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It can be difficult to know which ASX shares to make your first investment in. But, I know which investment I’d want to start with as a beginner.

I often like to write about ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) when considering choices for a portfolio. However, if I were a beginner starting with $1,000, there are a few things I’d want to keep in mind.

Investing in ASX shares can be a really good way to build long-term wealth. But diversification is an important part of helping us lower risk while still achieving long-term returns.

If someone were to invest in just one business with their first $1,000, then their entire portfolio would be just one business. That’s not diversified at all.

That’s why I think the ASX share I’m about to name would be a smart starting investment.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

Firstly, let’s consider the diversification aspect of this investment.

It is an exchange-traded fund (ETF), meaning that it is invested in a portfolio of shares. That instantly provides diversification. Indeed, this ETF is invested in around 200 positions. That’s a lot of diversification straight away, with just one investment.

These names come from across the world including the United States, Japan, Switzerland, the Netherlands, the United Kingdom, Germany and France. In my opinion, it ticks the box for global diversification as well.

I think the businesses in this ASX share’s portfolio are among the best at what they do around the world. I like that almost 40% of the portfolio is invested in information technology businesses, because the technology sector is normally where it’s possible to find growth businesses with good margins.

Some of the names I’m referring to are Apple, Visa, Home Depot, Mastercard, Toyota, United Health, Nvidia, Cisco Systems, Adobe and ASML.

In my opinion, it has a good list of holdings. The quality of the businesses has shone through with the net returns – since its inception in January 2017, the BetaShares Global Sustainability Leaders ETF has returned an average of 16% per annum. But remember, past performance is no guarantee of future results.  

Another good reason to like this ETF

Not only is it a global ETF with quality holdings and impressive historical returns, but it has reasonable management costs (0.59% per annum) and a strong ethical screening process.

Some investors may not mind owning gambling shares, alcohol or coal shares, but plenty of other investors may want to exclude those areas from their investing.

To get into the portfolio, companies need to be in the top one third of performers in terms of carbon efficiency for their industry, or engaged in activities that can help reduce carbon use by other industries.

I think this ASX share ticks all the boxes as a beginner investment, which is why I’d be happy to put my first $1,000 into it.

The post How I’d invest my very first $1,000 in ASX shares right now appeared first on The Motley Fool Australia.

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More reading

• 2 popular ETFs that could be buys for ASX investors

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ASML Holding, Adobe Inc., Apple, Nvidia, Visa, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended ASML Holding, Adobe Inc., Apple, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A fundamental idea behind investing is that great reward usually can’t come without commensurate risk. 

After all, who in the world is just going to hand you free money? You have to earn it.

If you’re a regular The Motley Fool reader and already have a portfolio of ASX shares, you already know and accept this.

You’ve chosen to invest in equities knowing that it is more risky than term deposits or bonds — but the long-term returns are likely to be more satisfying.

With this attitude in mind, Shaw and Partners portfolio manager James Gerrish recently sifted through some stocks that have been unloved this year. 

“We think a basket of the underperforming stocks from August could deliver solid returns into Christmas, assuming we can buy them into fresh 2022 lows.”

He found two that could be excellent risk-reward propositions:

Conservative outlook could be a chance to buy in

Credit Corp Group Limited (ASX: CCP) is an old-school finance company that buys debts from other businesses to chase and collect them itself.

Its share price has, unfortunately, almost halved since the start of the year.

Going into reporting season, Gerrish’s team was “mildly bullish” — but the annual result did not flatter the company.

“Their profit result equated to a 14% increase on FY21 which was a solid outcome, however, their guidance for FY23 was the issue – they are guiding to a lower net income of $90 to $97 million,” Gerrish said in his Market Matters newsletter.

“Weak guidance has been the largest weight on the ASX through August reporting season as management has been conservative in their outlook.”

Having said this, Gerrish likes the potential returns if the stock can dip to the $18 mark. Credit Corp closed Wednesday at $18.59 a share.

“On 13.7x FY23 earnings Credit Corp is still around fair value in Market Matter’s view but… we can easily see ~30% upside – note the stock traded ex-dividend 36c fully franked,” he said.

“We like the risk-reward towards CCP into fresh 2022 lows.”

‘Worst of the headwinds could be behind the business’

Chicken producer Inghams Group Ltd (ASX: ING) has really had a tough time of late with supply chain issues, COVID-19 staff absence, La Nina, and input cost inflation.

According to Gerrish, the misfortunes were borne out in the August results.

