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The king of ASX dividend shares, Washington H. Soul Pattinson & Co Ltd (ASX: SOL) held its annual general meeting (AGM) this morning. I won’t bore you with the nitty-gritty details, as they were comprehensively poured over by my Fool colleague Eddy Sunato earlier today.

But in a nutshell, Soul Patts reported some solid performances from its investment portfolio (especially from its holdings in the resources sector), as well as a 44% slide in net profits before tax.

But what really stands out is this company’s dividend record.

You may have picked up that I described Soul Patts as the ‘king of ASX dividend shares’ earlier. That’s because this company simply has the best record when it comes to paying dividends out of any company in the ASX’s All Ordinaries Index (ASX: XAO).

That record was helpfully brought up at the AGM this morning.

An unbeatable dividend history

The company was happy to remind investors that it remains the only ASX company to have increased its dividend payments for a consecutive 20-year period. And yes, that does include 2020, a year which has been many ASX stalwarts slash their dividends, much to shareholders’ dismay.

It’s not just tokenistic annual increases either. Soul Patts’s dividends in 2001 amounted to 11 cents a share. In 2020, they were 60 cents a share, which the company was pleased to tell us amounts to a compounded annual growth rate of 9.2% per annum (which handily outstrips inflation). In 2020 alone, the increase was a comfortable 3.4% on 2019’s payouts.

This streak of dividend payments has benefitted shareholders over the past 2 decades. Soul Patts told us that the company’s total shareholders returns (combining share price growth and dividends) have outperformed the All Ordinaries Accumulation Index (ASX: XAOA), which also includes growth and dividends, over 1, 5, 10, 15 and 20 years. On the last metric, Soul Patts has reportedly managed to return an average of 14.3% per year to investors. That outperforms the index’s 8.1% average by 6.2% every year.

This 14.3% metric holds constant over the proceeding 20 years as well. The company also tells us that it has delivered an average of 14.4% per annum since 1980. That means a $1,000 investment in 1980, with dividends reinvested, would be worth $216,4760 today. Enough said.

Soul Patts’ portfolio

Soul Patts is an industrial conglomerate. It owns a vast portfolio of underlying investments, which its management team runs on behalf of its shareholders. This portfolio consists of large stakes in a number of ASX shares, including Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC) and Australian Pharmaceutical Industries Ltd (ASX: API).

It also includes a collection of unlisted assets and private companies. These include Round Oak Minerals (a copper and zinc miner) and various properties such as retirement homes and farms.

More reading

• The Archer (ASX:AXE) share price lifts on partnership deal
• Washington H. Soul Pattinson (ASX:SOL) share price rises 2% after upbeat AGM
• S&P Global set to launch world’s first cryptocurrency index
• Why the MSM (ASX:MSM) share price has gone gangbusters again
• 3 reasons why Soul Patts (ASX:SOL) is a great ASX dividend share

Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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Curious about the outlook for the Australian economy and ASX share prices in 2021?

We are too.

Which is why we dialled into AMP Capital’s – a subsidiary of AMP Ltd (ASX: AMP) – webinar earlier today.

The webinar featured Shane Oliver, head of investment strategy and economics and chief economist at AMP Capital, and Diana Mousina, senior economist at AMP Capital.

Share markets lead the charge

When the extent of the global pandemic began to dawn on investors, share markets the world over crashed hard and fast. In the matter of a month the S&P/All Ordinaries Index (ASX: XAO) plummeted 37%, hitting its low on 23 March.

While that rapid plunge caught most investors off guard, the pace of the rebound was even more surprising. The All Ords is now back in positive territory for the year and US markets are posting new record highs.

“Maybe share markets have run ahead of themselves, but they’ve done what they often do. They fell out of bed in anticipation of the economic hit of the shutdowns… and they’ve rallied in anticipation of the recovery,” said Shane.

Can that rally continue into 2021?

Yes, according to Shane. He points to continued low interest rates, massive amounts of stimulus, investor hopes for the reopening and a return to some sort of normality in 2021–22, and pent-up demand as factors likely to drive further share price gains in the year ahead.

AMP does not expect the Reserve Bank of Australia (RBA) to raise rates for at least 3 years, while it forecasts that global monetary and fiscal stimulus will remain large.

According to Diana:

The RBA is likely to keep interest rates where they are now and continue with its quantitative easing program because the rest of the world is doing the same thing. If they weren’t purchasing more government bonds, you’d see even more upward pressure on the Australian dollar, which has already been appreciating over the past few months.

