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Some Australians could slow their spending in the months to come amid stagnant wages and cost increases for necessities, according to a UBS analyst.

As reported by The Australian, UBS analyst Shaun Cousins says lower and middle-income earners could tighten their purse strings. But those who earn $120,000 or more a year will keep burning through the savings they accumulated during the pandemic.

Notably, Cousins says this means retailers that attract higher net worth clientele, such as S&P/ASX 200 Index (ASX: XJO) favourites Harvey Norman Holdings Limited (ASX: HVN) and Lovisa Holdings Ltd (ASX: LOV), could be less affected by fiscal tightening.

The other side to this is that more value-oriented ASX 200 retailers like JB Hi-Fi Limited (ASX: JBH) could see a drop in sales as bargain hunters start to feel the bite of a rising cost of living.

The effects are unlikely to be felt immediately. But they could start to add up from November onwards and culminate in a slowdown in February next year.

Cousins said:

The Australian consumer is facing significant headwinds from the rising cost of living across energy, food, fuel and interest rates, with house prices falling.

These headwinds have yet to weigh on spending with the strong labour market – low unemployment and rising wages despite falling purchasing power – and elevated recent household savings key supports as the consumer returns to traditional spending patterns and engages in catch-up spend after difficult years with Covid.

Cousins continued:

We fear a slowdown in spending from November onwards, with the fuel excise, cumulative impact of the rising cost of living. If the consumer remains buoyant in November we suggest Christmas will also be strong with the prospect spending slows from February 2023 onwards as the rising cost of living headwinds bite.

Consumer confidence rises along with the official cash rate forecast

The vast majority of people surveyed as part of the ANZ Roy Morgan Consumer Confidence index are positive about the prospects for their jobs and the economy at large. This may entice high-income earners to keep spending at premium retailers, The Australian reported.

The index gained 0.4% last week and currently stands at 86.

However, some dark clouds could form over this important benchmark. ANZ Roy Morgan head of Australian economics David Plank believes the rise in consumer confidence results from a “misplaced” interpretation of RBA commentary that the next rate hike in October may not be as severe.

Plank said:

This may indicate that people with mortgages have taken comfort from the recent commentary that the RBA might scale back the size of rate increases in October. We think that commentary is misplaced and expected another 50bp from the RBA in October. This might come as something of a shock for those with mortgages.

Meanwhile, UBS raised its expectations for the cash rate peak to 3.1% from 2.85%. This suggests further work is needed to get inflation back under control, the article said.

The cash rate is currently 2.35%.

The post What’s the outlook for ASX 200 retail shares as inflation begins to bite? appeared first on The Motley Fool Australia.

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More reading

• 5 ASX retail shares spruiking the highest dividend yields right now
• The ‘in’ crowd: How are the ASX 200 newcomers performing today?
• The ASX 200 is getting a shakeup today. Here’s the tea
• Here’s why this ASX 200 retail share is on my buy radar
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended JB Hi-Fi Limited and Lovisa Holdings Ltd. 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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2022 hasn’t been a kind year for most ASX tech shares.

At least, not yet.

Technology companies are often priced with distant future earnings in mind. Meaning they’ve been particularly vulnerable to rising interest rates, which drive up the present-day cost of investing in those future earnings.

To give you some idea of the headwinds facing ASX tech shares this year, the S&P/ASX All Technology Index (ASX: XTX) is down 31% since the opening bell on 4 January. That’s far steeper than the 11% loss posted by the All Ordinaries Index (ASX: XAO).

But not all technology stocks have lost ground in 2022.

Share price up on revenue and earnings growth

Atturra (ASX: ATA) counts among the ASX tech shares bucking the trend, with the share price up 25% year-to-date.

Atturra is a relative newcomer to the ASX, listing on 22 December 2021. The company provides a range of enterprise advisory, consulting, and IT services and solutions to government and corporate entities.

The company released its first FY22 results as a listed entity on 30 August.

Among the highlights, the newly minted ASX tech share reported a 29% year-on-year increase in earnings before interest and tax (EBIT) of $12.4 million.

