial pilot data and the execution of the trial. Though, this reasoning didn’t save the company’s share price which fell another 10% in the days following the news.

Compared to 2020, Mesoblast shares appeared to have been pushing through 2021 comparatively stably and even slowly gaining. That was, until the beginning of March.

On 2 March, Mesoblast exited a trading halt by announcing a US$110 million private placement led by a strategic investor group. By 9 March, the Mesoblast share price had plunged nearly 6%.

The company’s shares have since increased slightly but are still 2.85% lower than their final day of trading in February.

Mesoblast is a rare dual listed company

A company gains several benefits from being listed on two separate global exchanges. These include access to greater capital, additional liquidity and more diverse trading hours.

Because Mesoblast’s shares are dual-listed on the ASX and Nasdaq, the company can theoretically action more capital raises with fewer negative consequences, therefore having greater access to additional cash when needed.

Up and coming products

Mesoblast currently has three products at phase 3 trial stage.

They are:

• Remestemcel-L for the treatment of steroid-refractory acute graft versus host disease and for acute respiratory distress syndrome as a result of COVID-19.
• REVASCOR for advanced chronic heart failure.
• MPC-06-ID for lower back pain due to degenerative disc disease.

Mesoblast share price snapshot

Despite a number of significant hits to the Mesoblast share price, it is still trading above its 2021 opening price, currently by around 6%.

The company’s shares are also up an impressive 101% over the last 12 months. So, investors who got in before Mesoblast’s rollercoaster will still be happy with their investment.

Mesoblast has a market capitalisation of $1.6 billion, with approximately 648 million shares outstanding.

More reading

• Piedmont Lithium (ASX:PLL) successfully completes US public offering
• What’s weighing on the Mesoblast (ASX:MSB) share price lately?
• These are the 10 most shorted shares on the ASX
• ASX 200 up 0.3%: Mesoblast raises US$110 million, tech shares rebound
• Here’s why the Mesoblast (ASX:MSB) share price is tumbling lower today

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 S&P/ASX 200 Index (ASX: XJO) ended the day higher by

It was another breathtaking day for the Airtasker Ltd (ASX: ART) share price as it jumped another 66% today.

Here are some of the other highlights on the ASX:

Westpac Banking Corp (ASX: WBC)

Westpac announced today that it has commissioned two independent reports about its risk governance and liquidity risk management.

The first report will assess Westpac New Zealand’s governance process and practices applied by the board and executive management.

The other report relates to the effectiveness of the actions that Westpac New Zealand has taken to improve the management of liquidity risk and the associated risk culture, following previously identified breaches of the Reserve Bank of New Zealand’s (RBNZ) liquidity policy and potential non-compliance identified through the RBNZ’s liquidity thematic review.

RBNZ will require Westpac New Zealand to hold additional liquid assets until the RBNZ is satisfied that the previously required remediation work has been effective. The RBNZ said that it is “confident that Westpac New Zealand’s current liquidity and funding positions are sound, and that the bank is well capitalised.”

Westpac New Zealand has acknowledged the importance of liquidity and risk governance obligations and will support the independent reviewers to provide the necessary reports to the RBNZ.

The New Zealand bank said that it has taken a number of steps to improve risk governance but recognises more work is required, and supports the additional oversight that the independent reports will provide.

Separately, Westpac then announced that it is considering whether a demerger of its New Zealand business would be in the best interests of shareholders. It’s only in the very early stages of this assessment and no decisions have been made.

The ASX 200 bank said that its New Zealand division is an important part of the business and has been for over 160 years. It said the business continues to perform well with a strong position in retail and commercial banking.

However, the changing capital requirements in New Zealand and the RBNZ requirement to structurally separate the New Zealand business from Australian operations means that the bank needs to assess the best structure for its New Zealand business.

The Westpac share price dropped around 1% today.

Premier Investments Limited (ASX: PMV)

The Premier Investments share price went up more than 2% in reaction to its FY21 half-year result.

Premier said that its retail division delivered 7.2% growth of sales to $784.6 million, with like for like sales going up 18.2%.