The outlook for dividends

With term deposits paying an average rate of around 0.5%, investors are increasingly eager for ASX dividend-paying shares. While those dividends have also slipped, Shane says 2021 should see an uptick, which in turn should support share prices:

As we go through 2021, I reckon the dividends will start to go back up again… We’re looking at dividend payment on the Aussie market over the next 4 months of somewhere between 4–4.5% [up from the recent 2.9%].

He added that the higher income on offer should keep money heading into the share markets: “Our indicators for Australia are now looking healthier than they are in Europe and the US.”

Australia’s positive economic outlook in 2021

Explaining why she has a positive view for Australia’s economic performance in 2021, Diana pointed to a number of factors.

First, the Aussie government stepped up with large fiscal spending packages, including JobKeeper and the upgraded JobSeeker. At around 11% of GDP, the fiscal spending splurge was on the high end of comparable nations.

Second, Australia’s success at controlling the virus puts us on solid footing as we head into 2021.

According to Diana:

Overall Australia will probably do better than the rest of the world in 2021… The fiscal stimulus will dwindle. JobKeeper is likely to be wrapped up after March. We could get some more tax cuts coming through next year, which would stimulate households. And some changes around stamp duty in New South Wales, which other states could follow. And there’s still a really big pipeline of state infrastructure projects which tend to be very positive by generating a lot of jobs. That has a big multiplier impact on the economy.

Diana reiterated that AMP believes the Australian share market will likely to do better over the next 6–12 months compared to the rest of the world.

Should Australia be worried about its ballooning debt?

Diana isn’t overly concerned about the mounting government debt, saying it’s sustainable, for now:

If your level of economic growth is much higher than the interest you’re paying on that debt, then you can sustain these very high levels of debt for some time. You should be able to grow your way out of this debt.

She adds:

The rest of the developed nations have much higher levels of net debt positions… Just because you have high levels of debt doesn’t mean that bond yields will go higher, as you can see in the US.

As long as bond yields remain low, the interest the Aussie government has to pay on its debt will remain manageable.

The outlook for inflation

Of course, the one thing that could force the RBA to increase interest rates, and make servicing the growing debt pile more costly, would be a ramp up in inflation.

However, AMP doesn’t expect any broad inflation issues next year.

Diana noted that there will be some “pockets of inflationary pressure” due to higher prices for certain goods as well some restaurants charging more for dining out due to restricted capacity and higher cleaning costs. But she said those pockets of higher costs will be kept in check by the spare capacity in the labour market, which AMP doesn’t see returning to near full capacity until end of 2021 or into 2022.

And the Aussie dollar?

Currently trading above 74 US cents, the Australian dollar has been unexpectedly strong. That’s driven by high commodity prices, with iron ore trading for more than US$140 per tonne, and a weaker US dollar. A weaker greenback is often tied in with better global growth.

AMP forecasts that the Aussie dollar will be worth around 80 US cents by end of 2021. On the lower bound, Diana said, “It’s hard to see it moving below 70 [US] cents, even with the RBA continuing its QE program.”

Property’s surprising resilience

If you listened to the doomsayers back in March and April, you may well have sold your family home and run for the hills.

Yet here we are in December and property prices in many areas are reporting strong growth.

As Shane says, “If you take the whole housing market, it’s been a big surprise. Much like the broader economy surprised on the upside for the second half of the year, so too has the property market.”

He explains that lower interest rates and a range of protective income measures from the government have largely managed to offset the drag from higher unemployment and lower immigration.

However, Shane points out that lower immigration will have a continuing negative impact on some property markets, particularly in city areas where “apartment units are somewhat vulnerable next year”.

He expects this will mainly be an issue in Sydney and Melbourne, saying “generally, the property market should do well next year.”

What can we expect when the government winds back its stimulus?

As with the property market crash that never materialised, the fears of government stimulus packages winding down causing share markets to crash is overblown, according to Diana:

[T]he recovery is well on track… Our state borders are now opening up. The majority of restrictions have been lifted. The majority of business can now operate close to normal… The savings rate is extremely high in Australia, at around 18%, while before COVID it was around 4–5%. So, there’s a huge pocket of money people can use to spur consumption going ahead.

Diana also noted that while JobKeeper will likely end in the first quarter of 2021, the government is likely to keep the JobSeeker level “a bit higher” than pre-COVID levels.