“Profit fell almost 60% to $35 million, well below the consensus of $43 million, despite volumes increasing more than 4%,” he said.

“Painfully the company said consensus expectations were too high for FY23 and we should expect downgrades of up to 10%!”

Unsurprisingly, the Ingham share price has lost more than 20% since 12 August. It’s lost about a third since the start of the year.

Gerrish feels like this could be a discount worth investing in.

“On a valuation of 16.2x FY23 (depressed) earnings, the risk-reward is improving especially as we believe the worst of the headwinds could be behind the business.”

He added a nice entry point would be below $2.50. Ingham closed Wednesday at $2.48 a share.

The post 2 ASX shares to buy as risk-reward plays after reporting season: expert appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• These were the worst performers on the ASX 200 in August
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares
• Why Credit Corp, Endeavour, Kogan, and Service Stream shares are dropping

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A famous Warren Buffett saying goes “The stock market is a device for transferring money from the impatient to the patient”.

But it’s fair to say 2022 has tested the nerves of investors in technology stocks.

The S&P/ASX All Technology Index (ASX: XTX) has now lost almost 35% over the past 12 months, and there is not much relief in sight with the Reserve Bank continuing to increase interest rates.

“With the benefit of hindsight, high-growth tech businesses proved to be the proverbial canary in the coalmine,” said Forager Funds portfolio manager Alex Shevelev and senior analyst Gaston Amoros.

“The canary went very quiet during most of 2021 and then suffered a catastrophic heart attack in 2022.”

Rock-bottom share prices don’t match the fundamentals

If you’re willing to be patient, though, there are some bargains to be snapped up right now.

“For some of these companies… the low share prices belie the trajectory of the fundamentals.”

Shevelev and Amoros took PDF and e-signature tools provider Nitro Software Ltd (ASX: NTO) as a prime example.

“After raising capital at $3.43 a share in late 2021 to fund a European acquisition, [it] saw its share price trade down to almost $1 and has now received a takeover offer from private equity funds at $1.58 a share,” they said.

“The company was quick in rejecting the offer as opportunistic and significantly undervaluing the business. We tend to agree with them.”

Many tech companies have reined in their spending

The Forager team noted that the new environment of higher interest rates and scrutiny on growth shares has led to many tech companies to change their ways. 

“Software vendors, in particular, keep growing fast and are now displaying a newfound zeal in cost cutting that has pulled cash flow forecasts forward,” they said. 

“It is not a coincidence that we are getting opportunistic take-private bids in this space.”

Nitro’s shares are up almost 50% since the rejected takeover offer, although they are still about a third down since the start of this year.

According to Shevelev and Amoros, Nitro is not the only one tightening its belt and looking ripe for investors willing to ride for the long term.

“There are other good software businesses out there that offer a similar risk-reward profile to the patient investor,” they said.

“In our portfolio, we are very happy with our holdings in software vendors Whispir Ltd (ASX: WSP), Bigtincan Holdings Ltd (ASX: BTH), and RPMGlobal Holdings Ltd (ASX: RUL).”

The Whispir share price is down 60.5% for the year so far, while Bigtincan is 42.4% lower and RPM Global has lost 29.1%.

The post 4 ASX tech shares for the ‘patient investor’: expert appeared first on The Motley Fool Australia.

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More reading

• Why Coles, Fisher & Paykel, New Hope, and Nitro shares are rising
• Why Deep Yellow, Nitro, Tyro, and Webjet shares are storming higher
• Nitro share price rockets 40% on takeover approach
• Analysts name 2 top ASX growth shares to buy now
• Bigtincan share price climbs amid 143% revenue explosion

Motley Fool contributor Tony Yoo has positions in Nitro Software Limited, RPMGlobal Holdings, and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BIGTINCAN FPO, RPMGlobal Holdings, and Whispir Ltd. The Motley Fool Australia has positions in and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended Nitro Software Limited, RPMGlobal Holdings, and Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, SG Hiscock portfolio manager Hamish Tadgell names not one, but two, ASX shares that he’d buy and hold for the long run.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Hamish Tadgell: I’m sure a lot of people say CSL Limited (ASX: CSL) to you when you ask this question. 

I think that is, you can say that it’s a late cycle recovery play and it’s an incredibly good business spending $1 billion a year on R&D, and got so many growth options in it. Yeah, you could definitely say that, but I’ll give you another one — NextDC Ltd (ASX: NXT).

