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The government-run Future Fund targeted some of the biggest S&P/ASX 200 Index (ASX: XJO) retailers during 2020/2021, pushing back against remuneration policies and equity grants.

As of 30 September 2021, Future Fund manages $248 billion of Australia’s wealth to strengthen the country’s financial position.

Thus, it owns shares in many of the ASX’s largest companies. And, according to reporting by The Australian, it’s holding them to account.

Let’s take a look at how the fund is reportedly throwing its weight against “creative accounting”.

Here’s why some ASX 200 retailers were targeted

According to The Australian, the Future Fund voted against nearly 50 ASX companies’ remuneration reports and bonus schemes in 2020/2021.

Harvey Norman Holdings Limited (ASX: HVN) earned itself one such vote, with the fund reportedly disagreeing with its remuneration report.

It also voted against the remuneration report of Premier Investments Limited (ASX: PMV).

Meanwhile, it disapproved of an equity grant proposed to be paid to CEO and managing director of Super Retail Group Ltd (ASX: SUL) Anthony Heraghty.

Future Funds doesn’t comment on votes it casts against companies’ remuneration reports, equity grants, or board elections.

However, a position paper published in August 2020 stated:

[B]oards should consider applying a basic ‘pub-test’ which may suggest that some of the pain felt by staff below executive management ranks should also be applied to the remuneration outcomes of key management personnel…

Boards should not strip out the COVID-19 impact when assessing performance or apply ‘creative accounting’ to adjust for the impact of COVID-19 (e.g., taking COVID-19 expenses below the line for remuneration purposes).

The board is especially mindful of undue windfall gains. The board would not want to see management protected from the downside impact of COVID-19, but not restrained on the upside.

It wasn’t just retailers who were on the Future Fund’s hook over 2020/2021.

The Australian reports the fund voted against an equity grant for Commonwealth Bank of Australia (ASX: CBA) CEO and managing director Matt Comyn.

It also voted against Star Entertainment Group Ltd‘s (ASX: SGR) remuneration report and an equity grant proposed for its CEO and managing director Matt Bekier.

The post Here’s why these ASX 200 retail shares are in the government’s firing line appeared first on The Motley Fool Australia.

More reading

• Why Afterpay, Kogan, Premier Investments, and Pro Medicus shares are dropping
• Why is the Premier Investments (ASX:PMV) share price tumbling today?
• ASX 200 (ASX:XJO) midday update: Afterpay hits 52-week low, energy shares rise
• 5 things to watch on the ASX 200 on Wednesday
• Forget Christmas! Could these ASX retail shares be set for a Boxing Day bonanza?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Super Retail Group Limited. The Motley Fool Australia owns and has recommended Harvey Norman Holdings Ltd. and Super Retail Group Limited. The Motley Fool Australia 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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Shares in insurance giant Insurance Australia Group Ltd (ASX: IAG) are trading down today and are now less than 2% in the red at $4.38.

IAG is coming off a difficult year in 2021 that saw its shares trade sideways before sliding down hard in the second half. Shares fell off the top of $5.45 in September to close the year 20% down from that point.

Last year was also another one marked with controversy and reprehensible conduct the firm became embroiled in by its own doing and admission.

For instance, the Australian Securities and Investment Commission (ASIC) has again launched proceedings against the company for erroneous actions to customers whereas IAG itself uncovered a string of compliance issues last year.

With all this in mind, could 2022 be the year of recovery for the IAG share price? Or is this beaten down stock likely to stay stuck in the mud for a while longer? Here’s what the experts think.

Is 2022 the year for IAG’s share price?

The team at Morgan Stanley doesn’t particularly think so. The firm reckons there is a downside risk to the company’s earnings due to recent perils activity, which infected IAG’s share price poorly in 2021.

It also notes that IAG is exposed to catastrophe risk given that it has shifted its business into more short-tail lines.

As such, Morgan Stanley expects further downgrades to IAG’s outlook particularly as there is little shield to the company in the event they materialise.

Analysts at UBS agree in entirety. The Swiss investment bank also thinks the perils activity is a material risk moving forwards. Both brokers are also wary of the regulatory scandals IAG is caught up in once again, which could pose a risk to the company’s earnings outlook.

Both brokers feel this is a risk that shouldn’t be discounted by investors at the present standing, particularly as there is less capital flexibility and increased earnings uncertainty.