Speaking of stimulus…

One of the questions investors want answered is whether the next round of US government stimulus, which has yet to pass, is already factored into share prices.

Diana said that’s somewhat dependent on whether Republicans hold onto the Senate in January’s by-election. Should Democrats win control of the Senate, they’ll hold both houses and the White House under Joe Biden. That will mean a much larger stimulus package, and likely a bigger boost for share prices.

Either way, she believes the stimulus package has only been partly priced into markets:

When it is passed, I do expect that share markets will have another leg up. Because there’s always some concern that it may not get there… Of course, if you don’t see it getting passed, that will be a negative for share returns.

What can we learn from 2020?

Looking back on 2020, Shane said it’s reinforced his views to “invest for the long term”:

The noise has become more intense. There’s something new every day now. It’s a lot harder to keep up as an investor. It’s important to turn down the noise… And [2020 reinforced] how hard it is to try to time the bottom… The big surprise was how quickly things turned around to the upside. So, invest for the long-term. Don’t get too hung up with short-term swings.

More reading

• The sector that’ll explode in February: fundie
• Macquarie (ASX:MQG) share price lags on $2.3bn takeover
• IOOF (ASX:IFL) share price lifts after investor briefing
• Meet the latest ASX stock to come under the takeover spotlight
• BlueScope (ASX:BSL) share price on watch as takeover rumours swirl

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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“I need a quote to go at the end of my email,” one of our team said out loud the other day.

We all work predominantly from home, so the audience was that person’s teenage son, Lachie, and his girlfriend.

She suggested something from Stephen Hawking.

Lachie suggested his school motto, “Many pathways. No limits.”

In the end, we went with Hawking’s “Intelligence is the ability to adapt to change” – he’s obviously one of the greatest minds of our age, and 2020 has been nothing if not a year of change.

But Lachie’s idea got me thinking.

His school motto is a wonderful exhortation for kids who are all different and all looking to make their different ways in the world. 

But it’s also a good reminder for investors.

As you might know, we don’t enforce a ‘house view’ on our team here at The Motley Fool. The investment team agrees on a lot, differs on some things, and disagrees vehemently on a small remainder.

For those of our members who want us just to have a single view, that can take some getting used to.

But here’s the thing about investing: invariably, it’s best if a particular style or strategy is allowed to play out in full. If we started to pull punches on some of our more controversial ideas, we’d find ourselves slowly but inexorably dragged into the boring, average – and probably financial inferior – consensus.

Yes, we might avoid some losing stock picks. We might avoid some ‘own goals’. But, in all likelihood, we’d also miss out on some – or many – big winners.

After all, if the market already saw it our way on those companies, the share price would already be meaningfully higher, and the potential for outperformance would be drastically reduced.

And here’s how it plays out: each of our entry level services, Share Advisor, which I run with Andrew Legget; Extreme Opportunities, which Anirban Mahanti leads with Kevin Gandiya; and Dividend Investor, which Ed Vesely helms, with Chris Copley and Kate Lee, is beating the market.

(Yes, that’s a slight brag: it’s hard to have one service beating the market, but pretty impressive to have 3 out of 3 in front. But more on that later.)

The thing is, there are relatively few companies that are common to more than one of those service scorecards.

There are companies I like that Anirban wouldn’t buy. There are businesses Ed is a fan of that I just don’t share that view of. And Anirban’s companies tend to be smaller, growth-ier, and focussed in areas Ed or I don’t have similar expertise.

Couldn’t we just take the best of each? Yep, and we do have a service, called Motley Fool Gold Pass, which does exactly that. But the fact remains that each service is individually delivering strong, market-beating, returns, with some pretty different investment strategies and companies.

“Many pathways”, as Lachie said.

And yet, just like Lachie’s school, we’re not just a random collection of stock-pickers, thrown together. There are things that bind us. Principles and values.

We take a long-term perspective. And no, despite what you might hear from others, ‘long term’ isn’t next month. We look out 3–5+ years when we make our investment decisions.

We don’t use charts or trading software.

We invest in businesses, not three letter ASX codes. 

And as to “No limits”?

I also think it’s an appropriate slogan for all investors.

It’s a reminder, to me at least, that we shouldn’t be constrained. There is no reason investment returns can’t compound meaningfully for many, many decades to come. There’s no reason you can’t learn about a new company, industry, product or market. You are not – should not – be limited to just investing in Australian companies.

