Tag: Motley Fool

Fortescue Future Industries (FFI), the green division of Fortescue Metals Group Limited (ASX: FMG), is working on producing green hydrogen. But how close is that to becoming reality?

First of all, let’s look at what ‘green hydrogen’ actually is. Some forms of hydrogen are produced with fossil fuels used in the process.

However, the idea behind green hydrogen is that only renewable energy is used to split water molecules, creating hydrogen.

Fortescue Future Industries is aiming to decarbonise its trucks, drill rigs, planes, and industrial processes with green hydrogen. The hydrogen can also be turned into green ammonia which can be used as a fuel for shipping and rail, as well as creating green fertiliser for agriculture.

How much green hydrogen does Fortescue Future Industries want to make?

FFI wants to become a global leader in green energy and technology, including leading the effort to decarbonise sectors that are difficult to decarbonise.

Fortescue Future Industries is investing to create a global portfolio of green energy projects to supply 15 million tonnes per year of renewable green hydrogen by 2030. From there, the plan is to accelerate production to 50 million tonnes per year over the following decade.

Green hydrogen production plans

In December 2021, FFI announced that it had made hydrogen using an electrolyser designed and built by the Fortescue Future Industries team. This process produced industrial-grade hydrogen for the first time.

FFI is now looking at multiple new electrolyser technologies that will form part of the electrolyser patent family. The outcomes of these projects will inform its electrolyser technology selection going forward.

At present, FFI is in the process of installing solar panels at its Dawson Road facility in Western Australia. This will see its electrolyser being able to produce green hydrogen in 2022.

However, to reach the company’s longer-term goals, there are plans for a number of projects around the world.

In November 2021, FFI received planning approval from the Queensland government for the global green energy manufacturing (GEM) centre in Gladstone, Queensland. The first stage of development is to build an electrolyser manufacturing facility with an initial capacity of two gigawatts per annum. This entails an investment of up to US$83 million with construction starting last month.

The GEM has several growth stages already planned into its factory footprint, including green manufacturing technology such as cables, batteries, wind turbines, and solar panels.

It also has a number of agreements with various countries about the potential for creating green hydrogen production facilities, including Indonesia, Canada, PNG, Jordan, India, and Brazil.

Fortescue also recently announced an agreement with Airbus to create a plane that can run on green hydrogen.

Who will its customers be?

While Fortescue Future Industries is building its portfolio of production facilities, it is also building a client base for its future production.

Covestro, a world-leading, Germany-based supplier of high-tech polymer materials, is planning on formalising an agreement where FFI will supply it with the equivalent of up to 100,000 tonnes of green hydrogen a year.

In October 2021, Fortescue Future Industries signed an agreement with JCB and Ryze Hydrogen to become the United Kingdom’s largest supplier of green hydrogen. JCB and Ryze will purchase 10% of FFI’s global green hydrogen production.

Under the partnership, FFI will lead the green hydrogen production and logistics to the UK market, and JCB and Ryze will manage green hydrogen distribution and development of customer demand in the UK, according to FFI.

Green hydrogen to become cheaper?

The cost to produce green hydrogen is seen as one of its drawbacks to it becoming more widely used.

Various media, including The Guardian, recently reported on how Australian researchers from technology company Hysata claim to have increased the efficiency of electrolysers. The company says its technology could reduce the cost of producing hydrogen to as low as $2 per kilo.

Hysata CEO Paul Barrett said that the efficiency levels achieved were the best in the world:

We’ve gone from 75% [efficiency] to 95% – it’s really a giant leap for the electrolysis industry.

For hydrogen producers, this will significantly reduce both the capital and operational costs to produce green hydrogen.

The post How close is Fortescue (ASX:FMG) Future Industries to making green hydrogen? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some ASX shares pointing to potential industry trends that may lead to compelling growth over the coming years.

One of the below ASX shares provides exposure to the ever-growing need for protection against cybercrime.

The other ASX share is benefiting from the desire for improved technology in the audio industry.