It achieved online sales growth of 61.3% to $156.7 million, which contributed 20% of total online sales.

The Premier retail earnings before interest and tax (EBIT) rose 88.5% to $237.8 million with the EBIT margin rising 1,308 basis points. Net profit after tax (NPAT) grew 88.9% to $188.2 million.

The ASX 200 business was also able to reach agreements with landlords that reduced the rent to 12.7% of sales, a reduction of 318 basis points year on year.

The board decided to maintain the interim dividend at 34 cents per share.

In the first seven weeks of the second half of FY21, global like for like sales were up 32.1% and the gross profit margin increased by 379 basis points year on year.

Computershare Ltd (ASX: CPU)

Computershare announced a substantial acquisition today. It’s buying the assets of Wells Fargo Corporate Trust Services (CTS), a leading US based provider of trust and agency services to government and corporate clients.

The ASX 200 company is doing a capital raising of $835 million to fund the US$750 million acquisition – the rest will be paid for with debt.

Computershare said that CTS is currently appointed to administer corporate trust services to around 26,000 mandates across a range of securities and bond issuances.

The ASX business said that the acquisition is a highly strategic fit with its existing Canadian and US corporate trust operations and its growth strategy. The combination is expected to accelerate Computershare’s position in the US corporate trust market to a top four position.

Client deposit balances and money market fund balances of over US$60 billion will also transfer across as part of the acquisition.

More reading

• How is Australia’s jobs rebound affecting ASX shares?
• Westpac (ASX:WBC) considering NZ business demerger
• Is CBA (ASX:CBA) the best bank for dividends in 2021
• Genex (ASX:GNX) share price frozen on hydro project fund raising
• The ANZ (ASX:ANZ) share price is Macquarie’s top big four bank pick

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments 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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The Australian economic recovery to the COVID-19 pandemic recession has been swift and sudden. Australia’s jobs rebound has led to the fastest six months of economic expansion ever recorded, according to ABS data. This, in turn, has positively affected growth on the ASX.

Seek data showed that new job advertisements are now back to pre-COVID-19 levels, with some analysts predicting the job market is about to hit fever-pitch. This could also lead to wage growth – which has been meagre for a long time now – as Australia’s lack of immigration levels create extra demand for Australian workers.

ANZ economist Felicity Emmett told the ABC that “the unemployment rate has dropped like a stone. We weren’t expecting the unemployment rate to get to 5.8 per cent until the end of the year.”

While Commonwealth Bank economist Kristina Clifton said “The jobs lost in the early months of the coronavirus pandemic have now been fully replaced. The next test for the labour market will be the expiry of the JobKeeper program.”

How is the jobs rebound affecting ASX shares?

The ASX didn’t respond exactly like you may have expected, actually falling when the ABS released its most recent jobs data report. But overall, the proof is its long-term results. The S&P/ASX 200 Index (ASX: XJO)has gained 43% over the past 12 months, rising in value from 4,832 points in May 2020 to 6,780 today.

The S&P/All Ordinaries Index (ASX: XAO) is up 47% over the past 12 months, and 2% year-to-date. Its rise since March last year has been equally impressive, from 4834 points to today’s value over 7,000. 

The S&P/ASX All Technology Index (ASX: XTX) has been far-and-away the strongest performer of the three, adding 117% over the past 12 months. This index has doubled in value since the COVID-19 pandemic first hit Australia around March last year, rising from 1,300 to more than 2,700 today.

What will JobKeeper’s end mean for ASX share prices?

JobKeeper is scheduled to end on 28 March. While specific industries, like aviation, will be catered for with prolonged wage subsidies, many others will not. As many as 100,000 workers may find themselves unemployed at the end of this month, which could push Australia’s unemployment rate back up above 6%.

The effect this will have on ASX share prices is currently unclear, but many economists are still holding their breath as to the outcome this may have on the ASX’s strong recent gains.