You know what else struck me about it? It feels almost a little hokey. A little saccharin.

We’re supposed to be a little cynical, right? A little dour. We’re supposed to remember all the things that can go wrong, and instinctively recoil from optimism.

And I can’t completely disentangle myself from that sense.

But I think it’s important to try.

Of course not everything is perfect. Of course there will be bumps, losses, and periods of genuine gloom.

But it’s also important to pick yourself up, dust yourself off, and keep striving.

To be optimistic, and to believe that the future will be better than the past.

Which, frankly, might just be the best lesson we can take from 2020 – in general, and as investors.

Fool on!

More reading

• Redbubble (ASX:RBL) share price jumps 12% to record high
• Why the Uscom (ASX:UMC) share price gained 10% today
• The Archer (ASX:AXE) share price lifts on partnership deal
• What does the future hold for Treasury Wine (ASX:TWE) after China’s tariff?
• Australia’s money supply rises 12%, but it’s only going to a few

Motley Fool contributor Scott Phillips 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 Redbubble Ltd (ASX: RBL) share price was a very strong performer on Wednesday.

The ecommerce company’s shares jumped 12% in afternoon trade to finish the day at a record high of $6.11.

This means the Redbubble share price is now up 460% since the start of the year.

Why did the Redbubble share price storm to a record high?

Investors appear to have been buying the company’s shares for a couple of reasons.

The first is a series of positive updates from fellow ecommerce companies such as Kogan.com Ltd (ASX: KGN) and Mydeal.ComAu Pty Ltd (ASX: MYD) that demonstrate that the online shopping boom has continued.

This was particularly the case during the Black Friday and Cyber Monday promotional period, where a number of buy now pay later providers and retailers both reported stellar growth.

Another catalyst was a broker note out of Goldman Sachs last month.

Its analysts reiterated their buy rating and $6.25 price target on the company’s shares in response to Redbubble announcing the appointment of its new chief executive officer, former SEEK Limited (ASX: SEK) executive, Michael Ilczynki.

Goldman seemed to be pleased with the appointment and continues to believe that Redbubble is well-positioned for growth.

Why is Redbubble positioned for growth?

The broker named three reasons why it thinks Redbubble is well-placed for growth and was good value at the time.

It commented:

“(1) expansion of its TAM through continued broadening of its product categories.”

“(2) potential growth from increasing repeat usage on its platform (still relatively low at <1.5X p.a.).”

“(3) further operating leverage as we expect RBL to manage cost growth well below revenue growth over our forecast period (we forecast opex to grow at a 7% CAGR FY20E-FY23E vs. a marketplace revenue CAGR of 18% driving EBIT margins from 1.2% in FY20E to 11.3% in FY23E and an EBIT CAGR of 151%),” Goldman concluded.

Whether the Redbubble share price can go higher in the near term, only time will tell. But it is worth noting that its shares are now trading within a whisker of this price target.

More reading

• ASX 200 falls on Thursday
• The 13 ASX shares that could have doubled your money in 2020
• 3 reasons the Redbubble (ASX:RBL) share price is in the buy zone
• Why Accent, Mesoblast, Redbubble, & Regis Healthcare shares are charging higher
• Redbubble (ASX:RBL) share price on watch after naming former SEEK exec as new CEO

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd and SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Redbubble (ASX:RBL) share price jumps 12% to record high appeared first on The Motley Fool Australia.

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Medical device manufacturer Uscom Ltd (ASX: UCM) has today announced a significant increase in its sales and profits for the first 5 months of FY21.

The Uscom share price lifted by 10% after the announcement, and is currently trading at 17.5 cents.

Strong first-half so far

The company’s un-audited accounts shows significant increase in total revenue, profit, and cash inflow compared with the first 6 months of FY20.

For the first 5 months of trading, Uscom says its sales revenue was $2.01 million, up by 196% from the previous corresponding period. Total revenue of $2.26 million, up by 135%.

Profit for the 5 months was $0.18 million, which was an improvement from a loss of $1.5 million.

Meanwhile operating cash inflow for the 5 months was $0.21 million, which increased from an outflow of $0.78 million after correcting for the capital raising of $1.05 million in November 2020.

Surge in unit orders 

At the outset of the COVID-19 pandemic in February, Uscom received a material increase in demand for its USCOM 1A devices from China. As a result, unit orders for the first 5 weeks of 2020 were up 124% compared to the first 2 months of 2019.

