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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has fought back from a weak start and is pushing higher. At the time of writing, the benchmark index is up 0.2% to 7,420 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Energy Resources of Australia Limited (ASX: ERA)

The Energy Resources of Australia share price is rocketing 29% higher to 42.5 cents. Investors have been buying the mineral exploration company’s shares due to its exposure to the hottest commodity of the moment – uranium. Last week the spot uranium price hit a seven-year high after some rampant buying activity.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot price is up 2% to $2.78. This follows the release of an update on the specialist chemicals company’s Waggaman ammonia plant in Louisiana. According to the release, the plant was not materially damaged by Hurricane Ida. And while it is expected to be out of action for four weeks as power is restored to the area, this was a better-than-feared outcome. Management estimates that the disruption will hit its earnings by US$28 million before tax.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price is up 4.5% to $8.36. This follows the receipt of a revised indicative, conditional, and non-binding proposal from the Sydney Aviation Alliance. According to the release, the Sydney Aviation Alliance has proposed to acquire the airport operator for $8.75 cash per share. This represents a 9.4% premium to its last close price, which has been enough for it to be granted due diligence.

Talga Group Ltd (ASX: TLG)

The Talga share price is up 8.5% to $1.52. This morning the battery anode and advanced materials company announced that it has extended and expanded its memorandum of understanding with global technology leader ABB. The agreement now includes mine electrification plans.

The post Why Energy Resources of Australia, Incitec Pivot, Sydney Airport, & Talga are rising appeared first on The Motley Fool Australia.

More reading

• Sydney Airport share price soars 5% on latest takeover news
• ASX uranium shares are booming double digits across the board on Monday. Here’s why.
• Which ASX shares are the top movers in the ASX 300 today?
• ASX 200 (ASX:XJO) midday update: Sydney Airport jumps, Qantas falls
• Sydney Airport (ASX:SYD) share price on watch after new takeover approach

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 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 Iluka Resources Ltd (ASX: ILU) share price has surged to an all-time high today.

Shares in the Aussie resources company have stormed more than 4% higher in today’s session.

Let’s take a look at what’s been propelling the Iluka share price lately.  

What’s fuelling the Iluka share price?

Iluka hasn’t released any price-sensitive news that could explain today’s bullish price action.

However, the company’s share price has been the beneficiary of a surge in demand for its core products.

Late last month, Iluka highlighted this increasing demand in its half-year report for FY21.

Highlights from the company’s half-year report included;

• Mineral sands revenue up 61% on 1H20 figures to $735.6 million
• Underlying Group earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 37% to $308.2 million
• Net profit after tax (NPAT) up 14% to $129.0 million
• A 288% increase in free cash flow to $179.3 million
• Reinstated interim dividend of 12 cents a share

In the report, Iluka’s management noted the zirconia market had rebounded to pre-pandemic production levels.

The report cited an increase in Chinese tile products for the elevated levels of demand with titanium sales also rising on supply concerns.

For the first half, mineral sands sales volumes surged to 177 kilotonnes (kt) with weighted average prices edging higher.

In addition, the Aussie mineral sands company has also expanded its production of rare-earth elements.

Iluka is set to spend $35 million to boost its Eneabb project in WA. The project aims to source rare-earth products from waste stockpiles from its mineral sands mining.

Snapshot of the Iluka share price

Since the start of the year, shares in Iluka have soared almost 59% higher.

By comparison, the S&P/ASX 200 Index (ASX: XJO) has only managed to claw 12% higher in 2021.

Despite reinstating its interim dividend, Iluka did not provide guidance for the full year.

The company noted that its focus remains on inventory and balance sheet management as well as progressing key projects on schedule.

At the time of writing, shares in Iluka are trading up 3% for the day at $10.30.

Earlier, shares in the mineral sands miner were up more than 4% after hitting an intraday and record high of $10.47.

The post The Iluka Resources (ASX:ILU) share price just hit an all-time high. Here’s why appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares on Thursday
• Iluka (ASX:ILU) share price slumps 6% on FY21 results
• Iluka (ASX:ILU) share price on watch as interim dividend returns

Motley Fool contributor Nikhil Gangaram 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 National Australia Bank Ltd. (ASX: NAB) share price is underperforming other ASX big bank shares after it got hit by a broker downgrade.