However, the bearish sentiment isn’t shared equally amongst the list of brokers provided by Bloomberg Intelligence.

It’s all good– bullish forecasts do exist

For instance, Morgans recently retained its add rating even when trimming its own valuation of IAG to $5.31 per share. It also forecasts a dividend schedule of 18.2 cents per share for shareholders in FY22.

The firm is constructive on IAG seeing as the company has made inroads on its 5 year plan in FY22, and also likes the company’s valuation with the recent pullback in share price.

It doesn’t think the perils cost are much of an issue, and instead shrugs the topic off as “another 6 month period affected by weather for IAG, which is becoming a consistent theme for the general insurers”.

Both Macquarie and Jarden each agree, with the pair rating IAG a buy whilst assigning price targets of $5.40 and $5.65 per share in 2022 respectively.

Credit Suisse also expect IAG to outperform in 2022 and values the company at $5.60 per share, noting it should absorb the aforementioned peril costs well this year.

Not only that, but the broker also likes IAG’s valuation with the pullback in 2021, but is cautious on how the company intends to manage its insurance margins from a cost basis.

Factoring in the list of analysts provided by Bloomberg Intelligence, 61.5% have a buy rating on its shares, whereas the remaining 38.5% have a hold.

Consensus has the price target at $5.31, whereas the spread between the highest and lowest valuation is 18%.

With this in mind, it appears that expert sentiment is constructive on the IAG share price in 2022, and the majority of coverage seems to think this could be a year of growth from the current point.

The post Could the IAG (ASX:IAG) share price be on the road to recovery in 2022? appeared first on The Motley Fool Australia.

More reading

• Own IAG (ASX:IAG) shares? Here are the key dates to pencil in for 2022
• Brokers name 3 ASX shares to sell
• Why is the IAG (ASX:IAG) share price diving in December?
• Is the IAG (ASX:IAG) share price too cheap to ignore?
• Why is the IAG (ASX:IAG) share price underperforming QBE in 2021?

The author has no positions 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 owns and has recommended Insurance Australia 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record its first decline of the year. At the time of writing, the benchmark index is down 0.25% to 7,571.7 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Afterpay Ltd (ASX: APT)

The Afterpay share price is down 4.5% to $80.08. Investors have been selling this buy now pay later provider’s shares following another decline in the Block share price overnight. This appears to have been driven by weakness in the tech and buy now pay later sectors. For example, the Affirm share price sank 10% on Tuesday night.

Kogan.com Ltd (ASX: KGN)

The Kogan share price is down a further 4% to $8.27. This ecommerce company is one of a number of tech shares recording heavy declines on Wednesday following a poor night on the tech-focused Nasdaq index. This has led to the S&P/ASX All Technology index falling 2.35% on Wednesday.

Premier Investments Limited (ASX: PMV)

The Premier Investments share price is down 4.5% to $29.26. A good portion of this decline has been driven by the retail conglomerate’s shares trading ex-dividend this morning. Eligible shareholders of the Peter Alexander and Smiggle operator can now look forward to receiving its fully franked 46 cents per share final dividend on 27 January.

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price is down 7.5% to $58.27. This morning the team at Morgans downgraded the health imaging company’s shares to a reduce rating on valuation grounds. Its analysts suggest that investors sit tight and wait for buying opportunities around the $50 mark. Morgans remains positive on the future, though. It believes the company’s long-term thematic and earnings visibility remains strong.

The post Why Afterpay, Kogan, Premier Investments, and Pro Medicus shares are dropping appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 tech shares getting hammered today?
• Why is the Premier Investments (ASX:PMV) share price tumbling today?
• ASX 200 (ASX:XJO) midday update: Afterpay hits 52-week low, energy shares rise
• Afterpay (ASX:APT) share price sinks 5% to new 52-week low
• 5 things to watch on the ASX 200 on Wednesday

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 Afterpay Limited, Kogan.com ltd, and Pro Medicus Ltd. The Motley Fool Australia owns and has recommended Afterpay Limited, Kogan.com ltd, and Pro Medicus Ltd. The Motley Fool Australia 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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Although Westpac Banking Corp (ASX: WBC) shares delivered a decent 10% return (before dividends) for investors in 2021, they underperformed the rest of the big four banks by a sizeable margin.