Following those orders, the Uscom share price spiked to its 52-week high of 53 cents – a level it has yet to reach again since.

Recognition in China

Last week, Uscom announced that the Chinese government had listed its subsidiary in China, Uscom China, as a National High Technology Enterprise. 

The company said the listing recognised Uscom’s achievements in research and development, innovation, and significant findings in high-tech fields. 

Furthermore, the company said it expected 5  five new products to receive Chinese regulatory approval and enter the market over the next 12 months, with another 2 in the pipeline.

About the Uscom share price

The Uscom share price started the year at 12 cents, spiked to 53 cents in February and has since declined to its current level at around 18 cents. It commands a market cap of $25 million.

More reading

• The Archer (ASX:AXE) share price lifts on partnership deal
• What does the future hold for Treasury Wine (ASX:TWE) after China’s tariff?
• Australia’s money supply rises 12%, but it’s only going to a few
• Charter Hall (ASX:CHC) share price higher on 555 Collins Street update
• Cluey (ASX:CLU) share price jumps 12% after IPO before fading

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Uscom (ASX:UMC) share price gained 10% today appeared first on The Motley Fool Australia.

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The Archer Materials Ltd (ASX: AXE) share price lifted today after the company announced a partnership agreement with Max Kelsen.

In early trade, the Archer share price reached an intraday high of 58.5 cents but has since retreated to 56 cents, up 3.7%, at the time of writing. In comparison, the All Ordinaries Index (ASX: XAO) is also higher, up 0.6% to 6,964 points.

What’s driving the Archer share price forward?

The Archer share price is on the move today following its collaboration with global leading artificial intelligence (AI) company, Max Kelsen. Archer advised that it will work with Max Kelsen to develop quantum algorithms for its CQ quantum computing processor (chip).

Max Kelsen is an established leader in the field of artificial intelligence and machine learning applications. The software business represents a number of Fortune 500 companies as well as Australia’s most iconic brands. Its core business model revolves around workflow automation and value extraction from data that provides accurate modelling for critical decisions.

As both companies are members of the global IBM Q Network, the partnership will seek to use IBM’s Qiskit and quantum computers for testing and validation. This in turn will forge a pathway for commercialisation of the CQ chip, which aims to provide high-value add in the finance and telecommunications sector.

Under the agreement, Archer staff will work directly with the quantum computing team at Max Kelsen. Quantum processors will be used to run quantum algorithms which will target to develop business use-cases of CQ chip technology.

What did the CEO say?

Commenting on the partnership, Archer CEO Dr Mohammad Choucair said:

As part of Archer’s forward-looking strategy, the partnership with Max Kelsen – a leading AI and quantum computing firm – is a key step forward in the commercialisation of our CQ chip technology.

It’s a great example of how two Australian IBM Q Network members are working together to realise the commercial potential of quantum computing.

We will use IBM’s Qiskit and quantum machines to validate our work, and once validated, Archer intends to apply the end-user cases, algorithms and Qiskit to CQ chip hardware, which demonstrates the increasing value our partnerships bring as we progress in our development.

About the share price

The Archer share price has risen strongly since the start of the year, thanks to the broard surge in investor hype within the tech industry.

The Archer share price is up more than 250% in the last 12 months, and reached a 52-week high of 81.5 cents in May.

More reading

• S&P Global set to launch world’s first cryptocurrency index
• Why the MSM (ASX:MSM) share price has gone gangbusters again
• Real-time ASX price data becoming FREE for regular punters
• ASX shares looking awesome for next year: economist
• Why the Xtek (ASX:XTE) share price is edging higher today

Motley Fool contributor Aaron Teboneras 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 proposal by Treasury Wine Estates Ltd (ASX: TWE) to spin off its Penfolds business was put on hold recently to allow the company to focus on responding to China’s trade tariffs and the ongoing anti-dumping probe by China into imports of Australian wine.

As tensions between Australia and China escalated, Treasury Wines responded to the tariffs at the end of November. The Treasury Wine share price then tumbled to a near 5-year low, trading at $8.40 as of 1 December.

Response to trade tariffs

 Treasury Wine’s response plan included the following key items:

• reallocation of Penfolds Bin and Icon range from China – which represent 25% of the company’s annual global Penfolds allocation volumes – to other key luxury growth markets including Asian markets outside of China, Australia, the US and the Europe.
• reallocation of luxury grape sourcing to other premium Australian portfolio brands, which have been significantly
  supply constrained over recent years.
• acceleration of its multi-country of origin portfolio growth strategy, with a focus on growing sourcing from its existing asset base in France and potentially from China.