The NAB share price tumbled 0.8% to $28.21 during lunch time trade when the S&P/ASX 200 Index (Index:^AXJO) gained 0.2%.

NAB is the worst performer among the big four ASX banks. The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price advanced 0.3% to $27.65.

The Commonwealth Bank of Australia (ASX: CBA) share price and Westpac Banking Corp (ASX: WBC) share price was largely flat.

NAB share price hit by broker downgrade

What is probably weighing on the NAB share price is Credit Suisse decision to cut its recommendation on the bank to “neutral” from “outperform”.

“NAB has rallied 5% over reporting season and is up 64% on a year rolling basis. The most of its peers,” said the broker.

“It is now trading at 14.9x and has been consistently trading at parity with the sector a position not held for over a decade.”

Good news already in the NAB share price

There is good reason why the NAB share price is back in favour with investors. Operationally, it seems to have regained its mojo.

Nonetheless, the bank shares are trading close to Credit Suisse’s 12-month price target of $28.50 a share. That means it’s no longer a value buy.

ASX bank shares running ahead of fundamentals

In fact, stretched valuations apply to the whole sector, added Credit Suisse. This is why the broker is urging a more cautious approach to ASX bank shares.

“The major banks are now trading on 15.2x 1-year forward PE versus a 4-year average of 12.8x and a 10-year average of 12.4x,” said Credit Suisse.

“While we think the sector provides stable earnings, incremental upside from here appears less than recent history and even though there is still further reserve releases and capital management to come much appears to be in market forecasts.”

The best ASX bank shares to buy now

But don’t take the NAB share price downgrade as a bad omen for all ASX bank shares.

There is only one bank that the broker reckons is worth buying in this current environment. That bank is the Westpac share price and Credit Suisse describes it as its top pick “warts and all”.

“We acknowledge the challenges facing WBC but see a pathway to recovery that the market has yet to embrace,” explained the broker.

“Near term expense and margin pressures are likely to be offset by capital management before a clearer trajectory to emerge next year. WBC is trading on a 12% discount to the sector.”

Credit Suisse’s 12-month price target on Westpac is $28 a share.

The post National Australia Bank (ASX:NAB) share price dragged lower by downgrade appeared first on The Motley Fool Australia.

More reading

• ASX 200 energy and materials shares are leading the market on Monday
• CBA (ASX:CBA) share price lower amid crypto defamation lawsuit
• ASX 200 (ASX:XJO) midday update: Sydney Airport jumps, Qantas falls
• ANZ (ASX:ANZ) share price edging higher amid lending blitz
• It’s been a rollercoaster for the Westpac (ASX:WBC) share price over the last 6 months

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, 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 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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Shares in Silex Systems Ltd (ASX: SLX) are rocketing to a multi-year high today. The lift comes despite no news out of the nuclear energy and semiconductor company since late last month.

At the time of writing, the Silex share price is up 16.98% trading at $1.86 apiece, after touching a high of $1.95 in early afternoon trade. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.36% to 7,733 points.

What’s driving Silex shares higher?

Investors are buying up Silex shares as the uranium sector heats up, with peer companies also enjoying strong gains.

In its 30 August release, Silex advised it completed a key milestone in the Zero-Spin Silicon (ZS-Si) Project.

ZS-Si is a key enabling material for the next generation of processor chips to power silicon quantum computers.

The recently constructed prototype demonstration facility started operations with initial testing for the production of ZS-Si underway. This marks the fourth major accomplishment in the project for the company.

Silex now plans to conduct silicon enrichment tests, focussing on process characterisation, optimisation and efficiency improvements in the coming months.

Once the ZS-Si finalises the second stage, production is expected to be ramped up by the end of 2021.

A third stage, involving industrial-scale process verification will follow producing initial commercial quantities of ZS-Si commencing in late 2022.

What does this mean?

Current methods for the production of enriched silicon are limited and costly with only a few kilograms produced annually.