It’s a stock that is really a long term investment play in our view. It does, from time to time, prove a little bit volatile around half-yearly updates as to whether they’re ahead or behind on where the market’s trying to forecast in terms of connections and interconnections and the like. But when we look at it, if you look at the thematic backdrop first in terms of continuing growth and consumption of data, which has just exploded, I think [it] is only going to continue to go one way. 

There is an increasing need for these types of assets, data centre assets. We also see that the barriers to entry around these increasing, due to privacy data security and particularly data sovereignty legislation. The Australian government has passed certain legislation that unless you’ve got certain accreditation and a domestic company, the Australian government won’t have a contract with you.

So it puts domestic players in an incredibly strong position and they need to meet very high quality standards in terms of the infrastructure and investment they’re making. 

The data centre is like a property play at the end of the day. You build the centres, have long term contracts with certain providers and then your major shopping centre retailers, your Woolworths Group Ltd (ASX: WOW), your David Jones, and the like. And then you have a whole lot of small and medium enterprise businesses that take out space in your data centre. It’s a bit like the specialty retail shops, if you like.

It’s the combination of those that provides an attractive yield and growing return on capital over time. 

The other thing, there’s been a lot of focus recently on rising energy costs and data centres are big users of energy. They are increasingly trying to put in more sustainable sources, solar and alternative sources of renewable energy, but they also have pretty strong pass-through in terms of passing those energy costs onto customers. So that provides a reasonably high level of insurance in a rising inflation environment, which again is what you’re looking for — companies with pricing power. 

MF: You mentioned the NextDC share price can be a little bit volatile. But in 2022 it hasn’t been as volatile as most other tech stocks. It’s been more steady, like an infrastructure stock, hasn’t it?

HT: Yeah. Well, it is. It’s got infrastructure characteristics about it. You got to build the infrastructure first. 

A lot of people get a little concerned when companies [like] NextDC announces that it’s going to spend more money on new data centres. We actually get excited by that because it highlights that there’s growing demand for their product. And historically the company is not built on-spec. It’s only really built where it’s got effectively offtake agreements or commitments from customers that underpin those developments.

The post Fundie reveals the 2 ASX shares he’d buy and hold for 4 years appeared first on The Motley Fool Australia.

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More reading

• Morgans names 3 more of the best ASX shares to buy in September
• Should all ASX investors be buying defensive shares right now?
• Why is the CSL share price on the slide today?
• Experts say investors should buy these ASX 200 shares
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Tony Yoo has positions in CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended 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 Scott Phillips.

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) had another day to forget and dropped deep into the red. The benchmark index fell 1.4% to 6,729.3 points.

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

ASX 200 expected to rebound

The Australian share market looks set to rebound on Thursday after a strong night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 31 points or 0.45% higher this morning. On Wall Street, the Dow Jones rose 1.4%, the S&P 500 climbed 1.8%, and the NASDAQ stormed 2.15% higher. Comments out of the US Federal Reserve boost sentiment.

Xero named as a buy

The Xero Limited (ASX: XRO) share price could be in the buy zone according to analysts at Godman Sachs. This morning the broker retained its buy rating and $111.00 price target on the cloud account platform provider’s shares. The broker was pleased with what management said at the Xerocon Sydney event.

Oil prices crash

Energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a very difficult day after oil prices crashed on Wednesday night. According to Bloomberg, the WTI crude oil price is down 5.75% to US$81.88 a barrel and the Brent crude oil price is down 5.5% to US$87.69 a barrel. Recession fears sent oil prices to a seven-month low.

Shares going ex-dividend

Another group of shares will be going ex-dividend on Thursday and could trade lower. This includes stock exchange operator ASX Ltd (ASX: ASX), engineering company Monadelphous Group Limited (ASX: MND), and energy giant Woodside. The latter is also be dealing with sinking oil prices, which could make for a particularly tough day.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent day after the gold price rose overnight. According to CNBC, the spot gold price is up 0.9% to US$1,728.70 an ounce. Traders were buying gold after the US Federal Reserve said it will raise rates but be careful not to go too far.

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

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More reading

• Why is the Woodside share price on the slide today?
• Why is the Santos share price slipping on Wednesday?
• Hoping to pocket the monster Woodside dividend? Read this
• 5 things to watch on the ASX 200 on Wednesday
• What happened to Woodside shares on Tuesday?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Three S&P/ASX 300 Index (ASX: XKO) healthcare shares were flying higher than their peers this afternoon.