In the week or so following the release of its response, the Treasury Wine share price has risen by 9.5% to $9.20.

International support from parliamentary leaders

More than 200 parliamentarians from 19 countries have formed an alliance called the Inter-Parliamentary Alliance on China Policy (IPAC). This is led by global legislators who are senior politicians aiming to maintain a free, open and rules-based international trade order.

The alliance recently launched a global support for the Australian wine movement in response to this wave of Australia–China trade tension, via a global campaign calling for people to drink Australian red wine in December.

Treasury to diversify away from China

A research report out of Bell Potter estimated that the tariffs from China will impact Treasury Wine’s earnings in the near term, and thus the broker lowered the company’s target share price to $8.20.

In response to the collapse in demand, Treasury CEO Tim Ford said “We are moving on with a plan…to build the markets outside of China, and that’s what we’ll continue to do.”

Bank of America analyst David Errington also noted that Treasury Wine will now be focusing on other markets, stating: “Treasury Wine will most likely divert about 1.5 million cases a year from China to other markets by 2023, and China’s earnings contribution to the company would almost halve by then.”

About the Treasury Wine share price

The Treasury Wine share price currently sits at $9.20 as of 9 December, up 9.4% from its 1 December low. Treasury Wine shares are down 43% in the year to date, leaving the company with a market capitalisation of $6.67 billion.

More reading

• Which ASX shares will China ‘punish’ next?
• Zip and Creso Pharma were among the most traded shares on the ASX last week
• Why Cashrewards, Doctor Care Anywhere, Kogan, & Treasury Wine are pushing higher
• 2 defensive ASX dividend shares for income
• What big brokers think of the Treasury Wine (ASX:TWE) share price now

Motley Fool contributor MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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 we all know, 2020 has been a rather strange and unconventional year. The coronavirus pandemic is mostly to blame of course. It’s hard to imagine the sight of a mask in public being considered anything but ‘normal’ these days. But it wasn’t too long ago that it was a strange sight. And I’m not sure anyone had even heard the phrase ‘social distancing’ before the start of this year either. Yet it’s now part of our common lexicon.

But apart from these new ‘pandemic management’ norms, one of the largest changes we have seen across the economy (and society) has been the influx of government stimulus. The levels of money that the state and federal governments have injected into the economy over this year have been astronomical.

It had made the famous ‘$900 cheques’ of the global financial crisis-era seem like pocket change. Think about it. JobKeeper at $1,500 a fortnight (since reduced) for anyone who couldn’t work due to the pandemic, a doubling of ‘the dole’ (aka JobSeeker), rolling stimulus cheques to pensioners and other welfare recipients… all of this would have been inconceivable just last year.

And yet here we are.

Money: From the many to the few

But actions have consequences. And one of the consequences of this stimulus is a massive increase in money circulating through the economy. According to reporting in the Australian Financial Review (AFR) yesterday, we can put a number on this extra money sloshing around. The AFR reports that the Australian money supply has increased by 12.3% in the 12 months to October 2020. That ‘supply’ is of ‘broad money’, which, according to the AFR,  includes ” just about every form of money in an economy, including currency, deposits, securities [shares] and bonds”.

In terms of just cold hard cash, the number is even higher – a 19% increase over the same period.

So we should all be feeling 12-20% richer, right?

Well, the AFR also reports that this massive increase in money is disproportionately flowing to a relatively small group of people. This problem was not caused by the pandemic, but it was exacerbated by it.

Labour vs capital

The AFR quotes Australia and New Zealand Banking GrpLtd (ASX: ANZ) chief economist Richard Yetsenga on this matter:

A pre-COVID problem was not just the existence of historically slow economic growth in many economies but how that growth was distributed… Superstar firms, technology companies, some natural resource companies and even some of the super-rich have been winners from the global growth of the last 10–20 years.

But median wages in many economies have not increased the way we might have expected and certainly not in a way that was consistent with historical experience.

Here Mr Yetsenga is referring to the gap between the share of national income that labour (wage and salaries) receives compared to capital (invested money). This gap has reportedly been widening for decades.