In light of this, investors may be wondering what needs to happen for Australia’s oldest bank’s shares to close the gap on its peers in 2022.

What could take Westpac shares higher in 2022?

The team at Bell Potter has been looking at Westpac’s performance in 2021 and given its verdict on its shares.

In respect to its performance, the broker notes that the bank spent another year working on its transformation in the hopes of returning to sustainable profit growth in the future.

Unfortunately, Bell Potter doesn’t appear to believe the transformation is complete and feels there is still a lot of hard work that needs to be done with its Fix, Simplify and Perform strategy.

The broker commented: “It seems it was another year of transformation prior to getting back to sustainable profit growth. While profit increased mainly due to an easing off in COVID-19 issues, there is still a lot of work to be done in driving change – specifically in terms of Fix, Simplify and Perform.”

Its analysts highlight that most of 2021 was spent on the Fix pillar of its strategy. This involved risk management, customer remediation, and completing regulatory investigations. It also worked hard on the Simplify pillar, which involved exiting/divesting businesses, closing products, and streamlining fees.

This means that 2022’s focus will be predominantly on the third pillar, Perform. It is aiming to strengthen its franchise, improve returns, and lower costs. In respect to the latter, Westpac is wanting to reduce its cost base materially by FY 2024 to $8 billion from $10.2 billion.

However, Bell Potter has warned that “these changes still soak up time and money” and that its cost cutting plan is “a big ask at this stage.”

Is it a buy?

In light of the above, the broker believes Westpac’s shares are close to being fully valued now.

Its analysts have put a hold rating and $22.00 price target on its shares. This is broadly in line with where its shares are trading this afternoon.

The post Own Westpac (ASX:WBC) shares? Top broker says ‘there is still a lot of work to be done’ appeared first on The Motley Fool Australia.

More reading

• Morgans names 2 ASX 200 dividend shares to buy
• Top ASX shares to buy in January 2022
• These ASX mining, tech, and bank shares could be buys in 2022
• ASX 200 falls on Friday but records 13% gain in 2021
• Morgans names 2 blue chip ASX 200 shares to buy

Motley Fool contributor James Mickleboro owns 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 Westpac Banking Corporation. 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 National Australia Bank Ltd. (ASX: NAB) share price has been throwing punches with the other big banks over the last month, gaining 5.5% during this time. The only big four constituent that did better during the past month was the Commonwealth Bank of Australia (ASX: CBA) with a 5.8% rise.

Shares in NAB are in fine form once again today following the publishing of November’s lending data yesterday. The data from the Australian Prudential Regulation Authority shows an increase in spending as COVID-19 restrictions are relaxed across the country.

Though, today’s focus is on the passive income potential for NAB shareholders in 2022.

Will it rain dividends for NAB shareholders?

Analysts over at Bell Potter believe 2022 could be another solid year for dividends from the National Australia Bank. According to the broker’s forecasts, NAB shareholders could land a fully franked dividend yield of 5.1% this year.

For reference, Australia’s second-largest listed bank by market capitalisation handed out $1.27 per share in dividends in 2021. Investors booked a dividend yield of ~6.1% based on the current NAB share price after applying franking credits.

At this stage, it is unknown exactly what amount NAB will pay in dividends this year. Although, the bank is targeting a 65% to 75% payout ratio according to its FY21 investor presentation.

To increase the dividends paid to shareholders this year, NAB will need to maintain its profits. Late last month, the major bank lifted its fixed-interest mortgage rate another 0.1% higher. This followed an increase of 0.5% at the beginning of December 2021.

NAB share price snapshot

It might be a surprise to some investors, but NAB shares have been the best-performing of the big four in the past 12 months.

During this time, the banking giant rallied more than 30% to its current $29.56 share price. Making up the podium finish, CBA and Australia and New Zealand Banking Group Ltd (ASX: ANZ) returned 24% and 22% respectively.

The post Could NAB (ASX:NAB) shares be a dividend gold mine this year? appeared first on The Motley Fool Australia.

