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The Aussie real estate investment trusts (REITS), or real estate developers, were among the best-performing large caps and mid cap ASX shares today.

For example, out of the top 10 large caps, the share prices of Lendlease Group (ASX: LLC), Vicinity Centres (ASX: VCX), and Scentre Group (ASX: SCG) all increased by 2% or more. In the mid caps, Cromwell Property Group (ASX: CMW), and Abacus Property Group (ASX: ABP) sit on the leaders table. 

What drove the ASX REITs performance today?

One strong driver is the housing figures released today by CoreLogic.

CoreLogic’s most recent data shows that house prices nationally rose by 0.4%, with the exception of Victoria. Small markets like Darwin and Adelaide saw increases of 1.2%, with Canberra and Hobart recording rises of 1%. Perth and Brisbane recorded modest changes, up 0.6% and 0.5% respectively, while Sydney’s housing prices edged up 0.1%. 

CoreLogic pointed to low stock levels and strong demand as drivers behind the October rises. As quoted in the Australian Financial Review (AFR), CoreLogic head of research Tim Lawless went on to say; 

I think partly we can attribute that to the fact they generally have had better management of the virus itself, so we haven’t seen further lockdowns. But also they have better affordability and seem to be quite attractive to first-home buyers so there are some outside factors beyond the virus being better contained.

Other events 

DEXUS Property Group (ASX: DXS) today announced it has sold a North Sydney office tower above its book value. Moreover, it was recently reported that Amazon.com, Inc. (NASDAQ: AMZN) would be opening one of its fulfillment centres on a Dexus logistics park. It is estimated that Dexus has generated around $2 billion from planned exits and unsolicited offers recently. In a conversation with the AFR, Dexus chief investment officer Ross Du Vernet said:

We’re selling assets at book value and we’re buying back our stock at more than a 20 per cent discount to NTA [net tangible assets]. That is a very straightforward and value-enhancing trade for us.

The Dexus share price rose by 2.26% today.

Additionally, GPT Group (ASX: GPT) announced today it is planning to sell its 25% stake in 1 Farrer Place, the Sydney CBD landmark. At 30 June, its stake was valued at $584.6 million. The GPT Group has claimed two drivers behind the decision. First, the company prefers to hold or manage office towers it owns 50% or more of. Second, it intends to use the funds to grow its already increasing logistics pipeline.

The GPT share price finished the day up 2.98%.

More reading

• Why Abacus, Amaysim, CSR, & Telix shares stormed higher today
• Why the Abacus (ASX:ABP) share price is on the run today
• Elections, pandemics and rate cuts. Where to next for ASX share prices?
• ASX property shares buoyed by latest market data
• The Mosaic (ASX:MOZ) share price comes alive, up 5%

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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As we would probably all be aware of by now, the 2020 US presidential election is just around the corner. President Donald Trump is running for re-election against his Democratic challenger, former vice president Joe Biden. We can expect to see results to start coming in on Wednesday afternoon (our time).

Regardless of your personal feelings about the election and the candidates themselves, I think it’s a good time to evaluate which outcomes would be benevolent, and malevolent, for our ASX share market.

Elections matter to the sharemarket. Often, presidential candidates and the parties they are running ahead of, have vastly differing visions for how they want to shape and structure the US economy. And how the US economy is structured has a direct relationship with the US stock market, and by extension, or own S&P/ASX 200 Index (ASX: XJO).

Election season

So which outcome would be best for ASX shares? Well, let’s just say that the worst outcome would be an uncertain or contested result. Markets hate uncertainty at the best of times and having the world’s largest economy and market with a leadership vacuum for a month or longer would be a terrible outcome for global markets in my view.

But getting that scenario out of the way, let’s look at the options.

Reporting in the Australian Financial Review (AFR) today suggests that the best outcome for markets would be a Democratic ‘clean sweep’. This would involve Joe Biden winning the Presidency, as well as the Democratic Party winning a majority in both Houses of Congress (America’s parliament). Whilst the presidential election is going to be the most-watched election this week, remember at the same time, elections for the full US House of Representatives, as well as a third of the US Senate, are also taking place.

Some possible scenarios to consider

The AFR notes that if the Democrats sweep all 3 elections (sometimes referred to as a ‘blue wave’), the prospects of passing larger additional stimulus bills would increase dramatically. Larger stimulus means more money in the economy, which obviously is great news for US companies and the global economy (and markets), at least in the short-term.