According to the AFR, the ‘labour share’ was more than 60% of the national income in the early 1980s. Today, it is closer to 50%. Conversely, the ‘capital’ share of national income has gone from just over 20% to more than 35% over the same period. Boiled down, this essentially means wages have stayed flat in real terms, while ‘capital’, like shares and property, have gone up. Most people earn wages and salaries. Far fewer own shares and houses.

As discussed earlier, the AFR supposes this effect has been accelerated in 2020. This has no doubt been helped by stubbornly-high housing prices across the country (coming after a decade of massive growth). As well as surging stock markets, both here and abroad (especially in the United States). Record low interest rates, as well as new quantitative easing (QE) programs, have likely exacerbated this situation further.

Actions have consequences indeed.

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Motley Fool contributor Sebastian Bowen 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 Charter Hall Group (ASX: CHC) share price is pushing higher on Wednesday after providing an update on its flagship office fund CPOF.

In afternoon trade the property company’s shares are up slightly to $14.28.

This leaves the Charter Hall share price trading within sight of its record high of $14.79.

What did Charter Hall announce?

This afternoon Charter Hall announced that CPOF has agreed a pre-lease from a leading global technology company as the anchor tenant customer for its new $750 million 555 Collins Street office development.

It also revealed that construction will now commence having completed the demolition process during 2020. Lendlease Group (ASX: LLC) has been named as the project’s construction partner.

What is the 555 project?

According to the release, the 555 project initially includes 48,000sqm of premium grade office space and over 2,300sqm of retail amenity.

The company notes that the project secured planning approval from the Victorian State Government under its Building Recovery Taskforce earlier in the year.

Management advised that it will accommodate up to 7,500 workers and provide a future-proofed workplace that will empower tenants and their staff to work in their own authentic way, supported with world-leading tech-enabled environments and health and wellness facilities.

Charter Hall’s Managing Director and Group CEO, David Harrison, commented: “This major pre-commitment provides the momentum for CPOF to proceed with construction and advance further leasing interest during the development phase, as we did on the Wesley project, which was 100% pre committed 12 months before practical completion.”

“555 Collins Street is a visionary commercial precinct that will create a new benchmark for office development in Australia. We expect a flight to high quality modern office buildings as tenant customers refine their workplace to meet the changing appetite for modern, technology and health/hygiene driven accommodation requirements” added Mr Harrison.

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Motley Fool contributor James Mickleboro 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 Cluey Ltd (ASX: CLU) share price has landed on the Australian share market on Wednesday following the completion of its initial public offering (IPO).

In morning trade the education technology company’s shares were up as much as 12.5% to $1.35.

Since then the Cluey share price has given back these gains and is trading roughly flat at $1.21.

The Cluey IPO.

This morning Cluey became the latest company to complete its IPO when it raised $30 million at an offer price of $1.20 per share. This gives it a market capitalisation of approximately $143.5 million.

Management advised that its IPO was well supported by reinvestment from existing shareholders and a range of new institutional and retail investors. This led to applications exceeding the offer size multiple times.

According to the release, the company intends to use the proceeds to fund its growth strategy. This involves growing its student enrolments as well as exploring further product, channel, market growth opportunities and potential strategic acquisitions.

What is Cluey?

Cluey describes itself as an innovative edtech company. It integrates personal tutoring with its scalable technology platforms and utilises data and learning analytics to support the delivery of quality learning to thousands of Australian students.

Since launching in July 2018, the company has delivered over 192,000 learning sessions and is growing strongly. It delivered 52,700 sessions in the first quarter of FY 2021, up 338% on the same quarter in FY 2020 and up 41% compared to the prior quarter.

In addition, its strong growth has continued in October and November with 38,000 sessions, up 261% compared to the same period last year.

Cluey’s Chief Executive Officer, Mark Rohald, commented: “Our listing is a significant milestone for our company. We’re excited about delivering our next phase of growth and we welcome our new investors on this journey.”

“We continue to see strong growth in the demand for our services and are accelerating the recruitment of additional customer acquisition personnel ahead of the start of the new academic year in Q3 FY2021, our peak enrolment period.”

“A range of new initiatives are on track to be delivered in Q3 FY2021, including small group tutoring for secondary school students, and we remain confident of achieving the FY2021 financial forecasts set out in our prospectus,” he concluded.

Cluey is aiming to deliver a 218% increase in revenue to ~$15.5 million in FY 2021. However, it is also forecasting a sizeable $32.9 million net loss, which is more than double FY 2020’s loss of $16.1 million.

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Motley Fool contributor James Mickleboro 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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