If the ZS-Si Project is successful, it could potentially enable Australia to establish itself as a world leader in ZS-Si production. In addition, this would create a new value-added export market.

Demand for ZS-Si as silicon-based quantum computer is anticipated to gain traction globally over the next decade.

The project is supported by collaboration partners, Silicon Quantum Computing and the University of New South Wales. Funding comes from the Federal Government’s Cooperative Research Centres Projects.

Silex share price summary

In the past 12 months, the Silex share price has produced returns of around 220%, and has doubled in value year-to-date. Compared to this time last month, the share price has moved 80% higher.

Silex presides a market capitalisation of about $309.9 million, and has 173 million shares on issue.

The post The Silex (ASX:SLX) share price surged 20% to a 6-year high on Monday appeared first on The Motley Fool Australia.

More reading

• The Silex (ASX:SLX) share price rocketed 24% on Thursday

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 Firefinch Ltd (ASX: FFX) share price has soared into the green during afternoon trade on Monday as the company released its results for the half-year ended 30 June 2021.

Firefinch shares are now exchanging hands at 71.5 cents apiece, a 16% gain from the open.

Let’s investigate a little further.

Firefinch share price gains on mixed half year results

The company’s net loss for the half-year grew to $6.28 million from $1.07 million the half-year prior, whereas cash and cash equivalents were $58.5 million for the six months ended 30 June. That was well up on the $891,000 in 2020.

Firefinch also increased the mineral resource and ore reserves at its Morila Gold project. The new production profile at the site now demonstrates a capacity of “up to 200,000 ounces per annum during the initial 7 year reserve life”, as per the company’s release.

Firefinch also realised gold production of 22,525 ounces for the half-year in line with guidance of 21,000-23,500 ounces.

In addition to this progress, the company also gave updates on its binding term sheet with a subsidiary of Jiangxi Ganfeng Lithium Co.

The two have entered into a 50:50 incorporated joint venture (JV) to “develop and operate” the Goulamina Lithium project. In return for Gangfeng’s investment(s) into the JV, it will earn a “50% interest” in the project.

Jiangxi Ganfeng is the “world’s largest lithium producer by production capacity”, as per the company’s announcement.

For context, Firefinch intends to “demerge the Goulamina Lithium project into a separate ASX-listed lithium focused entity” to be called “Leo Lithium Limited“.

The timing of the demerger all depends on the final investment decision of the JV company and the company seeking shareholder approval for the JV in 2022.

What did management say?

Regarding the Goulamina mine demerger, it stated:

On implementation of the demerger, Firefinch shareholders will receive a pro-rata entitlement of shares in Leo Lithium by way of an in-specie distribution (at no cost). It is also currently intended that Leo Lithium will raise additional capital via an entitlement offer to existing shareholders in parallel with its application for listing. The entitlement ratio, the pricing and quantum of the entitlement offer will be determined closer to the demerger.

Firefinch share price snapshot

The Firefinch share price has posted a year to date return of 297%, extending the outsized gain of 346% over the past 12 months.

The results have far outpaced the S&P/ASX 200 Index (ASX: XJO)’s climb of about 25% over the past year.

The post Firefinch (ASX:FFX) share price leaps 16% on half-year results appeared first on The Motley Fool Australia.

More reading

• American Pacific Borates (ASX:ABR) share price leaps 18% on lithium update
• Macquarie (ASX:MQG) share price struggles amid broker sell rating
• ASX 200 energy and materials shares are leading the market on Monday
• Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why.
• Online share trading platform Stake offers $3 ASX trades

The author Zach Bristow 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 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 American Pacific Borates Ltd (ASX: ABR) share price has bounded into the green during afternoon trade on Monday.

American Pacific shares are now exchanging hands up 17.96% at $1.66 apiece. This comes after the company made a key announcement regarding its integrated Boron facility in California.

Let’s investigate further.

But first – a quick recap on American Pacific Borates

American Pacific Borates is on the trail to become a “fully integrated producer of Boron specialty products and advanced materials”. Boron is a key component in the transition to renewable energy, as it can store both chemical and electrical energy.

The company’s major focus is on its 100% owned Fort Cady Boron facility in California, US.