FY22 revenue reached $134.6 million, up 37% from the prior year. And Atturra held $35 million in cash at hand as at 30 June, with a debt of $4.8 million.

These are among the reasons that 1851 Capital’s Chris Stott told Livewire, “We’ve gone with Atturra,” when asked for a microcap stock that can take advantage of the current conditions and “really set itself up for the coming years”.

Why this small-cap ASX tech share ‘stands out’ right now

According to Scott, the recently listed ASX tech share “trades on seven times EBIT… So, it’s doing very well in terms of, it’s performed well since its listing.”

Scott added:

It’s got $30 million of net cash on the balance sheet. It’s been upgrading its earnings since the listing. So, [a] very well managed little IT services business, off the radar. Not many institutions on the register, not well covered by the stock broking community. So that one stands out for us right now.

How has this ASX tech share been performing?

Up 25% this year to 75 cents per share, the Atturra share price reached all-time highs of 84 cents on 7 June.

Over the past month, the ASX tech share has gained 12%, compared to a 4% loss posted by the All Tech Index.

The post Why this small-cap ASX tech share ‘stands out’ right now: expert appeared first on The Motley Fool Australia.

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More reading

• Why is the Vulcan Energy share price lifting today?
• Why Brickworks, IDP Education, IGO, and New Hope shares are racing higher
• What’s the outlook for ASX 200 retail shares as inflation begins to bite?
• Do AFIC dividends come fully franked?
• Why has the Chalice Mining share price crashed 40% in 4 months?

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The Australian Foundation Investment Company Ltd (ASX: AFI), or AFIC for short, is a popular choice for many passive ASX investors. A listed investment company (LIC), AFIC invests its capital on behalf of its shareholders.

As such, it’s become a favourite over its long history for investors who just want a ‘set-and-forget’ type investment they can leave in the bottom drawer.

The popular alternative to this approach is, of course, the exchange-traded fund (ETF). ETFs have been around for far less than the 94-year-old AFIC. And yet they have exploded in popularity in recent years.

But index ETFs like the Vanguard Australian Shares Index ETF (ASX: VAS) rarely, if ever, pay fully franked dividends.

The Vanguard ETF’s dividend distributions typically come partially franked. Since not all shares in the ASX 300 Index pay fully franked dividends every year, it’s almost impossible for an index fund to give investors full franking credits. As a trust, an ETF can only pass through what it receives.

But is the same true of AFIC? Is this LIC the better choice for investors wanting to maximise the franking credits they can receive?

Do AFIC shares pay fully franked dividends?

Well, this is one area an LIC like AFIC might have an advantage. Like all LICs, AFIC is a company, not a trust. As such, it pays company tax on its profits, the process that generates franking credits in the first place.

Additionally, AFIC also holds a portfolio of blue-chip ASX shares that it manages on behalf of its investors. Some of its current top holdings are franking credit-spewing companies like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX BHP). When AFIC receives these franking credits, it can pass them straight on to shareholders.

But let’s turn to the numbers.

So AFIC has a very long history of funding fully franked dividends. In fact, it hasn’t missed a biannual dividend payment in at least 30 years. The last time AFIC didn’t provide a fully franked dividend was way back in 1994. So, yes, we can say with relative certainty that AFIC pays fully franked dividends.

This is not guaranteed to continue into the future of course. But it would be a historically significant occasion if AFIC announced a future dividend that came with anything less than full franking.

Over the past 12 months, AFIC shares have paid out an interim dividend of 10 cents per share and a final dividend of 14 cents per share, a pattern the LIC has held to since 2020.

This gives the AFIC share price a dividend yield of 3.15% on current pricing, which grosses up to 4.5% with the value of those full franking credits.

The post Do AFIC dividends come fully franked? appeared first on The Motley Fool Australia.

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More reading

• Here’s what this top broker is saying about the BHP share price
• Here’s why I decided to buy each of the big 4 ASX 200 bank shares
• Why China’s slowdown isn’t as bad as it looks for ASX 200 mining shares
• BHP share price gains amid improved Oz Minerals takeover rumours
• Looking to buy CBA shares? Here’s how the bank’s balance sheet stacks up

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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The Chalice Mining Ltd (ASX: CHN) share price has tumbled in the past four months.