Betashares Global Cybersecurity ETF (ASX: HACK)

This is an exchange-traded fund (ETF) that gives investors access to the global cybersecurity sector.

As Betashares says, “With cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.”

Statista expects the global cybersecurity market to grow to $248.26 billion by 2023. That would be an 80% increase from 2017.

There are 35 businesses in the portfolio. Each of them provides a particular set of services that helps businesses and individuals stay safer in the cyber world.

The ETF’s largest holdings at the latest disclosure are: Cisco Systems, Palo Alto Networks, Crowdstrike, Accenture, Mandiant, Check Point Software Technologies, Leidos, Thales, Juniper Networks, and Cloudflare.

The investment comes with an annual management cost of 0.67%.

Of course, past performance is not a reliable indicator of future performance. In the three years to 28 February 2022, the HACK ETF produced an average return per annum of 21.2%.

Audinate Group Ltd (ASX: AD8)

Audinate is an ASX share that provides the Dante offering to the audio sector.

Dante is an audio over internet protocol (IP) networking solution, which Audinate claims as the worldwide leader in its field. The company says it is used “extensively” in the professional live sound, commercial installation, broadcast, public address, and record industries.

It is seeing a recovery from the worst of the effects of COVID-19 on events.

The ASX share reported that in the first-half of FY22, revenue jumped 32% to $20.2 million and the earnings before interest, tax, depreciation and amortisation (EBITDA) rose 11% to $2 million. Despite COVID-19 impacts, it made a positive operating cash flow of $0.5 million in the first half of FY22.

It’s seeing record levels of demand, but supply has been hurt by the current component shortages.

Audinate says the AV sector is just starting digital networking conversion. The company is also entering the fragmented video market. Management noted the company has the balance sheet for strategic acquisitions. It recently completed the acquisition of the Silex Insight video business, which produces video networking products for manufacturers of AV equipment.

The company estimates that its total addressable market exceeds A$1 billion.

Some areas of focus include improving Dante adoption by non-English speakers and implementing business scalability initiatives. It also wants to launch new Dante video software and cloud services products.

The post Potential opportunities: 2 compelling ASX shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended AUDINATEGL FPO and BETA CYBER ETF UNITS. The Motley Fool Australia owns and has recommended AUDINATEGL FPO and BETA CYBER ETF UNITS. 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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COVID-19 has impacted most ASX shares in different ways. Some ASX shares were hurt by the impacts of the pandemic, but they are now recovering and powering ahead.

The below two businesses are ones that have intentions to become leaders at what they do and are rapidly growing their revenue:

Bubs Australia Ltd (ASX: BUB)

Bubs is a producer of goat infant formula products. It also has adult goat milk products, a range of vitamins and organic grass-fed cow milk infant formula. Bubs also has access to Australia’s biggest goat herd.

The company recently reported its FY22 half-year result that showed a significant resurgence of corporate daigou demand for products, with gross revenue growth of 276%. Daigou gross revenue is now more than pre-COVID levels.

The ASX share continues to grow its sales through Aussie supermarkets and pharmacies quickly, with scan sales growth of 31%.

Bubs is also opening up several international markets. Excluding China, the half-year international revenue grew by 164% and represented 21% of total revenue.

It has plans to expand in the US market, which is a large market. Bubs also just signed a strategic alliance with lead daigou distributor Willis Trading if it hits certain product purchase milestones over FY22 and FY23.

Altium Limited (ASX: ALU)

Altium is one of the world leaders in the electronic PCB design software space.

One of the main ways that Altium is looking to capture the market is with its cloud offering called Altium 365, which enables engineers to work anywhere and collaborate. Since August 2021, Altium said that the number of monthly users on Altium 365 had grown by 54% to 19,700.

The company saw a return to growth in the FY22 half-year result with revenue growth of 28% to US$102 million and net profit after tax (NPAT) growth of 38% to US$22.9 million.

The ASX share is working on other services it can offer, including Altimade which provides cloud-based ‘smart manufacturing’ that aims to improve the productivity and manufacturability of electronics hardware and manage the supply chain of components and production risk.