At the time of writing, American Pacific Borates has a market capitalisation of $550 million.

What’s up with the miner’s share price today?

The company advised it is “exploring partner options” for “potential bi-product lithium production” at the site.

American Pacific announced it wants to exploit the current high prices that lithium is fetching in the markets as much as possible. They said this is one way to do it.

Aside from this, the company explained that the “improving economics” of other adjacent segments to lithium, such as direct lithium extraction (DLE) technologies, is another compelling reason to “consider partner options” for its “bi-product lithium stream”.

It stated that DLE technologies are “quickly improving to a point” where extracting lithium waste from the facility’s waste stream “could be economic”.

Regarding further ways to exploit its lithium waste stream, it said:

Importantly, there is also an opportunity to use the lithium produced to enhance some boron speciality applications currently under consideration including LiBor salts for lithium-ion batteries.

What’s more, the company’s decision-making here is supported by US Government policy, as per the release.

American Pacific Borates share price snapshot

The American Pacific Borates share price has had a choppy year so far. Year to date, American Pacific Borates shares have returned 10.66%.

Despite this, it has gained 107.5% over the last 12 months. And the miner’s shares are 13% in the green over the last month.

These returns have outpaced the S&P/ASX 200 Index (ASX: XJO)’s climb of around 25% over the past year.

The post American Pacific Borates (ASX:ABR) share price leaps 18% on lithium update appeared first on The Motley Fool Australia.

More reading

• Macquarie (ASX:MQG) share price struggles amid broker sell rating
• ASX 200 energy and materials shares are leading the market on Monday
• Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why.
• Online share trading platform Stake offers $3 ASX trades
• Novonix (ASX:NVX) share price falls on broker downgrade

The author Zach Bristow 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 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 Macquarie Group Ltd (ASX: MQG) share price is edging lower on Monday afternoon.

At the time of writing, the investment bank’s shares are down 0.1% to $174.06.

This compares to a gain of 0.2% by the S&P/ASX 200 Index (ASX: XJO) today.

Why is the Macquarie share price underperforming?

The weakness in the Macquarie share price on Monday could have been driven partly by a broker note out of Citi last week.

According to the note, in response to its trading update, the broker has retained its sell rating but lifted its price target on the company’s shares to $153.00.

Based on the current Macquarie share price, this implies potential downside of 12% over the next 12 months.

What did the broker say?

Citi was pleased with the investment bank’s trading update, which revealed that Macquarie expects its first half profit in FY 2022 to be “slightly down” over the second half of FY 2021.

The broker believes this implies a first half net profit in the range of $1.8 billion to $2 billion. This was materially ahead of the consensus estimate of $1.55 billion.

Citi has upgraded its estimates and is now expecting a net profit of $1.9 billion for the half. However, this isn’t enough for a more positive rating. This is due to its belief that the Macquarie share price is expensive at the current level.

It commented: “We now forecast $1.9bn for 1H22, with commodities and MacCap gains tracking better than our expectations, despite the negative timing of storage & transport revenue. We see a moderation in earnings in 2H22 as MQG cycles the UK meters gain on sale; and buoyant capital markets activities starts to cycle.”

“The stock has reacted positively to the guidance upgrade (+5%), but consensus is largely upgrading on the back of one-time MIC wind-down revenues. At 22x FY23 earnings the stock remains expensive in our view,” the broker concluded.

The post Macquarie (ASX:MQG) share price struggles amid broker sell rating appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• September is not being kind to the BHP (ASX:BHP) share price
• Top brokers name 3 ASX shares to sell today
• The Macquarie (ASX:MQG) share price has gained 3 times that of CBA over 5 years
• ASX 200 (ASX:XJO) midday update: Tech shares fall, Fortescue upgraded

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

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The S&P/ASX 200 Index (ASX: XJO) is in the green today, bolstered by the energy and material sectors.

At the time of writing, the ASX 200 is 0.38% higher than it was at Friday’s close. It has gained 28.9 points today.  

Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) has gained 1.26%, while the S&P/ASX 200 Energy Index (ASX: XEJ) is up by 1.32%.

Let’s take a look at what’s been driving the materials and energy sector to lead today.