Since the start of May, the gold miner’s shares have crashed 40%, making it one of the worst performers across the sector.

In retrospect, Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) have declined by 35% and 20%, respectively across the same time period.

At the time of writing, Chalice Mining shares are clawing back some of its losses, up 2.41% to $4.035.

What’s happened to the Chalice Mining share price?

Downward pressure on gold prices has driven investors to flee the precious metal causing a sell-off for Chalice Mining shares.

Gold has been in the spotlight in recent times as central banks around the world lift interest rates to combat inflation.

The metal broke under the US$1,700 barrier for the first time in many months to currently trade at US$1,675 per ounce. This means gold has fallen 10% since the start of May.

On the other hand, bond yields have risen across the board, with the US two-year treasury rate at 3.94% – the highest since July 2007.

In early September, Chalice Mining released its presentation highlighting the significant exploration upside for the Julimar Ni-Cu-PGE Project in Western Australia.

Management noted that the Julimar discovery has kick-started the new West Yilgarn Ni-Cu-PGE Province, which could deliver more major discoveries.

However, investors were unfazed by the presentation, sending the Chalice Mining share price 13.04% lower to $3.75.

The S&P/ASX All Ordinaries Gold Index (ASX: XGD) retreated 1.77% on the same day (7 September).

Chalice Mining share price summary

Over the last 12 months, Chalice Mining shares have dropped 40%, with year-to-date down 60%.

The company’s share price reached a 52-week low of $3.37 in late June before moving in a sideway channel.

Chalice Mining commands a market capitalisation of roughly $1.52 billion.

The post Why has the Chalice Mining share price crashed 40% in 4 months? appeared first on The Motley Fool Australia.

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More reading

• What’s with ASX copper shares on Thursday?
• Why did the Chalice Mining share price leap 10% on Tuesday?
• Here are the top 10 ASX 200 shares today
• Chalice Mining share price lifts on positive exploration results today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Aaron Teboneras has positions in Northern Star Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Magellan Financial Group Ltd (ASX: MFG) share price is trading higher today amid a better day for ASX financial services shares on Tuesday.

Magellan Financial Group’s shares are up 3.73% to $12.24 a share at the time of writing, while the Magellan Global Fund (ASX: MGF) is currently trading flat.

Some of Magellan’s peers are also slightly more buoyant today. Insignia Financial Ltd (ASX: IFL) and Virgin Money UK CDI (ASX: VUK) are up 0.94% and 1.61%, respectively.

The S&P/ASX 200 Financials Index (ASX: XFJ) is also 1.2% higher at the time of writing.

Today’s rise in the Magellan share price comes amid the company’s ongoing share buyback program. In March, the fund manager announced plans to buy back 10 million fully paid ordinary shares from the market, the equivalent of 5.4% of the shares on issue.

The company has issued daily notifications that it’s been scooping up its shares ever since.

But there have been no other updates from the company recently. So why are Magellan and other ASX financial shares rising on Tuesday? Let’s investigate.

Australian and US equities rise

The bigger picture is that both Australian and US equities markets overnight are lifting. So for the Magellan share price, and that of its peers, it could be a case of a rising tide lifting all boats.

The S&P/ASX 200 Index (ASX: XJO) is 1.21% higher in Tuesday afternoon trading, gaining more than 1% in the first ten minutes of today’s session.

US equities had a bumpy ride overnight with volatility in both the S&P 500 and the NASDAQ Composite indices during trading, but both finished in the green.

The S&P 500 closed 0.69% ahead, while the NASDAQ Composite recorded a 0.76% gain.

Volatility dips before likely rate hike

Curiously, the CBOE Volatility Index dived 2.05% overnight, which suggests that the next US trading session could be a little less bumpy.

This may be the calm before the storm, however, with US interest rates expected to rise at the next United States Federal Reserve meeting later this week (early Thursday morning Australian time).

It’s speculated interest rates will increase by a hefty 75 basis points amid worse-than-expected inflation numbers posted last week.