More reading

• ASX 200 rises, Airtasker soars again, Westpac considers NZ
• Genex (ASX:GNX) share price frozen on hydro project fund raising
• ASX 200 up 0.45%: Premier Investments results, Xero acquisition, Computershare halted
• 2 leading ASX 200 dividend shares to buy for income
• 5 things to watch on the ASX 200 on Wednesday

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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With rising inflation and the accompanying rising interest rates among the top concerns for S&P/ASX 200 Index (ASX: XJO) investors, we cast our gaze to the latest out of the United States.

Yesterday, overnight Aussie time, US Federal Reserve Chairman Jerome Powell may have blinked first in the central bank’s staring contest with inflation.

Addressing the House Financial Services Committee, Powell said that with very low inflation figures last year and plenty of pent up consumer demand, the Fed does expect inflation to tick up.

He calmed the markets by reiterating that, “Our best view is that the effect on inflation will be neither particularly large nor persistent… We have been living in a world of strong disinflationary pressures, around the world really, for a quarter of a century. We don’t think a one-time surge in spending leading to temporary price increases would disrupt that.”

However, the blink in question came when Powell stated, “We do expect that inflation will move up over the course of this year.”

One of the leading gauges of investors’ inflation expectations is the US 10-year Treasury yield. And following on US President Joe Biden’s US$1.9 trillion (AU$2.5 trillion) COVID relief package, yields spiked to 1.69%, the highest since before the pandemic struck.

Of potential concern now is the pending US Federal budget. Estimated at a whopping US$3 trillion or more, Biden’s spending plans could see bond yields spike far higher.

Here’s why that’s important for ASX 200 investors.

What happens in the US doesn’t stay in the US

Unlike the old adage, “What happens in Vegas stays in Vegas”, what happens in the US doesn’t stay in the US.

If inflation begins to run higher in the United States, it’s a good bet inflation in Australia will too.

The world today is more deeply economically connected than ever before. And the world’s leading central banks and developed nations have taken similar approaches to combatting the economic slowdown brought on by the global pandemic.

Namely huge fiscal spending packages on the government side. And record levels of quantitative easing (QE) along with record low interest rates from the central banks.

Australia’s government economic support packages and the Reserve Bank of Australia’s response certainly fall in line with that approach.

And as an added inflation concern Down Under, the flooding in New South Wales and Queensland may well put significant upward pressure on food prices over the coming months.

How do Australian government bond yields impact share prices?

Mark Draper is a financial adviser with GEM Capital Financial Advice. Writing in the Australian Financial Review, Draper said:

Since 1994, investors have enjoyed the tailwind of falling bond rates. But the tide has turned since the last quarter of 2020, when Australian 10-year rates rose from about 0.7 per cent to around 1.7 per cent. That is a 140 per cent increase…

In valuation terms, Arvid Streimann, head of macro at fund manager Magellan Financial Group, says that a 1 per cent increase in the 10-year bond interest rate generally results in a 9 per cent decrease in the capital value of 10-year bonds and about 15 per cent for equities.

Have another read of Streimann’s figures. A mere 1% hike in the 10-year bond yield could see the ASX 200 fall by 15%.

Now not all shares are created equally.

Growth shares have done exceptionally well since the lows of last March, propelled higher by a tide of easy money. Value shares, until more recently, have trailed.

So how should share investors position themselves if inflation and bond yields indeed keep heading higher this year?

JPMorgan Asset Management on the reflation trade

While some analysts point to commodity shares as a good inflation hedge, Thushka Maharaj, global multi-asset strategist at JPMorgan Asset Management, has a different view.

Maharaj says (as quoted by Bloomberg):

Commodities tend to be volatile and do not necessarily offer good inflation protection. As for index-linked bonds, our study showed their long duration outweighs the pure inflation compensation this asset offers. It’s not the top asset on our list of inflation hedging.

If inflation were to rise and continue rising – and we think that’s a low probability event ­– equity sectors that are geared toward the recovery provide a good investment profile. We also like real assets and the dollar.

We are expecting volatility in inflation, especially at the headline level over the next few months, mostly over 2Q, driven by base effects, excess demand in the short term, and disruption in supply chains caused by a long period of lockdown. We see this as transitory and expect the central banks to look through the near-term volatility.