However, if Biden or Trump wins the presidency, but the opposing side wins one or both houses of Congress, it could result in much smaller stimulus measures, or even gridlock.

The AFR quotes New York-based TPW Investment Management chief investment officer Jay Pelosky as stating the following on potential outcomes:

A Blue Wave would lead to stimulus akin to the already approved House bill for roughly $US2.2 trillion ($3.1 trillion) and would represent the start of what I expect could be a surprisingly active and progressive Biden administration.

A Trump win and Republican Senate would suggest a smaller stimulus sized around the White House $US1.5 trillion proposal.

A Biden win and a Republican Senate would result in gridlock, be extremely problematic for the US place in the world and near-term lead to a small stimulus – think Senate leader Mitch McConnell’s $US500 billion program.

Foolish takeaway

So at this point, a ‘blue wave’ Democratic sweep looks to be the most market-friendly outcome, for both the US and Australia’s ASX. According to the AFR, current polling is suggesting this outcome is a definite possibility (around a 75% chance) as well, but not a done deal. I guess we shall have to wait until Wednesday to really find out how the markets take the result!

More reading

• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• Why the CSR (ASX:CSR) share price is climbing today
• Top brokers just upgraded the ResMed (ASX:RMD) share price and this other ASX stock
• 3 ASX 200 shares that received broker upgrades last week
• Takeovers will continue to rock ASX shares

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The SEEK Limited (ASX: SEK) share price fell heavily in morning trade, following the response to a short seller attack late last week.

At one point, shares in the online employment company fell to as low as $19.78, reflecting an 8% decline. However, the SEEK share price has since recovered to finish the day marginally down at $21.53, down 0.8%.

What happened?

Last week, Blue Orca Capital took aim at Seek, stating that its Chinese business, Zhaopin was operating fraudulently.

The activist investment firm reported that SEEK’s subsidiary was being inundated with fake positing from deregistered, in-liquidation and abnormal companies. In addition, it was said that Zhaopin was carrying dangerous levels of debt, and has repeatability tapped capital markets to fund acquisitions.

Blue Orca backed its statements, saying it had investigated the claims. The firm said:

Companies we called about their job postings on the website even stated directly that the posts were fraudulent. Our due diligence also uncovered a whistle-blower claim by a Chinese college student alleging that Zhaopin pays people to submit fake resumes. We think Zhaopin’s platform is rotten, which is devastating for Seek’s prospects.

Blue Orca said that SEEK’s shares were grossly misplaced and rated them at $7.20 a piece.

SEEK responds

Earlier today, SEEK responded to the report, strongly refuting the statements and allegations made in relation to its Zhaopin business. SEEK believed that the goal of the report was to use speculative judgments to generate negative publicity, which is consistent with short-seller firms.

The online employment giant advised that the report contained many inaccuracies and the claims made were very serious and unsubstantiated. The company reaffirmed that it followed disclosure obligations and was confident in its long-term outlook.

SEEK said that Zhaopin had been profitable for more than 10 years, and continued to generate strong operating cash flow. The Chinese business had a net cash position of $222 million at the end of June.

Furthermore, SEEK confessed that fake advertisements and candidate CV’s was common in all online employment markets globally. It said it was a global leader in tackling this issue, and had strict processes to verify onboard customers and candidates.

The company acknowledges that while the Chinese market is highly competitive, Zhaopin leads in many, but not all key metrics.

SEEK co-founder and CEO Andrew Bassat commented on the article. He said:

We accept that market participants have different opinions, however this report is littered with inaccuracies. We are well positioned for future growth and remain confident in SEEK’s long-term outlook.

The company will provide a trading update at its annual general meeting on 19 November.

SEEK share price recovery

The SEEK share price has not only recovered today, but has neared its all-time high of $24.09 achieved in January. It seems though even a negative press release cannot dampen the online employment meteoric share price rise.

It’s evident that investors have disregarded the bad news from Blue Orca and see value in the $7.5 billion company. SEEK continues to recover from its 52-week low of $11.23 reached in March, representing a gain of 89%.

More reading

• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• Why 5G Networks, Cedar Woods, SEEK, & Tyro shares tumbled lower today
• SEEK (ASX:SEK) share price drops 5% after responding to Blue Orca short seller attack
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the SEEK (ASX:SEK) share price rebounded after being 8% down appeared first on Motley Fool Australia.