Octopart is also growing rapidly. This segment is a search engine for electrical parts. It saw half-year revenue grow by 105% to US$22 million, it’s benefiting from the electrical parts shortage amid all of the COVID-19 impacts.

By 2025, Altium is looking to transform the industry. It’s looking to reach 100,000 Altium Designer subscribers as a sign of its dominance.

In FY22, it is expecting its revenue to reach between US$213 million to US$217 million. That would represent growth of between 18% to 20% for the financial year.

The post These 2 ASX shares are growing rapidly, are they unstoppable? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The last few months have been rough for retail businesses.

There have been immediate headwinds galore — supply chain delays, the Omicron variant of COVID-19, inflation, and now a war in Europe.

The amount of stress the sector has had to bear is reflected in how the S&P/ASX 200 Consumer Discretionary (ASX: XDJ) has plunged almost 12% this year so far.

The selloff, however, might have gone too far for some ASX shares. 

After all, the businesses themselves may not have changed much and the macroeconomic headwinds are transient.

Some experts nominated a pair of Australian retail stocks that are in exactly this position, and that they would buy up right now:

Time to buy this beauty

Let’s not beat about the bush. 

The Adore Beauty Group Ltd (ASX: ABY) share price has plummeted a brutal 58% since early November.

However, Fat Prophets founder and chief Angus Geddes sees nothing but upside now.

“We expect this online beauty retailer to benefit from the economy reopening,” he told The Bull.

“The company will launch on its apps a new, profit-accretive, private label brand. We expect the company’s beauty subscription business to generate earnings growth.”

Certainly, the directors running Adore Beauty reckon it can’t get any worse. The Motley Fool reported last week that 2 board members had bought a total of $1.7 million worth of stocks recently.

UBS analysts agree with Geddes, putting a price target of $4.70, which is more than double the current level.

“The company’s apps and products are wide-reaching, generating quality profits and cash flows,” said Geddes.

‘Looking attractive’

Furniture retailer Nick Scali Limited (ASX: NCK) has similarly seen its share price nosedive in recent weeks, dipping more than 26% for the year thus far.

Spotee Connect analyst Chris Batchelor said this just makes it more mouth-watering as a buy candidate.

“A recent share price retreat leaves Nick Scali looking attractive on a recent price/earnings multiple of 11.5 times,” he said.

“Sales boomed during the pandemic, as people diverted their spending from travel to sprucing up their homes.”

Not only is it cheap at the moment, Nick Scali shareholders are reaping a tidy 5.24% dividend yield.

“The furniture retailer has a network of stores in Australia and New Zealand,” said Geddes.

“It recently acquired Plush-Think Sofas, lifting its store footprint by 75%.”

Analysts at Citi this month forecast that the dividend would increase further this year, taking the grossed-up yield to a whopping 9.5%.

The post 2 retailer ASX shares ready to make you rich: experts appeared first on The Motley Fool Australia.

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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 recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty 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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If you’re looking for dividend shares with attractive yields, then you may want to look at the ones listed below.

Here’s why analysts at Bell Potter rate these dividend shares as buys:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to look at is this footwear focused retailer. It is the company behind a growing collection of popular retail brands. These include HYPEDC, Platypus, Stylerunner, and The Athlete’s Foot.

Accent’s shares have been hit hard this year due to COVID lockdowns impacting its profits materially and concerns over sports giants Adidas and Nike focusing on growing their direct to consumer businesses.

The team at Bell Potter isn’t concerned, though, and continues to forecast a strong sales and profit rebound in FY 2023. In light of this, its analysts believe recent share price weakness is a buying opportunity.

Last month Bell Potter put a buy rating and $2.75 price target on the company’s shares. As for dividends, it is expecting fully franked dividends per share of 5.8 cents in FY 2022 and then 10.9 cents in FY 2023.

Based on the current Accent share price of $1.67, this will mean yields of 3.5% and 6.5%, respectively.