ASX 200 shares geared toward the recovery

The ASX 200 shares that were most beaten down by the onset of COVID-19 and the ensuing lockdowns and social distancing are largely still trading well below their pre-pandemic share prices.

There are a number of these to cover, but for the purposes of this article we’ll stick to 2 leading ASX 200 travel shares.

The Qantas Airways Ltd (ASX: QAN) share price was absolutely ravaged by the virtual shutdown of international and interstate travel. Shares fell 68% over a period of 3 months, bottoming out in on 20 March. Qantas shares have soared 118% since that low, but are still 30% below their 20 December 2019 levels. At the current share price Qantas has a market cap of $9.8 billion and pays a dividend yield of 3.1%, fully franked.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price was another ASX 200 member to get smashed when travellers were forced to stay home. Shares in the iconic airport fell 47% in less than 3 months. While the Sydney Airport share price has gained 25% from the 20 March lows, it’s still 37% below its 27 December 2019 levels. Sydney Airport has a market cap of $16.3 billion and pays a dividend yield of 3.4%, unfranked.

More reading

• How are ASX 200 shares faring in the carbon revolution?
• Will the Qantas (ASX:QAN) share price soar 20% higher from here?
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 dips, travel shares drop, Pushpay soars
• Why BrainChip, Crown, Qantas, & Quickstep shares are tumbling lower

Motley Fool contributor Bernd Struben 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 Did Powell just blink first in the Fed’s staring contest with inflation? appeared first on The Motley Fool Australia.

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A carbon revolution is underway, but are S&P/ASX 200 Index (ASX: XJO) companies doing enough? A report from investor group Climate Action 100+ has assessed the environmental initiatives of 11 Australian companies it believes are important to a global net-zero emissions transition.

Climate Action 100+ is made up of more than 570 investors who, when combined, manage more than US$54 trillion. The group aims to ensure large corporate greenhouse gas emitters take action on climate change.

Let’s take a dive into which ASX 200 companies are doing their bit in the fight against climate change and which need to do substantially more. 

How were the companies assessed?

Climate Action 100+ looked into whether the companies had made specific commitments to reducing emissions. These commitments included:

• An ambition to reach net-zero greenhouse gas (GHG) emissions by 2050, with short, medium and long-term targets.
• A decarbonisation strategy.
• A plan to decarbonise future capital expenditures.
• Engagement and alignment with climate policy, particularly the Paris Agreement.
• A board with a clear focus on climate change.
• Commitment to implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

How are these ASX 200 companies performing?

Santos Ltd (ASX: STO)

According to Climate Action 100+, Santos is leading the carbon revolution out of the ASX 200 companies assessed.

Santos actually managed to at least partially satisfy all but one of the commitments.

While the energy producer missed out on commendation for a plan to decarbonise its future capital expenditures, its decarbonisation strategy was one of the best of the bunch.

BHP Group Ltd (ASX: BHP)

Doing its bit for the ASX 200’s carbon revolution is BHP. Though, according to Climate Action 100+, the mining company still has some work to do yet.

BHP’s net-zero GHG emissions by 2050 ambitions were found to be not ambitious enough but did partially satisfy Climate Action 100+’s requirements.

The miner was commended for its decarbonisation strategy, climate governance and commitment to implementing the recommendations of the TCFD disclosure.

Although, it was found that BHP is not working to decarbonise its future capital expenditures. 

Woodside Petroleum Limited (ASX: WPL) 

Woodside Energy was able to partially tick off most of the commitments set by Climate Action 100+.

The petroleum company was unable to account for a decarbonisation strategy or a plan to decarbonise its future capital expenditures.

AGL Energy Limited (ASX: AGL) 

The energy company was found to have a strategy to achieve net-zero GHG emissions by 2050, although Climate Action 100+ noted it didn’t provide a clear means of doing so between 2026 and 2035.

AGL was found to have some climate policy engagement and its board has a focus on protecting the climate.

Finally, the company has commitments to implement the recommendations of the TDFC disclosure.

South32 Ltd (ASX: S32) 

South32 partially satisfied most of the commitments, but missed a few key ones.