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If you’re looking to add some growth shares to your portfolio in November, then you might want to take a look at the ones listed below.

I believe they are among the best on the market and destined to deliver strong earnings growth over the 2020s.

Here’s why I rate them highly:

a2 Milk Company Ltd (ASX: A2M)

A2 Milk Company is a growing dairy company best known for its a2 Platinum infant formula range. It has been a big seller in China due to its premium brand and its use of milk from cows that have been specially selected to naturally produce milk with only the A2 beta-casein protein type. This protein is believed to be easier to digest than milk with both A1 and A2 proteins.

Although its sales in China have ballooned over the last few years, it is worth noting that its market share in the country is still very modest. I believe it has the potential to win a greater market share over the 2020s. Especially given its expanding distribution footprint through mother and baby stores and its strong presence on Chinese ecommerce platform.

Combined with its growing fresh milk footprint and potential acquisitions, I believe a2 Milk Company can grow its earnings at an above average rate over the next decade. Though, it is worth noting that FY 2021 is likely to be subdued due to COVID impacts.

Pushpay Holdings Group Ltd (ASX: PPH)

A second ASX growth share to buy is Pushpay. It is a donor management and community engagement platform provider for the faith sector. Its platform makes donating a seamless experience for both the giver and the receiver. Unsurprisingly, given the shift to a cashless society, this has been well-received by churches in the United States and led to a surge in customer numbers over the last few years.

This has underpinned very strong sales and earnings growth and shows no signs of slowing any time soon. In FY 2021, Pushpay is expecting to more than double its operating earnings once again. After which, it has its eyes on winning a 50% share of the medium to large church market in the future. Management estimates this to be a US$1 billion opportunity, which is almost 7 times greater than the revenue it generated in FY 2020.

Pushpay is due to hand in its interim report later this week, so investors may want to hold out for that release before investing. Though, I’m confident the company will smash expectations during the first half.

More reading

• 4 outstanding ASX 200 shares to buy with $4,000
• I plan to invest heavily in ASX shares next week
• 3 great ASX growth shares to buy in November
• 3 explosive ASX growth shares to buy with $3,000
• Why these ASX mid cap tech shares could smash the market in the 2020s

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) started the week in fine form and charged higher on Monday. The benchmark index rose 0.4% to end at 5,951.3 points.

Four shares that climbed more than most today are listed below. Here’s why they stormed higher:

Abacus Property Group (ASX: ABP)

The Abacus Property share price rose 3% to $2.85. This follows the release of an announcement by the property company this morning. That announcement reveals that Abacus has signed an unconditional agreement to acquire the remaining 75% interest in self-storage company, Storage King.

Amaysim Australia Ltd (ASX: AYS)

The Amaysim share price jumped 11% to 74.5 cents after announcing the sale of its mobile business to Optus. According to the release, the two parties have signed an agreement for a cash consideration of $250 million. This follows the recent sale of its Click Energy business for $115 million. The company intends to return the funds to shareholders. At this time, it estimates that approximately $207.2 million to $225.7 million will be available for distribution to shareholders via a $0.67 to $0.73 per share dividend.

CSR Limited (ASX: CSR)

The CSR share price stormed 5.5% higher to $4.66 following the release of its half year results. The building products company reported a 6% decline in revenue to $1.07 billion. Management advised that this reflected a slowdown in residential construction and lower aluminium prices over the first six months. It appears as though the market was expecting much worse from CSR.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price rocketed 30% higher to $2.16. Investors were buying the pharmaceuticals company’s shares after it announced a strategic commercial partnership with China Grand Pharmaceutical and Healthcare Holdings. The agreement is for its portfolio of Molecularly-Targeted Radiation products. It includes US$25 million up-front non-refundable prepayment to Telix and up to US$225 million in regulatory and commercial milestone payments.

More reading

• Telix (ASX:TLX) share price jumps 30% to an all-time high. Here’s why.
• Why the Boral (ASX:BLD) share price is up 6% today
• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• Why the Abacus (ASX:ABP) share price is on the run today
• Why the CSR (ASX:CSR) share price is climbing today

Motley Fool contributor James Mickleboro owns shares of TELIXPHARM DEF SET. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Telix Pharmaceuticals Ltd (ASX: TLX) share price has started the week with a bang, rocketing by more than 30% today in welcome news for shareholders.

Telix released a positive announcement during mid-afternoon trade, sending its shares to a new record. Shares in the biopharma company later pulled back just slightly to close the day up 28.96% at $2.16. 