ASX 200 supported by energy and materials sectors

It’s a good day to be an energy or materials share, with each index housing a sea of green.

The energy sector might be being boosted by the rising price of oil today.

According to CNBC, the price of West Texas Intermediate oil has surpassed US$70 a barrel today. It’s currently trading at $70.04 per barrel. At the same time, the Brent Crude oil price is 0.44% higher today at $73.24 a barrel.

The Worley Ltd (ASX: WOR) share price is leading the energy sector, with a 2.9% gain. The Santos Ltd (ASX: STO) share price is following Worley’s closely, with that of Woodside Petroleum Limited (ASX: WPL) bringing up third place.

ASX 200 materials shares are also having a great day’s trade.

The Pilbara Minerals Ltd (ASX: PLS) share price is heading the materials sector, with a 6.5% increase. The share prices of Oz Minerals Limited (ASX: OZL) and Lynas Rare Earths Ltd (ASX: LYC) are also boosting higher, gaining 5.4% and 4.7% respectively.

Though, it’s not all positive on the materials front. The Resolute Mining Limited (ASX: RSG) share price is sliding 3.4% at the time of writing.

All in all, it’s a lucky thing the material and energy sectors are in the green, as the S&P/ASX 200 Information Technology (ASX: XIJ) is currently down 0.7%.

The post ASX 200 energy and materials shares are leading the market on Monday appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Sydney Airport jumps, Qantas falls
• Santos (ASX:STO) share price jumps amid rising oil prices
• Pilbara Minerals (ASX:PLS) share price lifts following bullish broker note
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week

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 Paladin Energy Ltd (ASX: PDN) share price has been on a relentless rally this month, up 90% to an 8-year high of 97 cents.

The sudden re-rate in Paladin Energy shares has largely been driven by an uplift in uranium spot prices, running to an 8-year high of ~US$40/lb.

Uranium prices explode out of nowhere

Uranium prices have emerged out of a prolonged bear market where prices plunged from ~US$140/lb in 2007 to mid-US$20/lb between 2016 and early 2020.

This is why the Paladin Energy share price is still down ~90% from its 2007 highs.

The 2011 nuclear disaster at Fukushima Daiichi in Japan was arguably one of the major catalysts for a fallout in uranium demand.

After grinding around mid-US$20/lb, uranium prices pushed above US$30/lb in April this year. And jumped from US$30/lb to US$40/lb since mid-September.

Uranium prices have been propped up by a Canadian investment fund, Sprott Inc and its Physical Uranium Trust (SPUT).

S&P Global reported that “The spot uranium price for deliveries this month leapt 30.8% over 30 days to $39.75/lb as of 1 p.m. on Sept. 7 — a steep rise for a commodity market that previously saw years of sagging prices, according to data from S&P Global Platts.”

“Market analysts credited Sprott Asset Management LP, a uranium trust formed in July to buy up low-cost uranium on the spot market and hold it for the long-term, for jolting the market with a wave of purchases,” it added.

The fund has been aggressively buying uranium off the spot markets, acquiring more than 3 million pounds of uranium between 2 and 7 September, according to S&P Global.

Why the Paladin Energy share price is surging

Paladin Energy was once a major player in the uranium space, producing 119,586 pounds of uranium oxide in 2007 with plans to ramp production to over 3.7 million pounds by 2010.

The decline in uranium market conditions led Paladin Energy in May 2018 to place its Langer Heinrich project into care and maintenance.

It wasn’t until June 2020 that the company announced plans to restart the project followed by a $192.5 million capital raising in March 2021 to prop up its balance sheet.

Paladin Energy estimates that the project will require US$81 million of pre-production capital expenditure with a peak production of 5.9 million pounds of uranium oxide for 7 years.

The company believes it’s in a “competitive cost position” where life of mine production cash costs come in at US$27/lb in addition to freight and logistics of US$0.95/lb and sustaining capex of US$2.9/lb.

From an operational perspective, Paladin Energy is still in its early days of bringing the Langer Heinrich Mine back to life.

However, accommodative uranium prices have helped drive the Paladin Energy share price to fresh multi-year highs.