Commonwealth Bank of Australia (ASX: CBA)

Another ASX dividend share for investors to consider is banking giant, CBA.

The team at Bell Potter believe Australia’s largest bank could be a quality option for income investors. It currently has a buy rating and $108.00 price target on the bank’s shares.

The broker is positive on CBA due to its strategic strengths of scale, brand, and diversification, which are supported by an irreplaceable infrastructure comprising over 1,100 branches, 3,800 Australia Post agencies, and nearly 3,600 ATMs.

Bell Potter appears confident this will support solid dividend growth over the coming years. For example, the broker has pencilled in fully franked dividends per share of $3.87 in FY 2022 and $4.07 in FY 2023. Based on the current CBA share price of $105.70, this will mean yields of 3.7% and 3.85%, respectively.

The post Broker names 2 quality ASX dividend shares to buy appeared first on The Motley Fool Australia.

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

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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week in a subdued fashion. The benchmark index fell 0.2% to 7,278.5 points.

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

ASX 200 expected to rise

The Australian share market looks set to rise today despite a poor night of trade in the US. According to the latest SPI futures, the ASX 200 is poised to open the day 78 points or 1.05% higher. In late trade on Wall Street, the Dow Jones is down 0.9%, the S&P 500 has fallen 0.4%, and the Nasdaq is down 0.9%. This follows comments by US Fed Chair, Jerome Powell, stating that inflation is too high.

Oil prices jump

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a great day after oil prices jumped overnight. According to Bloomberg, the WTI crude oil price is up 7.3% to US$112.32 a barrel and the Brent crude oil price has risen 7.7% to US$116.24 a barrel. This was driven by speculation that the EU will ban Russian oil.

TechnologyOne rated as a buy

The TechnologyOne Ltd (ASX: TNE) share price could be in the buy zone according to Bell Potter. This morning the broker retained its buy rating but trimmed its price target to $14.00. This implies potential upside of 26% for investors. Bell Potter believes that customer flips to the company’s software as a service solution are likely to be accelerating.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a better day after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.25% to US$1,934.50 an ounce. Demand for safe haven assets boosted the precious metal.

Shares going ex-dividend

A couple of ASX 200 shares are going ex-dividend this morning and could trade lower. This includes toll road operator Atlas Arteria Group (ASX: ALX) and health supplements company Blackmores Limited (ASX: BKL).

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

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Blackmores 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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Are you looking for some exchange traded funds (ETFs) to add to your portfolio this month? If you are, it could be worth taking a closer look at the four ETFs listed below.

Here’s what you need to know about these ETFs right now:

BetaShares Cloud Computing ETF (ASX: CLDD)

The first ETF to look at is the BetaShares Cloud Computing ETF. This ETF gives investors exposure to a group of leading global companies involved in the delivery of computing services, servers, storage, databases, networking, software, analytics and other services over the internet. Through this ETF, you’ll be buying a slice of cloud-based tech companies such as Dropbox, Netflix, Shopify, and Zoom.

BetaShares Global Energy Companies ETF (ASX: FUEL)

Another ETF to look at is the BetaShares Global Energy Companies ETF. This ETF provides investors with access to some of the biggest energy companies in the world. BetaShares notes that these are larger, more geographically diversified, and more vertically integrated than Australian-listed energy companies. Among its holdings are BP, Chevron, ExxonMobil, and Royal Dutch Shell.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another ETF which could be worth checking out is the BetaShares NASDAQ 100 ETF. This exchange traded fund gives investors access to the 100 largest businesses on Wall Street’s technology-focused NASDAQ index. This includes tech giants such as Amazon, Apple, Alphabet, Facebook/Meta, Microsoft, Netflix, and Nvidia.

VanEck Vectors Australian Banks ETF (ASX: MVB)

A final ETF for investors to look at is the VanEck Vectors Australian Banks ETF. This ETF allows you to own a slice of all the big four banks, the regionals, and investment bank Macquarie Group Ltd (ASX: MQG) through a single investment. And as the banks tend to pay their shareholders big dividends, this ETF is likely to offer a generous yield most years.