The aftermath of the next rate hike could be a watershed moment for US equities, with some investors believing it could turn the Fed’s soft landing into a steep recession.

Thus, how the market responds to the hike may be a valuable indicator of how the rest of the economy feels.

Magellan share price snapshot

Today’s share price gain will be welcome news for Magellan shareholders. The company’s share price is down 42% year to date and 68% lower over the past 12 months.

That’s well below the ASX 200 financial index’s loss of 5.6% in 2022 so far and 6.2% in the past year.

The company’s market capitalisation is around $2.2 billion.

The post Why is the Magellan share price higher on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• 3 blue-chip ASX 200 shares touting the highest dividend yield in September
• Magellan share price drops 5% amid broader sell-off
• The Magellan share price has fallen over 10% in a month: Is it time to buy the dip?
• Steady compounders: 3 ASX 200 shares that have delivered over a decade
• Why Breville, Incitec Pivot, Magellan, and Super Retail shares are dropping

Motley Fool contributor Matthew Farley 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 Scott Phillips.

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The Arafura Resources Limited (ASX: ARU) share price is slipping behind its peers in the S&P/ASX All Ordinaries Index (ASX: XAO) on Tuesday.

Shares of the rare earth producer are flat today, while the All Ords is up 1.2%.

This comes amid the release of the company’s annual report for FY22 last night.

Let’s cover the highlights.

What did the report say?

• Net loss rose by 448.7% year over year to $35.55 million. Most of this cost came from a project cost line item of $28.17 million
• While its losses expanded, its cash balance grew from $10.78 million to $24.68 million
• Total equity also grew from $122.02 million to $132.36 million.

Much of this can be explained by the fact that net proceeds from the issue of shares grew from $116,500 to $47,190,939 during the reporting period.

What else did the company announce?

Arafura reported that the front-end engineering and design for its Nolans project is progressing. The company expects completion by the end of 2022.

Following this, ore commissioning of neodymium (NdPr) is expected in May 2025, with production scaling up over about a year to reach 4,440 tonnes per annum.

Arafura conducted a capital raise of $41.5 million to fund its Nolans project and ongoing operations.

In March, the company also received $30 million in funding from the Federal Government’s Modern Manufacturing Initiative.

What did management say?

Arafura Resources chairman Mark Southey provided the following commentary:

During the 2022 financial year, Arafura successfully navigated a rapidly evolving commercial environment ranging from economic volatility caused by geopolitical events along with the ongoing impacts of the COVID pandemic. Geopolitical and market turbulence was combined with an ever-increasing global focus by Governments, OEM customers and investors on energy transition, sustainability and ESG requirements.

What’s next?

Arafura also gave a detailed explanation of the neodymium market as well as its strategic positioning within this space moving forward, stating:

NdPr pricing strengthened significantly during the financial year, growing 90% by the end of the year. This substantial increase is assisting our long-term decision-making around project economics and off-take agreements; and comes on the back of global supply chain security risk, increasing international and domestic environmental legislation constraints, tight supply conditions, and steadily growing demand for permanent magnets. By the end of the year, NdPr pricing had risen to US$139/kg, providing real confidence in sustained higher prices and therefore strong project economics. Arafura remains well-placed to supply around 5% of world’s NdPr oxide demand.

Arafura share price snapshot

The company’s shares currently trade for 40 cents each.

Arafura shares are up significantly in the past month and year-to-date. The gains are 41% and 72%, respectively. Meanwhile, the All Ords is down 3.5% and 11.3% over the same periods.

The company’s market capitalisation is around $681.2 million.

The post Arafura share price lags All Ords on Tuesday amid $35 million loss appeared first on The Motley Fool Australia.

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More reading

• Why is the Arafura share price rocketing 8% today?
• 3 ASX All Ordinaries shares having a cracking Monday
• The Arafura Resources share price is down 7% this morning
• Why investors might be getting excited about Arafura shares
• Arafura defies sell-off in ASX mining shares to stay buoyant. Is this why?

Motley Fool contributor Matthew Farley 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 Scott Phillips.