The mining company wasn’t seen to have any medium-term GHG reduction targets, a decarbonisation strategy or a plan to decarbonise its future capital expenditures.

Woolworths Group Ltd (ASX: WOW) 

Woolworths managed to scrape in some good GHG reduction targets. Alas, Climate Action 100+ noted it didn’t have any to aim for in the short term.

The retail giant also fell short of a decarbonisation strategy and a plan to decarbonise its future capital expenditures.

All in all, it partially satisfied most of the commitments.

Origin Energy Ltd (ASX: ORG) 

Leading the ASX 200 in one aspect of the carbon revolution is Origin. The energy company is the only company on the list that has an executive remuneration scheme incorporating climate change performance elements, but that didn’t stop it from only partially fulfilling most of Climate Action 100+’s commitments. 

Origin did have a partial GHG emission reduction target, but only until 2035. It also showed some climate policy engagement and some climate governance. As well as some commitment to implementing the recommendations of the TCFD disclosure.

Boral Limited (ASX: BLD) ­

Boral partially satisfied less than half of Climate Action 100+’s commitments.

The cement company has a GHG emissions reduction target, but only until 2025.

It also has some engagement with climate policies and discloses its trade associations memberships.

Boral’s board discloses evidence of its board’s management of climate change risks with a named position on the board responsible for climate change policy.

Finally, Boral has commitments to implement the recommendations of the TCFD disclosure.

Adbri Ltd (ASX: ABC) 

Adbri also only managed to partially satisfy less than half of the commitments.

The cement company does indeed have a GHG emissions reduction target, but only until 2025 and it has not aligned with the goal of limited global warming to 1.5°C.

It also has a specific commitment to ensuring its trade associates are members of the lobby in line with the goals of the Paris Agreement and discloses its trade associations memberships.

Adbri’s board discloses evidence of board management of climate change risks but does not have a named position at the board level with responsibility for climate change policy.

Qantas Airways Limited (ASX: QAN) 

Qantas only managed to tick off a net-zero GHG emission reduction ambition by 2050. Though, the airline’s board was seen to have some focus on climate change.

The airline also showed commitment to implementing the recommendations of the TCFD disclosure.

BlueScope Steel Limited (ASX: BSL) ­

Still with some work to do to meet Climate Action 100+’s commitment to the carbon revolution, is BlueScope.

The only indications of a climate change strategy from the steel company were targets for reducing GHG emissions, but only between 2026 and 2035. It had some evidence of its board’s focus on climate change and a commitment to implementing the recommendations of the TCFD disclosure.

More reading

• Genex (ASX:GNX) share price frozen on hydro project fund raising
• Santos (ASX:STO) share price tumbles lower despite positive announcement
• Will the Qantas (ASX:QAN) share price soar 20% higher from here?
• 3 ways to help protect your ASX share portfolio against inflation
• ASX retail shares beware: Aldi e-commerce is coming

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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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The Telstra Corporation Ltd (ASX: TLS) share price is struggling to deliver shareholder value. This has been the case for the past five to six years. The earnings landscape for Telstra has become increasingly challenging. For example, the government’s NBN Co running home internet connectivity, emerging internet-based technologies, and rising competition have all diminished the company’s blue-chip status. 

Telstra is trying to turn a new page with a proposed legal restructure that it expects to be completed by this December. 

Is the restructure a good or bad thing? 

Brokers are largely positive on the news that Telstra will create separate subsidiaries. These will include InfraCo Fixed (physical network infrastructure assets), InfraCo Towers (physical mobile tower assets), and also ServeCo (customer service and products) and Telstra international. 

On 23 March, Goldman Sachs eyed potential asset monetisation. This gives the broker greater confidence that its infrastructure value will ultimately be realised by the market. The broker is bullish on the restructure with a $4.00 12-month target price. Specifically, representing an upside of ~20% at today’s prices. 

Today, Ord Minnett and Credit Suisse maintained a similar view with a respective $4.05 and $3.85 target price. Ord Minnett assumes that the proposed legal restructure will be approved by shareholders. Moreover, this decision will be made at the October AGM and the first bids on its towers will be made by December. 