The post Here are 4 popular ETFs for ASX investors to check out appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended BETANASDAQ ETF UNITS and BetaShares Global Energy Companies ETF – Currency Hedged. The Motley Fool Australia owns and has recommended BETANASDAQ ETF UNITS. 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 Wesfarmers Ltd (ASX: WES) share price finished in the green today amid another acquisition milestone.

Wesfarmers shares were trading at $50.68 at market close, a 0.7% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) slipped 0.22%.

Let’s take a look at what could impact Wesfarmers in the future.

What challenges lie ahead?

Wesfarmers recently received shareholder approval to take over Australian Pharmaceutical Industries (ASX: API), the owner of Priceline. Today, the Federal Court approved the scheme of arrangement for this acquisition.

However, many of API’s Priceline network pharmacies are independently owned franchises. This means Wesfarmers will need to work with 1400 independent retailers, The Financial Review reported.

The publication quoted former financial services chief executive Andrew Reitzer, who has previously said working with independently owned retailers was like “herding cats”.

The problem with this business model is that independent retailers are exactly that – fiercely independent. They have strong opinions on what works best for their business and don’t like being told what to do and when to do it.

Wesfarmers CEO Rob Scott has acknowledged the differences working with franchises but also recognises the similarities, the publication reported. He said:

There are differences in terms of managing a successful franchise group, but there are a lot of basic principles around product, pricing, supply chain, digital engagement and e-commerce that will still be very relevant.

API shares will be suspended from the close of trading on 22 March.

WAM Leaders Ltd (ASX: WLE) portfolio manager John Ayoub has recently named Wesfarmers as one of five reliable shares that can ride out 2022 volatility.

Wesfarmers share price snapshot

The Wesfarmers share price has climbed 0.14% in the past 12 months but lost 14.54% in the year to date.

Over the past month, Wesfarmers shares have jumped 0.54% and are 3.05% higher in the last week.

Wesfarmers has a market capitalisation of about $57.5 billion based on the current share price.

The post Wesfarmers (ASX:WES) now has control of API, but is the real fight just beginning? appeared first on The Motley Fool Australia.

More reading

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Wesfarmers 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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As most investors would be acutely aware of, the share market has taken its participants on a wild ride over 2022 thus far. Take the performance of the S&P/ASX 200 Index (ASX: XJO) just today as an emblem. The ASX 200 rocketed close to 1% soon after open, but ended up losing all of its goodwill by the afternoon, and ended up closing down by 0.22% by the end of the trading day. In 2022 so far, the ASX 200 remains down by 4.1%. But some sectors have been hit harder than others. So let’s check out how ASX artificial intelligence shares have been faring of late. 

We know that the tech sector hasn’t been the luckiest this year. In fact, many ASX tech shares are amongst the ASX 200’s worst performers in 2022. But let’s see if this extends to artificial intelligence shares. 

AI: Making it Appen…

Let’s first check out what could arguably be described as the ASX artificial intelligence share posterchild, Appen Ltd (ASX: APX). Appen shares had a strong day today, rising 1.15% to $7.05 a share. But unfortunately, that doesn’t make up for the rather dismal year that this annotated dataset company has had to endure. Appen remains down by a nasty 36.7% in 2022 thus far. 

That puts the company’s 12-month falls at an even more depressing 60.88%. Investors seem to have been put off by Appen’s most recent earnings report, which we all got a look at back in February. The shares have lost more than 17% since that report was dropped alone. 

In these full-year results, Appen reported an 8% increase in revenue, as well as a 3% rise in underlying earnings. However, it might have been the 20% slump in net profits after tax that really turned investors off.

So not a great time right now for Appen and its shareholders.

Another ASX artificial intelligence share to check out

But let’s check out another artificial intelligence company for the ASX in Brainchip Holdings Ltd (ASX: BRN). Brainchip has been around for a while, but really grabbed investors’ attention back in 2020 when its shares rocketed more than 1,500% in just 5 months. The company also went on another run that saw its shares gain more than 160% between Christmas eve last year and 19 January. 