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It has been a disappointing year for the CogState Limited (ASX: CGS) share price.

Since the start of 2022, the neuroscience technology company’s shares have tumbled 43% to $1.45.

Is the CogState share price in the buy zone?

One leading broker that believes the CogState share price is great value after this decline is Bell Potter.

According to a note, the broker has retained its buy rating with a slightly trimmed price target of $1.95.

Based on the current CogState share price, this implies potential upside of 34% for investors over the next 12 months.

What did the broker say?

Bell Potter highlights that CogState appears well-placed to benefit from a significant increase in therapies aiming to treat Alzheimer’s disease. This increased activity bodes well for demand for the company’s brain health assessments. It explained:

With currently no disease modifying therapies (DMT) available, there has been an increasing interest in identifying potential treatments. The number of unique agents under investigation has increased from 93 in 2016 to 143 in 2022. The amyloid hypothesis has been a critical target for these therapies with important Phase 3 trials underway and results on the horizon.

In addition, the broker highlights that CogState has a material revenue backlog and notes that demand is increasing for other indications.

Cogstate currently has US$139.1m in contracted revenue backlog: US$100.2m in clinical trials and US$38.9m in healthcare (EISAI agreement). 84% of new clinical trial contracts in FY22 were in AD which reflects the strong relationship with CGS. Whilst there has been increasing utilisation of CGS technology in other indications such as Parkinson’s Disease, Rare Paediatric Disorders and Depression, these studies are usually of lower contract sizes (safety endpoints, smaller cohort sizes).

All in all, the broker believes this will underpin solid sales and earnings growth through to at least FY 2025. In fact, by then, the broker expects CogState’s revenue to be $79.8 million and its EBIT to be $18.4 million. This will be a 77.3% and 72% increase, respectively, over FY 2022’s numbers.

The post Top broker says this ASX tech share has over 30% upside appeared first on The Motley Fool Australia.

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• 3 ASX All Ordinaries shares being sold off following FY22 results

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 positions in and has recommended CogState Limited. The Motley Fool Australia has positions in and has recommended CogState Limited. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) piqued many people’s interest recently when the company filed a form with Texas’ Comptroller’s Office indicating the electric vehicle maker’s interest in building a battery-grade lithium hydroxide refinery.

So far history has shown that it’s best not to bet against Tesla’s big ideas, so what could the company gain from owning its own battery materials refinery along the Gulf Coast? Only the potential to lower the price of its expensive batteries.

What Tesla is proposing 

Tesla said in the official form that it’s considering building a plant that could convert “raw ore material into a usable state for battery production.”

The refinery would create battery-grade lithium hydroxide that could then be “packaged and shipped by truck and rail to various Tesla battery manufacturing sites supporting the necessary supply chain for large-scale and electric vehicle batteries.”

In short, Tesla is proposing entering the battery materials refinery space, a move that would add to the company’s current battery manufacturing capabilities. 

The company said that it could start building the plant as early as the end of this year, with an estimated timeframe for having it operational by the fourth quarter of 2024.

It’s worth mentioning that none of what Tesla is proposing is a done deal. The company’s official filing for property tax relief for the project is one of the very first steps in the project. Tesla is also exploring an alternative site in Louisiana. 

But with battery costs ballooning over the past couple of years and supply chain shortages constantly causing headaches for the auto industry, Tesla’s latest idea could be yet another step toward improving its vehicle production costs. 

How it could help Tesla stay ahead of EV rivals 

Supply chain problems and increasing demand for electric vehicles have pushed up the cost of battery materials, particularly lithium. Battery-grade lithium prices have spiked more than 400% since 2021. 

And demand isn’t slowing down. The latest data from McKinsey estimates that global demand for lithium will increase from 500,000 metric tonnes in 2021 to up to 4 million metric tonnes by 2030. 

While Tesla can’t control this massive increase in lithium demand, it is trying to control some of the production costs that go into making batteries.

How much Tesla could save still isn’t clear, but Tesla is willing to at least entertain the idea of spending a proposed $365 million to build a refinery in order to save on costs down the road. 