Let’s take a look and see why the market responded so positively to Telix today.  

Landmark deal

According to the release, Telix advised it has entered a strategic commercial partnership with China Grand Pharmaceutical and Healthcare Holdings (CGP). The milestone agreement will see China Grand Pharmaceutical have access to Telix’s portfolio of molecularly-targeted radiation products (MTR).

China Grand has been chosen as Telix’s exclusive partner for the Greater China market. The deal includes the development and commercialisation rights to Telix’s prostate, renal and brain cancer imaging and therapeutics MTR products.

The deal in detail

Under the agreement, China Grand will provide an up-front payment of US$25 million to Telix. The credit does not consist of any future regulatory and commercial milestone payments.

Up to US$225 million is available in payments relating to key targets being met. They include up to US$69 million in attaining marketing authorisation from the National Medical Product Administration in China. Furthermore, up to US$156 million will be paid to Telix if net sales performance across the region is met during the term of the agreement.

China Grand Pharmaceutical will invest US$65 million in clinical costs to help develop Telix’s prostate and renal cancer products in China.

Royalties on therapeutic product sales will paid in addition to the milestone payments.

The initial term of the deal is valid for 10 years from the commencement date of each product being granted marketing authorisation.

Strategic equity investment

China Grand will make a strategic equity investment of US$25 million in the private placement of 20,947,181 fully paid ordinary Telix shares. The shares will be issued at a price of $1.69 and locked to a holding period of no less than 12 months.

Management commentary

Telix CEO Dr Chris Behrenbruch commented on the partnership:

Telix’s mission is to be a leading global oncology company and China is an important future market for our products. We are pleased to be working with CGP to deliver our diagnostic imaging and therapeutic products to cancer patients in China.

We believe that CGP possesses the technical experience and execution infrastructure to be an ideal clinical and commercial partner for Telix in China.

China Grand executive deputy officer Mr Frank Zhou added:

China Grand Pharma has a strong commitment to oncology, including radioactive products, in China and around the globe.

We firmly believe in the potential of Telix’s product portfolio to have a significant clinical impact in China. It is an honour for us to have the right to bring Telix’s unique product range to our doctors and patients with major unmet medical needs. At the same time, our close clinical involvement will help bring strength to Telix’s product development and reach. We are very excited about this long-term partnership.

More reading

• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher
• Telix (ASX:TLX) share price jumps 8% higher on FDA update

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Boral Limited (ASX: BLD) is up 5.6% in late afternoon trading. That places Boral shares in the top 3 performers on the S&P/ASX 200 Index (ASX: XJO) today, trailing only AMP Limited (ASX: AMP) and CSR Limited (ASX: CSR). The ASX 200 is up a more sedate 0.4%.

The share price of the construction material’s group was hit hard during the wider market panic following the outbreak of COVID-19, tumbling 65% from 21 February through to 23 March.

Shares have come roaring back since then, with today’s gains putting Boral’s share price up 168% from the 23 March lows. Year-to-date, shareholders are sitting on a gain of 7%, compared to a loss of 11% on the ASX 200.

What does Boral do?

Boral provides building products and construction materials to Australian and international markets. Its three divisions are: Boral Australia, its integrated construction materials business; USG Boral, its plasterboard joint venture in Asia, Australia and the Middle East; and Boral North America, a building products and fly ash business.

Globally, the company employs more than 23,000 employees and contractors across 783 operating and distribution sites.

Why is the Boral share price up more than 5% today?

Last week Boral announced an agreement to sell 50% of its USG Boral division to Gebr Knauf KG for just over US$1 billion (AU$1.4 billion). If you’re familiar with Boral, you’ll know its decision to expand operations into the United States has been a drag on its profits and share price.

There’s no new market news available today to send Boral’s share price sharply higher. But it’s worth noting that building products company CSR is also up more than 5% at time of writing. And cement building supplier James Hardie Industries plc (ASX: JHX) share price is up almost 3%.

This indicates investors are likely taking positions in shares that should benefit from the massive infrastructure programs governments around the world are rolling out to help lift their economies from viral-induced recessions.

Although the outcome of the US election and the precise makeup of its next round of stimulus remain uncertain, the world’s biggest economy will most likely be signing off on a multi-trillion spending package in the near-term.

This, along with Australia’s own infrastructure cash splash and the massive development programs underway in China, should offer some healthy tailwinds for Boral’s share price.