This may be surprising as the S&P/ASX 200 Health Care Index (ASX: XHJ) spent a great deal of its trading session in the red today, even notching the title of worst performing sector at one stage. However, a late rally saw the index close lightly in the green, up 0.17%.

On a broader level, the S&P/ASX 300 Index also struggled, closing 1.4% lower at the end of trading.

Healthcare and other defensive shares, such as consumer staples, tend to outperform other sectors during an economic downturn.

So it’s possible that shares of healthcare companies may rise higher in the months ahead following anticipated interest rate hikes in Australia and inflation predicted to surge higher in the United States.

But for now, let’s recap the healthcare shares that performed strongly on Wednesday.

Ramsay Health Care (ASX: RHC)

Ramsay managed to outperform the Health Care Index and ASX 300 today, closing 0.35% higher for the day at $71 apiece.

The company was featured in a Foolish article this morning in which a Shaw and Partners senior investment advisor said that its outlook looks bright after beating off headwinds of COVID-19.

Shares in the private hospital operator are down 1.21% year to date.

Resmed CDI (ASX: RMD)

The Resmed share price had a cracker of a day today, closing a hefty 4.23% higher at $33.51 and snatching poll position as today’s top performing ASX 200 share. Earlier, shares in the medical equipment company lifted to an intraday high of $33.86 apiece.

Resmed also received some positive coverage from a broker this morning. Morgans said that the outlook for the company was positive, stating:

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

The company’s shares are down 7.38% year to date.

Polynovo Ltd (ASX: PNV)

Polynovo shares were up 0.77%, trading at $1.31 apiece at the close on Wednesday. The company produces medical devices.

There has been no news from Polynovo today, nor has a broker covered the company recently. The most recent announcement was made on 26 August, when the company announced its results for FY22.

Polynovo reported a surge in revenues for the reporting period as it grew 42.8%. However, investors sent its shares plummeting 15% on the day of the announcement.

Polynovo plans to expand its presence in the United States, New Zealand, and Australian markets.

The company’s shares are down 16% year to date.

The post 3 ASX 300 healthcare share winners on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Morgans names 3 more of the best ASX shares to buy in September
• 2 healthcare ASX shares ready to go off like a cracker: experts
• Broker names 2 excellent ASX growth shares to buy right now
• These ASX 200 shares are going ex-dividend on Monday

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended POLYNOVO FPO and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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 Scott Phillips.

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This isn’t a good day for ASX banking shares, but it’s the National Australia Bank Ltd (ASX: NAB) share price that’s worse for wear on Wednesday.

Shares in the bank tumbled 3.1% to $29.31 while the S&P/ASX 200 Index (ASX: XJO) lost 1.4%.

Other ASX big bank shares were also dragged lower by the sell-off, but they weren’t as badly hit. The Commonwealth Bank of Australia (ASX: CBA) share price lost 2.1%, Westpac Banking Corp (ASX: WBC) share price fell by 2.07% and Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price declined 1.37%.

Why is the NAB share price lagging?

The underperformance of the NAB share price is likely due to a broker downgrade. Macquarie Group Ltd (ASX: MQG) cut its recommendation on NAB to neutral from outperform.

The broker noted that the divergence between ASX banks’ short- and medium-term outlooks is reaching new highs.

The upside is the next six months stem from the benefits of rising interest rates and lagging term-deposit rates.

Rising rates and bank margins

The Reserve Bank of Australia (RBA) jacked up the cash rate by another 50 basis points yesterday to 2.35%.

Every time it does that, it gives the banks an excuse to lift their mortgage rates. But when it comes to lifting term deposit rates, ASX banks tend to be slower to pass on the extra and often do not hand over the full rate increase. This gives their profit margins a boost.

Hard to be optimistic about ASX bank shares

Macquarie explains:

This dynamic creates a challenging backdrop to formulate the investment thesis. On the one hand, we see further upside risk to bank earnings in 1H23, leaving the sector in a relatively good spot given the uncertain outlook for the broader market.

On the other hand, our earnings forecasts remain well below consensus in FY24 and beyond.

The broker believes consensus is overestimating the profit margins for ASX bank shares, including the NAB share price, over the medium term.

It finds it difficult to be bullish on the sector given potential credit-quality concerns. Then there is also their demanding pre-provision valuations and elevated multiples relative to global peers.

When it comes to the NAB share price, Macquarie reckons it is fully valued. In other words, any good news is already priced in.

NAB share price snapshot

Given that the NAB share price has rallied ahead of the other big ASX bank shares, Macquarie’s view is understandable.