Morgans also released a note today. Consequently, it decided to leave forecasts unchanged. The broker notes that there are still several issues to be worked through. Additionally, further details to be released in the scheme booklet in early December. The broker retains a hold rating with a $3.33 target price. 

Downside risks for the Telstra share price? 

The restructure is generally viewed as a near short-medium term catalyst to unlock significant value for the Telstra share price. However, Goldman Sachs notes some key risks within the broader telecommunications market. Indeed, this could present downside risks for the Telstra share price. This includes: 

1) Increased competition, particularly in the mobile market

2) Disappointing cost out relative to its $2.7bn productivity program

3) Unfavourable regulation across its businesses

4) Asset monetisation is ultimately unsuccessful

More reading

• 8 ASX 200 shares rated as ‘outperform’ by brokers
• What experts are saying about Telstra’s (ASX:TLS) big restructuring plans
• Why is the Telstra (ASX:TLS) share price having such a good week?
• Is the Telstra (ASX:TLS) share price a buy after its restructure update?
• Top brokers name 3 ASX dividend shares to buy today

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. 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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The Westpac Banking Corp (ASX: WBC) share price has been a poor performer on Wednesday.

In late afternoon trade, the banking giant’s shares are down 1% to $24.18.

Why is the Westpac share price under pressure?

There are a couple of reasons for the weakness in the Westpac share price today.

The first was news this morning that the Reserve Bank of New Zealand (RBNZ) has instructed Westpac New Zealand to commission two independent reports concerning its risk governance and liquidity risk management.

In addition to this, the RBNZ has told Westpac that its New Zealand business will have to hold additional liquid assets until the central bank is satisfied that the previously required remediation work has been effective.

Adding extra pressure to the Westpac share price was a broker note out of Macquarie this morning.

According to the note, the broker has downgraded the bank’s shares to a neutral rating with a price target of $25.75. This was made largely on valuation grounds following a strong gain in recent months.

Combined, this has offset a potentially positive announcement out of the bank this afternoon relating to the aforementioned New Zealand business.

What did Westpac announce?

This afternoon Westpac announced that it is reviewing its New Zealand business and assessing whether a demerger would be in the best interests of shareholders. This is part of its fix, simplify, and perform strategy.

According to the release, the bank is in the very early stage of this assessment and no decisions have been made.

The company notes that Westpac NZ is a valuable part of the Westpac Group and has been for over 160 years. The business continues to perform well with a strong position in retail and commercial banking.

However, due to the changing capital requirements in New Zealand and the RBNZ requirement to structurally separate Westpac’s NZ business operations from its operations in Australia, it feels it is now appropriate to assess the best structure for these businesses going forward.

Westpac intends to provide further updates as and when required.

More reading

• Is CBA (ASX:CBA) the best bank for dividends in 2021
• The ANZ (ASX:ANZ) share price is Macquarie’s top big four bank pick
• Westpac (ASX:WBC) share price on watch after NZ update
• How to counter the ASX 200’s Achilles heel
• Top brokers name 3 ASX dividend shares to buy today

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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At the current Commonwealth Bank of Australia (ASX: CBA) share price, could it offer the best dividend in the banking sector?

What’s the FY21 CBA dividend going to be?

Only the CBA board know the answer to that question, and the board probably haven’t even decided that yet considering FY21 is still ongoing.

But there are different estimates for what the CBA dividend could be. For example, Commsec has an FY21 estimate for the annual dividend of $3.15 per share. That could mean a forward grossed-up dividend yield of around 5.25%.

But brokers have different estimates for the dividend as well. On the high end, there’s UBS with a dividend estimate of $3.60 per share, translating to a grossed-up dividend yield of 6% for FY21.

However, Credit Suisse has an annual dividend estimate of $3.10 per share, which represents a potential grossed-up dividend yield of 5.15% for FY21.

How does this compare to other ASX banks?

The CBA dividend is still going to be a lot lower than the pre-COVID-19 level, but the other big banks may not pay as much of a dividend either.

Let’s look at the dividend estimates for the big four ASX banks, according to Commsec’s numbers.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) has a forecast grossed-up dividend yield of 9.7%.