More reading

• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• Elections, pandemics and rate cuts. Where to next for ASX share prices?
• AMP (ASX:AMP) share price up another 7% on top of last week’s record rally
• Why the CSR (ASX:CSR) share price is climbing today
• Takeovers will continue to rock ASX shares

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) ended today higher by 0.4% today to 5,951 points.

Here are some of the highlights from the ASX:

Westpac Banking Corp (ASX: WBC)

The big four ASX bank announced its FY20 result today, reporting that its cash earnings were down 62% to $2.61 billion and cash earnings per share (EPS) fell 63% to 72.5 cents. Statutory net profit fell by 66% to $2.29 billion.

Westpac attributed the large drop of profit to a number of one-off items including provisions and costs for the AUSTRAC proceedings ($1.3 billion), provisions for estimated refunds, payments, costs and litigation relating to the royal commission, write-downs relating to intangible items and asset sales and revaluations.

Excluding notable items, cash earnings still declined 34% because of the difficult operating conditions.

Westpac noted that more than two thirds of Westpac’s home loan customers on deferral packages have started making repayments again.

The big bank said it had a CET1 capital ratio of 11.13% at the end of FY20.

The board decided to pay a final, fully franked dividend of 31 cents per share. The total dividend to be paid represents 49% of Westpac’s statutory profit which is in line with the current APRA guidance.

Westpac’s CEO, Peter King, said that while Westpac expects the economy to grow in the rest of 2021 and 2022, unemployment would remain elevated for some time.

Mr King said: “We remain in an uncertain economic environment, however the recent budget has provided significant stimulus to businesses and households. Our economists expect at least half the personal tax cuts will be spent and businesses will respond in the generous depreciation allowances.”

The Westpac share price fell by 0.6% today.

CSR Limited (ASX: CSR)

The CSR share price rose around 6% today in reaction to its half-year result.

CSR’s highlight was that the building products earnings before interest and tax (EBIT) increased to $96.3 million, up from $95.9 million with the EBIT margin increasing to 12.1% to 11.4%. The company said that strong cost control and operational efficiency offset the slowdown in residential construction activity which declined 7%.

There were no significant property earnings recorded during the period, however a further sale of industrial land at Horsley Park in NSW was secured with $226 million in development sale proceeds which are expected over the next four years.

Aluminium EBIT of $6.2 million was down from $25.4 million. This reflected a significant decline in aluminium prices due to COVID-19 impacts.

Net profit after tax dropped 15% to $68.8 million. Excluding significant items, net profit only fell 7% to $66.4 million.

The CSR board has declared an interim dividend of 8.5 cents per share as well as a special dividend of 4 cents per share.

In the first four weeks of the second half of FY21, building products revenue is down 6%. Management said that the longer term outlook remains uncertain as COVID-19 continues to impact the economy.

SEEK Limited (ASX: SEK)

The employment portal business responded to Blue Orca Capital’s allegations today, saying that it made many inaccurate statements and it said those allegations were unsubstantiated.

SEEK said that Zhaopin continues to be profitable, as it has been for over 10 years and it continues to generate strong operating cash flows and had a net cash position of $222 million at 30 June 2020.

The ASX 200 company said that Zhaopin has strict processes in place to verify customers. It stated that some negative examples can be found on any online employment marketplace but that the assertions made in the report are greatly exaggerated and misleading.

It also said that Zhaopin is a market leader on many key metrics, though not in every single one.

SEEK’s CEO and co-founder Andrew Bassat said: “We accept that market participants have different opinions, however this report is littered with inaccuracies. We are well positioned for future growth and remain confident in SEEK’s long-term outlook.”

The SEEK share price ended the day down another 1%.

More reading

• Why 5G Networks, Cedar Woods, SEEK, & Tyro shares tumbled lower today
• Why the CSR (ASX:CSR) share price is climbing today
• Top brokers just upgraded the ResMed (ASX:RMD) share price and this other ASX stock
• 3 ASX 200 shares that received broker upgrades last week
• Takeovers will continue to rock ASX shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It was a great start to the week for the S&P/ASX 200 Index (ASX: XJO) on Monday. The benchmark index was back in form and rose 0.4% to 5,951.3 points.