The post Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why. appeared first on The Motley Fool Australia.

More reading

• ASX uranium shares are booming double digits across the board on Monday. Here’s why.
• Which ASX shares are the top movers in the ASX 300 today?
• Two exciting ASX uranium shares get big price upgrade by broker
• ASX uranium shares are booming: What’s all the hype about?
• Up 70% in September, why the Paladin Energy (ASX:PDN) share price keeps going up

Motley Fool contributor Kerry Sun 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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Brokerage platform Stake is the latest broker to hop on the ‘cheap shares’ train. The previously US-only broker is expanding into ASX shares, offering a market-leading $3 brokerage fee as a start.

Stake announced its new expansion plans this morning. It will be opening up to ASX trading for a select number of Beta users starting today, with investors who miss out on the initial Beta permitted to join a waiting list.

So why now for ASX trading on Stake? “It was led by customer demand,” Stake CEO Matt Leibowitz tells The Motley Fool. “It was something our customers have been clamouring for, so we were happy to provide it”.

Stake reckons that its $3 brokerage will make it “the lowest cost CHESS-sponsored offering bar none”. By ‘CHESS-sponsored offering’ Stake is referring to how it will keep a conventional CHESS-sponsored model, which allows investors to use an individual HIN (Holder Identification Number).

This allows investors to hold their shares under one HIN via the CHESS system. This is similar to the model offered by existing brokers like CommSec and NABtrade.

However, it does draw a point of difference with the rival broker Superhero. 

To HIN or not to HIN…

Superhero made quite the splash when it launched its own ASX trading last year, complete with a $5 brokerage fee and free ETF trading. However, Superhero doesn’t assign individual HINs to investors, instead using a custodian model. This means customers’ assets are held under one broad HIN, rather than each investor having an individual HIN.

Stake is clearly seeking some differentiation with its new product, so will offer $3 brokerage for all trades, including ETFs.

Aside from Superhero’s $5 brokerage, other ‘cheap’ options for ASX investors are currently the $9.50 brokerage being offered by SelfWealth Ltd (ASX: SWF). The largest brokers in the country such as Commonwealth Bank of Australia‘s (ASX: CBA) CommSec or National Australia Bank Ltd‘s (ASX: NAB) NABtrade, typically charge users between $10 and $20 per trade, depending on position size.

US and ASX markets now open for Stake users

When asked if the company could turn a profit on such a low flat fee, Leibowitz was unequivocal. “Absolutely,” he told the Fool. “With our scale, this is something that we can see generating a positive return for Stake”.

“We just saw an opportunity,” says Leibowitz. “Lower brokerage benefits the users at the end of the day. Paying brokerage fees from the 1990s has always been normal for Aussie investors… but we don’t see why [other brokers] should enjoy such high margins.”

So until now, Stake only offered ASX users access to the US markets. For US shares, users are charged zero brokerage, with the company only taking a 0.8% foreign exchange currency fee for cash transfers. Stake’s ASX site will also have a wallet for cash transfers, albeit with no fees.

Stake does currently offer fractional shares for US trading, but Leibowitz confirmed that this won’t be available for ASX shares. “It just doesn’t work with the ASX,” he said. “The systems don’t really allow it, so it’s not something we can really offer.”

What’s next for Leibowitz?

But since the ASX lacks the kinds of high-cost shares that are present on the US markets (think Amazon.com Inc (NASDAQ: AMZN) at US$3,470 or Warren Buffett’s Berkshire Hathaway Class A (NYSE: BRK.A) at US$418,000), Leibowitz doesn’t think too many ASX investors will find it useful anyway. “You’ve got plenty of ASX shares under a dollar,” he says.

As for future plans, Leibowitz says the company is just focused on getting the rollout of ASX trading right before it considers other avenues. When pressed though, Leibowitz did admit the team “has talked” about offering cryptocurrency trading.

Stake says it is now the fourth-largest broker on the ASX, boasting 360,000 customers across Australia, New Zealand, Brazil and the United Kingdom.

The post Online share trading platform Stake offers $3 ASX trades appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2022 $1,940 calls on Amazon, short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon and Berkshire Hathaway (B shares). 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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