Westpac Banking Corp (ASX: WBC) has a forecast grossed-up dividend yield of 9.1%.

National Australia Bank Ltd (ASX: NAB) has a forecast grossed-up dividend yield of 8%.

So, it seems that ANZ has the biggest forecast dividend for FY21 out of the big four banks.

However, there are also regional banks that may be able to pay a bigger dividend than that.

For FY21, Bank Of Queensland Limited (ASX: BOQ) has an expected grossed-up dividend yield of 8.8% and Bendigo and Adelaide Bank Ltd (ASX: BEN) has a forecast grossed-up dividend yield of 10%.

So it seems that Bendigo Bank has the largest dividend yield for FY21, but there is more to an investment than just the dividend. The direction of the profit is also imporant

How is CBA tracking?

CBA’s half-year result included a cash profit decline of 10.8% to $3.9 billion. Net profit was supported by “strong business outcomes”, but it was impacted by the low interest rate environment and COVID-19 loan impairment expenses.

One positive trend is that the consumer arrears are falling. At 30 June 2020, the home loan arrears that were overdue by more than 90 days was 0.63% – this had fallen to 0.57% at 31 December 2020.

The CBA common equity tier 1 (CET1) capital ratio was 12.6% at the end of the half-year period, making it one of the strongest in the banking sector. The bank remains well capitalised and this raises the possibility of a capital release by the bank in the future.

More reading

• Westpac (ASX:WBC) considering NZ business demerger
• Top brokers name 3 ASX shares to buy today
• The ANZ (ASX:ANZ) share price is Macquarie’s top big four bank pick
• Westpac (ASX:WBC) share price on watch after NZ update
• Fund managers have been buying Blackmores (ASX:BKL) and this ASX share

Motley Fool contributor Tristan Harrison 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 Is CBA (ASX:CBA) the best bank for dividends in 2021 appeared first on The Motley Fool Australia.

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The Auroch Minerals Ltd (ASX: AOU) share price is flying more than 21% higher today.

At the time of writing, shares in Auroch are trading slightly lower at 26 cents per share. Including today’s price action, the Auroch share price has bolted more than 35% in the past 2 weeks.

Here’s what’s fuelling the Auroch share price.

Why is the Auroch share price flying? 

Exactly 2 weeks ago, the Auroch share price was sent plummeting after releasing assay results from its Nepean Nickel Project. The drilling results showed that high-grade nickel sulphide ore deposits extend for more than 500 metres of strike length.

The best new results included 2 metres at 2% nickel and 0.3% copper from 66 metres. This included 1 metre at 2.9% nickel and 0.36% copper. In addition, Auroch reported 4 metres at 0.77% nickel and 0.05% copper from 25 metres. The result also included 1 metre at 0.94% nickel and 0.05% copper.

Despite what seemed to be good news, investors lightened their holdings in Auroch. As a result, shares in Aurora traded at a low of 18 cents, before closing at 19 cents 2 weeks ago. Since then, shares in Aurora have continued on a sturdy trajectory, trading more than 35% higher since the 10^th of March.  

What is the outlook for Auroch Minerals?

Auroch’s flagship Nepean Nickel Project is run as an 80:20 joint venture with Goldfellas Proprietary Limited. The historic Nepean project mine was the second producing nickel mine in Australia. Between 1970 and 1987, the site produced 1,108,457 tonnes of ore.

The company will continue exploring the extent of the known high-grade nickel sulphide mineralisation in and around the historic mine. As a result, Auroch noted that an additional five holes will be drilled to test areas of this high-grade mineralisation.

Auroch noted that all holes will be cased with downhole electromagnetic (DHEM) surveys which could indicate further mineralisation.  The fact that results are expected soon, could explain today’s euphoric price action.  

Auroch is currently fully funded after raising $2.9 million in late September last year. Earlier this month the company also signed a drilling contract with Seismic Drilling Services to lock in a drill rig for the next 12 months.

More reading

• Auroch Minerals (ASX:AOU) share price plummets 15%

Motley Fool contributor Nikhil Gangaram 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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