Shares in NAB are up 1.6% over the past year. This compares to the 20% plunge in the ANZ and Westpac share prices over the period.

Not even the mighty CBA share price can match NAB as it shed 8.6% in the last 12 months.

Macquarie’s 12-month price target on the NAB share price is $30.25 a share.

The post Why is the NAB share price diving more than the other big 4 ASX banks today? appeared first on The Motley Fool Australia.

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More reading

• Why rising rates are a ‘sugar hit’ for ASX 200 bank shares: Macquarie
• Rates go up, and CBA beefs up its business cred. Scott Phillips on Nine’s Late News
• Down 19% since April, is the ANZ share price in the buy zone?
• NAB shares offer 15% upside and growing dividends: broker
• Experts say these 2 ASX dividend shares are buys

Motley Fool contributor Brendon Lau has positions in Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When it comes to passive investment vehicles on the ASX, there’s no doubt that the star of the listed investment company (LIC) has waned in recent years in favour of the exchange-traded fund (ETF). ETFs have never been more popular on the ASX than in the post-COVID years. In stark contrast, LICs have arguably fallen out of favour.

But there are some LICs that are still commanding respect on the ASX. Argo Investments Limited (ASX: ARG) is arguably one. Helped no doubt by its age and pedigree, Argo remains a popular ASX LIC. After all, it was founded way back in 1946, and was even helmed by the legendary cricketer Sir Donald Bradman for a while.

But for investors these days, little matters aside from performance. So let’s have a look at how Argo measures up against its larger rival – the Australian Foundation Investment Co Ltd (ASX: AFI). We’ll also look at how these two LICs compare to the index ETFs they so ferociously compete against.

What returns have Argo investors enjoyed?

So let’s jump straight into the numbers. So according to Argo itself, the LIC has delivered an average return of 7.7% per annum over the past three years on average, as of 31 July. That figure is based on the LIC’s share price and assumes dividends are reinvested.

Over the past five years, it has delivered an average of 7.1% per annum. This rises to 9.7% over the past ten years.

Let’s now see how that stacks up against AFIC.

How do these stack up against the ASX 200 and AFIC?

So AFIC does not report its three-year data. However, it does tell us that its share price has averaged a return of 11.6% per annum over the past five years. This extends to 12.2% per annum over the past ten years. These figures also assume dividends are reinvested, but also include the value of franking credits, which Argo doesn’t.

Still, it seems that AFIC’s share price has given investors greater overall shareholder returns over both the past five and ten years on average.

Both AFIC and Argo use the S&P/ASX 200 Accumulation Index as a benchmark. Many popular index ETFs on the ASX also track the ASX 200 Index. So let’s see how an investment in an ASX 200 ETF like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) compares to these returns.

Assuming dividend distributions are reinvested, the iShares ASX 200 ETF has delivered an average of 4.28% over the past three years on average. This rises to 7.89% per annum over the past five years, and 9.19% per annum over the past ten.

So while Argo shares may not have outperformed AFIC over the past five and ten years on average, it has managed to eke out a better performance than the ASX 200 benchmark it uses. Perhaps the LIC is not about to give way to the index ETF just yet.

The post How do Argo shares measure up to other LICs like AFIC? appeared first on The Motley Fool Australia.

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More reading

• Are AFIC shares outperforming the ASX 200 this year?
• How has the AFIC ASX share portfolio changed over FY22?
• Argo share price lifts on record 2022 financial year profit results
• Why is the AFIC share price sliding today?
• The CBA share price looks downright expensive

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX 200 bank shares have been somewhat of a mixed bag this year, starting off with a bang before receding back to range.

The benchmark and index funds tracking the sector are also down so far in 2022. The VanEck Australian Banks ETF (ASX: MVB) is down 8% this year to date and around 9.5% in the red for the past 12 months.

Despite the volatility, the banking majors in Australia look well positioned to capitalise on a series of macroeconomic and industry-specific tailwinds, analysts say.

Surging rates: good in the short term for ASX 200 banks

With interest rates now front and centre of the economic landscape, the Australian banking majors have seen a shakeup to their earnings outlook.

The increase in policy rates from the Reserve Bank of Australia (RBA) continues to be passed through to consumers at the retail and commercial levels, with interest rates on both home and business mortgages lifting to multi-year highs.

As such, net interest income (NII) obtained by the sector is set to increase, while the net interest margins (NIMs) on NII will also theoretically grow.