More reading

• ASX 200 falls on Friday but records 13% gain in 2021
• ASX 200 (ASX:XJO) midday update: Big four banks fall, Bega Cheese jumps again
• Analysts rate these ASX 200 dividend shares as buys
• Why is the NAB (ASX:NAB) share price having such a merry December?
• Bell Potter names 2 ASX 200 blue chip shares to buy in 2022

Motley Fool contributor Mitchell Lawler owns Commonwealth Bank of Australia. 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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The Brainchip Holdings Ltd (ASX: BRN) share price is trading significantly higher today.

Yesterday, we covered Brainchips’ price jump of 7% with the announcement of a new non-executive director to its board.

While there has been no news from the company since, the Brainchip share price rocketed 19.36% earlier today, trading as high as 96 cents apiece. At the time of writing, the company’s shares are sitting at 91 cents, up 15%.

Let’s look at what’s been happening lately with the company.

Brainchip recent news

Brainchip, to bring you up to speed, is an artificial intelligence developer attempting to mimic the natural processing power of the human mind.

You may have noticed we covered the tech company yesterday, as it announced the addition of experienced director, Pia Turcinov, to its board.

The Brainchip share price jumped considerably after the news was released.

In fact, there has been a landslide of news released by the AI company since exiting a one-day trading halt on 25 November.

The halt related to the news of a collaboration between Brainchip and Japanese firm MegaChips Corporation that would see Megachips provided with an intellectual property license for design and manufacturing.

1 December saw a notification detailing securities for Brainchip employees not intended to be quoted on the ASX.

Around this time, the Brainchip share price pushed up again by 13%.

In mid-December, the company announced a cessation of securities, one due to expiry and another due to unsatisfied performance rights.

Needless to say, it’s been a busy month for the tech company — in fact, .

Brainchip share price snapshot

Over the last year, the Brainchip share price has soared a whopping 102% and has lifted 40.9% in the past week alone.

The tech company currently has a market capitalisation of around $1.53 billion, with more than 1.6 billion shares issued.

The post The Brainchip (ASX:BRN) share price soared another 19% today. What’s going on? appeared first on The Motley Fool Australia.

More reading

• Why Brainchip, Pilbara Minerals, Straker, and Whitehaven Coal shares are pushing higher
• Why is the BrainChip (ASX:BRN) share price leaping 7% on the first trading day of the year?

Motley Fool contributor Alice de Bruin 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 Bruce Jackson.

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The ASX will soon welcome a number of new faces as the 2022 initial public offering (IPO) season kicks off.

Here are 3 shares expected to float on the market that might be worth keeping an eye on.

3 shares expected to IPO on the ASX next week

ChemX Materials Limited

ChemX Materials is on track to list on the ASX on Friday 14 January under the ticker code CMX.

It raised $8 million through its oversubscribed ASX IPO, issuing shares for 20 cents apiece. That sees it expecting to list with a valuation of approximately $18 million.

The raised funds will be put towards an exploration drilling program set to go ahead this quarter.

ChemX holds 2 exploration licences in South Australia, each for kaolin/halloysite manganese prospects.

It also has an agreement to acquire HiPurA and its high purity alumina (HPA) processing technology. The company believes demand for HPA is surging as manufacturers scramble to create lithium-ion batteries.

NICO Resources Limited

According to the ASX, NICO Resources is expected to list on Tuesday 11 January under the ticker NC1. However, its float has previously faced delays.

The company is a spin out of Metals X Limited‘s (ASX: MLX) nickel assets.

Its prospectus aimed to raise between $10 million and $12 million through issuing shares in the company for 20 cents apiece.

The proceeds will go towards exploration programs for potentially high-grade zones of nickel, cobalt, and scandium. It will also fund a review of mineral processing routes and the identification of information for a feasibility study update.

The company’s major project will be the Central Musgrave Project, located on the intersection of the border of South Australia, Western Australia, and the Northern Territory.

Careteq Limited

Careteq is expected to IPO on the ASX on Monday 10 January under the ticker code CTQ.

It creates and provides software-as-a-service-based solutions to assist the elderly and those with disabilities to continue living their best lives.

To do so, the company has created its Sofihub platform.

It raised $6 million through its prospectus‘ offer, wherein its shares were sold for 20 cents apiece. That sees the company expecting to list with a market capitalisation of $24.7 million.

The raised funds will go towards Careteq’s growth and cross-selling opportunities, as well as the development of new products, features, and applications.

Additionally, the company is planning to expand internationally, partnering with the SiTa Foundation in the United States to develop a safety device to be used against domestic violence.