Four shares that failed to follow the market higher today are listed below. Here’s why they tumbled lower:

5G Networks Ltd (ASX: 5GN)

The 5G Networks share price dropped 4.5% to $1.58 following the release of its first quarter update. According to the release, the telecommunications company delivered strong cash receipts of $14.3 million, which was an increase of 14% on previous quarter. Offsetting this was news that Keybridge Capital has applied to the Takeovers Panel seeking a review of its acquisition of Webcentral Group Limited (ASX: WCG).

Cedar Woods Properties Limited (ASX: CWP)

The Cedar Woods Properties share price fell 2.5% to $5.59. This afternoon the property company released its first quarter operational update. That update revealed that pre-sales are at $454 million in FY 2021. This is up 11% on the $409 million reported at the same time last year. Management advised that approximately 60% of pre-sales are expected to settle in FY 2021, with the balance contributing to earnings in FY 2022 and FY 2023.

SEEK Limited (ASX: SEK)

The SEEK share price slid 1% to $21.33 after responding to a short seller attack. SEEK advised that its Zhaopin business strives to be an industry leader in dealing with fake ads and candidate CVs, which do occur on all job listings websites globally. It feels the allegations are greatly exaggerated and misleading. It also defended its cash flows and pointed out that it has a long track record of generating strong operating cash flows.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price dropped 3% to $3.58. This is despite the release of a trading update this morning which revealed transaction value of $1.911 billion in October. This was up 9% on the prior corresponding period. I suspect this was offset by general weakness in the tech sector following a selloff on the Nasdaq on Friday night.

More reading

• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• SEEK (ASX:SEK) share price drops 5% after responding to Blue Orca short seller attack
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week
• The Credit Clear (ASX:CCR) share price has rocketed 133% since its IPO this week

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The second largest buy now, pay later (BNPL) player in Australia, Zip Co Ltd (ASX: Z1P) has lost a bit of shine in the past week as investors pummelled its shares down by 15% for the week. In today’s trading, Zip’s share price is down another 1% to $5.66 per share. 

How is Zip different to other players 

Firstly, Zip and Afterpay Ltd (ASX: APT) are technically in different sectors – with Zip categorised as a financial company, and Afterpay included as part of the ASX Technology Index (ASX: XIJ). However, they are competitors for all intents and purposes, as they offer similar services.

The biggest difference between Zip and Afterpay is in the way they earn revenues. Zip collects around 70% of its revenue from late fees incurred by its customers, whereas Afterpay earns 80% of its revenue from merchants. Zip also caters to a broader customer base, as it lets customers use its services at any merchant. In contrast, Afterpay only allows customers use its product at vetted merchant partners.

Zip’s business is also more diversified than other BNPL players as it focuses on expanding its addressable market. Its suite of products – Zip Pay, Zip Money, and Zip Business – supposedly provide a complete ecosystem experience for its customers.

Why did Zip’s share price fall 15% in the past week?

A few things have weighed on investors’ minds regarding Zip’s business. 

Firstly, the share price fall reflects the general perceived uncertainty surrounding the BNPL industry. Tighter regulations weigh heavily on the whole industry, even though Zip should be less adversely affected as it’s already regulated by the National Credit Act.

Analysts expect Zip’s margins to come under pressure as direct competition intensifies due to a low barrier of entry into the industry. Already we are seeing competitors entering this lucrative market. It’s also believed that Zip’s foray into the much larger overseas markets, especially the US through its recent acquisition Quadpay, may come a little too late to compete with Afterpay. 

Investors have also been concerned about the bad debts that sit on Zip’s books. Its bad debts ratio sits at 2.4%, significantly higher than Afterpay’s 0.85%, despite Zip conducting credit checks and collecting more information from its customers as required by the Credit Act. 

And finally, Westpac’s sale of $367 million stake in Zip last week after switching allegiance to Afterpay didn’t do a lot of good to restore confidence in the Zip share price.

What’s in store for Zip?

As mentioned, regulation and credit delinquency may be the most significant factors for Zip’s share price going forward. The key lies in its ability to navigate through the impending regulatory jungle, while also keeping tabs on its bad debt by employing strong credit risk management of its books.

More reading

• Where to invest $1,000 into ASX shares this week
• Meet Afterpay (ASX:APT)’s latest BNPL challenger
• 5 best performing large caps in 2020
• The Megaport (ASX:MP1) share price sank 16% lower in October: Time to buy?
• 3 reasons the Afterpay (ASX:APT) share price smashed the market in October

The Motley Fool contributor Eddy Sunarto has no shares in the companies mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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