This is also seen on the deposit side too, where the recent spike in rates has been likened to a “sugar hit” by Macquarie analysts. It comes at a time when competition in the mortgage market remains at an all-time high.

Maquarie analysts said in a recent note:

In the short term, banks continue to benefit from highly lucrative retail deposit pricing, which will likely provide margin upside in the next six months.

If we are heading into an environment where credit growth is going to be slow for a long period of time, it does have a substantial impact on the earnings outlook and the valuation of banks.

The market is certainly pricing the effect of changing interest rates into ASX 200 bank shares.

All of the majors are down this year to date and have been tracing sideways for a good portion of a month now.

The below chart tracks the progress of: Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corporation (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Bendigo and Adelaide Bank Ltd (ASX: BEN).

It remains to be seen if Macquarie’s forecast of the short-term impact of rate changes will result in a short-term thrust on the charts.

The post Why rising rates are a ‘sugar hit’ for ASX 200 bank shares: Macquarie appeared first on The Motley Fool Australia.

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More reading

• Rates go up, and CBA beefs up its business cred. Scott Phillips on Nine’s Late News
• Down 19% since April, is the ANZ share price in the buy zone?
• NAB shares offer 15% upside and growing dividends: broker
• Experts say these 2 ASX dividend shares are buys
• Own CBA shares? Here’s the bank’s warning on rapid RBA rate hikes

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Flat was the new up today with the Latin Resources Ltd (ASX: LRS) share price holding its ground for most of the day, despite the sharp market sell-off. That is, until the last two minutes of trade, when Latin Resources shares finally succumbed.

The ASX lithium junior finished down 4.35% at 11 cents at the close of trade after posting encouraging drilling results.

Latin Resources share price yields to the gloom

The news wasn’t enough to shield it from the 1.4% drop in the All Ordinaries (ASX: XAO) on Wednesday. But the Latin Resources share price isn’t alone, given that ASX mining shares are among the biggest losers on the market today.

The wooden spoon goes to the Hastings Technology Metals Ltd (ASX: HAS) share price. It collapsed 18.08% to $4.44. The Chalice Mining Ltd (ASX: CHN) share price isn’t far behind with its 13.04% plunge.

Latest drill results

Fortunately for the Latin Resources share price, management announced it struck more high-grade lithium at its Colina prospect in Brazil.

The miner’s latest drilling results include 26.88m @ 1.40% Li2 O from 94m, 28.80m @ 1.16% Li2 O from 307m and 10.00m @ 1.05% Li2 O from 186m.

Previous work in the area identified a “lithium corridor” that covered a distance of 4km. The Colina prospect is south-east of Latin Resources’ flagship Salinas Lithium project.

On track to the next share price catalyst

Latin Resources’ exploration manager Tony Greenaway said:

Our latest results continue to show excellent high‐grade lithium intersections and continuity of the pegmatites along strike and down dip. We are well on schedule to deliver our maiden JORC resource in December which is an exciting milestone for the company.

I am also pleased to have our regional teams out mapping at Salinas South where we know we have more outcropping pegmatites. Our plan is to work‐up these areas to drill‐ready status, and then in the near term commence drilling to begin testing these new areas.

Powering up the Latin Resources share price

The miner has completed more than one-third of the planned 100 drill holes. The results to date continue to confirm the continuity of grade and thickness of the Colina pegmatites at depth.

The Salinas Lithium Project in the pro‐mining district of Minas Gerais, Brazil. Latin Resources is also developing the Catamarca Lithium Project in Argentina.

Lithium is the flavour of the month for ASX investors due to surging demand for electric vehicles. The mineral is a key ingredient in batteries and some experts believe there won’t be enough supply to meet demand for years to come.

Latin Resources share price snapshot

This explains why the Latin Resources share price has rallied 156% over the past year. In contrast, the All Ordinaries has fallen 11% while the S&P/ASX 300 Metals & Mining (ASX: XMM) dipped 6.8% over the period.

But Latin Resources isn’t the only ASX lithium share that is racing ahead. The Allkem Ltd (ASX: AKE) share price has climbed 45% and the Pilbara Minerals Ltd (ASX: PLS) share price advanced 84% in the last 12 months.

The post Latin Resources share price follows ASX sell-off amid ‘excellent high‐grade lithium’ news appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX lithium share is rocketing 20% on positive drill results
• 3 ASX mining shares rocketing higher today on new finds
• Why is the Latin Resources share price leaping 30% today?

Motley Fool contributor Brendon Lau has positions in Allkem Limited, and Pilbara Minerals Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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