Here we have a tale on entry points in 2022. Year to date, Brainchip is still up a pleasing 20.25%, even after accounting for today’s nasty 3.056% drop to 95 cents a share. 

However, if you were unlucky enough to buy Brainchip shares on 19 January at the company’s all-time high of $2.34 a share, you’d be down close to 60% on your money. The company has made a series of announcements and patent successes over this year, which seems to have helped keep its share price especially volatile.   

So that’s how 2 ASX artificial intelligence shares have been faring lately. It’s been a mixed bag for this fledgling corner of the market. But watch this space, because few would expect the artificial intelligence space to come up with anything but world-changing ideas over the next few years. 

The post How have ASX artificial intelligence shares been performing lately? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
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• Guess which ASX tech shares are leading the pack today?
• Here’s why the BrainChip (ASX:BRN) share price is up 9% today
• Why has the Appen (ASX:APX) share price flamed 8% higher in 2 days?

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. owns and has recommended Appen 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.

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ASX shares across the different sectors have delivered wildly different outcomes so far in 2022.

Here’s what we mean.

Since the opening bell on 4 January, ASX shares, as measured by the All Ordinaries Index (ASX: XAO), are down 4.64%.

That’s not great. But it sure beats the 18.2% year-to-date losses posted by the S&P/ASX All Technology Index (ASX: XTX).

On the flip side of the coin, and helping support the All Ords in 2022, are energy shares. As witnessed by the 17.9% gain in the S&P/ASX 200 Energy Index (ASX: XEJ).

ASX shares in the resource and commodity space have done well also.

And the gold miners have handily outperformed, with the S&P/ASX All Ordinaries Gold Index (ASX: XGD) up 6.6% so far this year.

And all of this has come as global uncertainty has soared.

Fast rising interest rates and a European war roil ASX shares

Early in the New Year, investors in ASX shares came to grips with the reality that rising inflation rates weren’t so transitory after all. Meaning interest rate hikes from the Reserve Bank of Australia were likely to come. And come significantly sooner than the central bank had forecast just last year.

Then the world was left in shock by Russia’s brutal invasion of neighbouring Ukraine.

Uncertainties around the duration and scale of Russia’s war have not diminished since its troops crossed the border.

Meanwhile, investors in ASX shares are still faced with how interest rate hikes will impact their holdings.

With that in mind, The Motley Fool turned to Josh Gilbert, market analyst at multi-asset investment platform eToro, for his take on how investors can hedge their portfolios in these highly uncertain times.

Gold, commodities, oil and Big Tech

Addressing the heightened risks facing investors in ASX shares and global equities, Gilbert told us:

Commodities are the obvious asset of choice when planning to hedge a portfolio against imposed risks.

In times of uncertainty, gold is the first asset investors generally turn to as it’s been used for decades as a store of value and tends to perform well in volatile markets. On top of this, oil has been an asset class that investors are rotating into, given its tight supply and high demand.

Atop commodities, Gilbert also said that investors could consider other cyclical assets, like value stocks, to hedge their portfolios.

“These assets tend to be the most sensitive to economies re-opening, yet still have strong GDP growth and will likely ride out waves of uncertainty,” he said.

While technology shares have broadly taken a beating in 2022 (not just ASX tech shares, the United States NASDAQ is down 12.3% this year too), Gilbert said the biggest players in this space could offer investors some defensive hedging.

According to Gilbert:

We also see Big Tech as the ‘new defensives’. These are companies that have dominant market positions, strong growth, high margins and fortress balance sheets.

While many Big Tech stocks often have high valuations, investors are beginning to see them as ‘all-weather’ assets that can successfully navigate whatever the Federal Reserve, the economy, or geopolitical tensions throw at them.

The post How can investors in ASX shares hedge their portfolios amid uncertainty in 2022? appeared first on The Motley Fool Australia.

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

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