The post These 3 companies are set to IPO on the ASX next week appeared first on The Motley Fool Australia.

More reading

• Here’s why the Argosy (ASX:AGY) share price just rocketed 9% to a multi-year high
• Is the Altium (ASX:ALU) share price in the buy zone?
• Why are ASX 200 tech shares getting hammered today?
• Why is the Pointsbet (ASX:PBH) share price on a losing streak today?
• Are these 2 impressive ASX shares buys in January 2022?

Motley Fool contributor Brooke Cooper 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 Bruce Jackson.

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The Argosy Minerals Limited (ASX: AGY) share price is soaring to a fresh multi-year high on Wednesday. This comes after the company announced an operational update on the construction works at the Rincon Lithium Project yesterday.

Argosy holds a 77.5% interest in the Rincon project, located in Salta Province, Argentina. The mine is situated within the ‘lithium triangle’ – the world’s dominant lithium production source.

During early afternoon trade, the lithium miner’s shares are up 9.09% to 36 cents. This means that its shares have now risen 44% in the past month alone.

Argosy signals progress at Rincon

Investors are buying up Argosy shares following the company snapshot of its progress at the Rincon Lithium Project.

According to its release, Argosy revealed that around 53% of the total works have now been completed to bring the Rincon Lithium Project online. The development of the modular 2,000tpa (tonnes per annum) of lithium carbonate production plant remains on schedule and on budget.

The company is targeting to achieve the first commercial production of lithium carbonate product from mid-2022.

While the design phase has been concluded, construction works are currently at 55% complete. In addition, plat commissions activities which comprise of raw materials acquisition and tender works is 13% complete.

Major construction works involving the construction of the process plant, equipment and associated installations, and expansion of the brine system have all progressed. As such, Argosy provided a summary of the current progress:

• 99% of earthworks/land movements completed;
• 86% of site works completed (site camp/accommodation, laboratory, office, and other works);
• 73% of the brine system completed (pumping station and plant settling ponds);
• 48% of the process plant completed (plant equipment acquisition and plant warehouse); and
• 45% of utilities and associated services (vapour system, communication system and ancillary services).

Argosy noted that upcoming project works will focus on finalising the brine system along with the associated infrastructure. This is scheduled to be completed sometime in April 2022.

Other stages of the project such as commissioning works, production test-works and ramp-up are expected to follow.

What did the managing director say?

Argosy managing director, Jerko Zuvela highlighted the company’s steps forward, commenting:

The Company’s Puna operations team continue making significant progress on construction and development works, toward commencing 2,000tpa lithium carbonate production operations at our Rincon Project.

With lithium market activity and lithium carbonate prices further increasing to record levels,

and Argosy emerging into a battery quality lithium carbonate producer and cashflow generator, and also progressing with the following stage 10,000tpa project development expansion.

We look forward to a significant near-term growth phase and achieving our upcoming target of initial stage 2,000tpa production operations this year at our Rincon Lithium Project.

Argosy share price review

Over the past year, the Argosy share price has gone from strength to strength, recording gains of more than 210%. Investors are buoyant on the company’s share price as it continues to come in reach of record levels.

Argosy commands a market capitalisation of roughly $455.95 million, with approximately 1.27 billion shares outstanding.

The post Here’s why the Argosy (ASX:AGY) share price just rocketed 9% to a multi-year high appeared first on The Motley Fool Australia.

More reading

• These 3 companies are set to IPO on the ASX next week
• Is the Altium (ASX:ALU) share price in the buy zone?
• Why are ASX 200 tech shares getting hammered today?
• Why is the Pointsbet (ASX:PBH) share price on a losing streak today?
• Are these 2 impressive ASX shares buys in January 2022?

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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The last 12 months have been disappointing for the tech sector as demonstrated by the S&P ASX All Technology index’s modest gain of 2.6%. As a comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 13.3% over the same period.

But one shining light in the sector has been the Altium Limited (ASX: ALU) share price.

Despite a pullback today, the electronic design software company’s shares have gain 27% over the last 12 months. This is more than double the ASX 200’s return.

Where next for the Altium share price?

One leading broker has been running the rule over the Altium share price recently and has given its verdict.

According to a note out of Bell Potter, its analysts have put a hold rating and $45.00 price target on the company’s shares.

Based on the current Altium share price of $43.17, this implies modest upside of just over 4% for investors over the next 12 months.

What did the broker say?

Bell Potter’s analysts believe the Altium share price is about fair value at the current level based on their earnings forecasts. Though, they appear to suggest that there is upside risk from a better than expected performance in FY 2022.

The broker explained: “There is no change in our forecasts for Altium which we last updated in early November. We continue to forecast FY22 revenue and EBITDA of US$218m and US$80m which is at the top end or slightly higher than the guidance ranges of US$209-217m and US$72-80m.”

“We also continue to see some prospect of an upgrade to the guidance at the release of the 1HFY22 result in February especially after the company said at the AGM that it is “confident that it is not likely to be at the low end of the guidance range.””

Looking further ahead, the broker believes Altium is well-positioned to continue its growth in the years that follow.

It added: “We then forecast continued strong revenue growth in the high teen percentages in FY23 and FY24 and then >20% EBITDA growth in each period on the back of anticipated further margin expansion.”

However, as positive as this is, for the time being, the broker is staying firm with its hold rating on the Altium share price.

The post Is the Altium (ASX:ALU) share price in the buy zone? appeared first on The Motley Fool Australia.

More reading

• 3 top ASX growth shares to buy in January
• 3 fantastic ASX 200 shares to buy in 2022
• Analysts name 3 ASX growth shares to buy right now
• 2 exciting ASX tech shares to buy in 2022
• 2 ASX growth shares analysts rate as buys

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 Altium. 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) is in the red at time of writing. After opening higher in early morning trade, the index is currently down 0.1%.

But ASX 200 tech shares are, widely, doing it much harder today, which has sent the S&P/ASX All Technology Index (ASX: XTX) down 1.7%.

Among the worst ASX 200 performers today are Nearmap Ltd (ASX: NEA), down 3.8%; TechnologyOne Ltd (ASX: TNE), also down 3.8%; and buy now, pay later heavyweight Afterpay Ltd (ASX: APT), down 3.7%.

So, what’s going on?

Why are ASX 200 tech shares getting hammered today?

Australia’s ASX 200 technology companies are largely following their United States’ counterparts lower.

Yesterday (overnight Aussie time), the tech heavy Nasdaq closed down 1.3%. Electric vehicle giant Tesla Inc (NASDAQ: TSLA) lost 4.2%.

And most analysts are pointing to inflation fears as the culprit.

With inflation running hotter and likely remaining longer than central bankers had forecast last year, the US Federal Reserve could be looking at 3 interest rate rises this year. Moves that could well be followed by other inflation wary central banks across the world, including the Reserve Bank of Australia (RBA).

Higher interest rates tend to be bad news for growth stocks like many ASX 200 tech shares, whose share prices are often reliant on future earnings. Expectations of higher rates are already seeing US government bond yields surge.

Mike Bailey, director of research at FBB Capital Partners, said (quoted by Bloomberg), “The 10-year Treasury yield [now at 1.65%] is on fire and that could be weighing on sentiment for growth stocks, especially expensive ones, such as tech and semis,”

Singling out tech shares, Luke Hickmore, investment director at Standard Life Investments added, “With bond yields moving higher the market is adjusting tech lower. Tech is suffering from the long duration nature of these assets – i.e. it is generally a long time until the current valuation is supported by earnings in a normal multiple.”

How have tech shares stacked up over the past year?

ASX 200 tech shares had a great run coming out of the pandemic sell-off in March 2020.

But over the past 12 months, that great run has slowed to a crawl for many of the bigger and smaller listed tech shares.

Since this time last year, the ASX All Tech Index is up 2.7% compared to a gain of 13.3% for the ASX 200.

In US markets the variance is less stark, but still there. Over 12 months, the Nasdaq is up 21.9% compared to a gain of 28.6% posted by the S&P 500.

The post Why are ASX 200 tech shares getting hammered today? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Afterpay hits 52-week low, energy shares rise
• Afterpay (ASX:APT) share price sinks 5% to new 52-week low
• Could Tesla deliveries double this year?
• 5 things to watch on the ASX 200 on Wednesday
• 2 ASX shares analysts rate as buys in January

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Afterpay Limited and Nearmap Ltd. The Motley Fool Australia owns and has recommended Afterpay Limited and Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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