A bold move to own more of the supply chain 

There’s nothing set in stone about Tesla’s new refinery proposal, but it could be the beginning of Tesla moving even further up the supply chain line in battery-making. 

With lithium demand expected to soar over the next decade, Tesla could secure more control over its battery manufacturing with its own refinery. And in the coming years, that could potentially give the company an advantage in the EV space. 

If Tesla can eventually lower some of its battery costs, then it could improve its already-strong profit margins (currently at 13%). That means that while most traditional automakers are still trying to figure out how to catch up to Tesla’s enviable margins, Tesla is trying to figure out how to keep expanding them. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post This bold move could give Tesla an edge in battery production appeared first on The Motley Fool Australia.

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More reading

• Why Tesla shares moved higher Monday
• Should you invest in Tesla shares right now?
• Tesla is exploring building a lithium refining plant in Texas
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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 Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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As most of us would be aware, it hasn’t been a great year thus far for ASX shares. As it stands today, the S&P/ASX 200 Index (ASX: XJO) remains down by a nasty 8.62% year to date. But for the BetaShares Asia Technology Tigers ETF (ASX: ASIA), that loss is looking desirable.

This exchange-traded fund (ETF) has taken a battering this year. On today’s pricing, units of the BetaSahres Asia Technology Tigers ETF are down a painful 28.46% over 2022 thus far.

The Asia Tigers ETF is a tech-focused fund that holds around 50 companies. These hail from across Asia (excluding Japan), but the lion’s share (55.5%) are domiciled in China. Other countries like Taiwan, South Korea, India and Hong Kong make up the rest.

This ETF focuses on technology companies. Its top holdings include names like Alibaba, Taiwan Semiconductor Manufacturing Co, Tencent Holdings and Samsung.

With China taking such a large chunk of this ETF, it’s clear that many of the woes that the fund has faced in 2022 hail from this market. To illustrate, the Alibaba share price is down almost 35% year to date, while Tencent shares have lost almost 35%.

So what’s next for the Asia Tigers ETF?

For some insights into that question let’s turn to an expert. Anthony Strom of Fidelity International is an expert on Asian markets. He recently sat down for an interview with Livewire.

So Strom blames the woes that many Asian markets are currently facing on a couple of factors:

What stage are we at now with the Asian Century? Immediate words that come to mind are things like growing pains.What we’re seeing is a lot of growth being developed in that region through debt accumulation, which as we saw with the Asian crisis, is not a sustainable path forward. We’re seeing things like the corruption crackdown in China. You can take that as another positive, but again, it has the effect of slowing down development as markets must adjust.

That’s a higher-level summary of the current stage of the Asian century. I think it’s a stage of transition and slight growing pains.

Strom also notes that “the zero COVID policy has really slammed the breaks on growth within China”.

So the companies that the Asia Tigers ETF holds are certainly facing some challenges. But Strom is still confident that investing in Asian markets still “holds a lot of promise”. He names Malaysia, India and Indonesia as growth markets to watch.

How these will affect the BetaShares Asia Technology Tigers ETF is unclear. But investors might gain some confidence knowing that this Asian investing expert is still predicting a bright future.

The post Down 30% in 2022, what’s next for the BetaShares Asia Technology Tigers ETF? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Taiwan Semiconductor Manufacturing. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Taiwan Semiconductor Manufacturing and Tencent Holdings. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF. 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) is up 1.23% during afternoon trading on Tuesday.

The benchmark index dipped 0.2% at 11:30 AEST following the release of the Reserve Bank of Australia’s minutes from its September monetary policy meeting.

But it looks like any angst the central bank may have caused ASX 200 shares investors regarding further rate rises has been offset by yesterday’s strong performance in the United States markets.

Here are some of the key details from the RBA’s minutes.

The inflation headache

The RBA board noted that timely indicators pointed to inflation remaining high and broadly based in the September quarter.

To date, the Australian Bureau of Statistics (ABS) has only provided inflation data on a quarterly basis, so the official data available today stems from the June quarter.

The ABS will start publishing a monthly CPI indicator in October. However, the RBA noted, “it could take some time for reliable trends to be discernible”.

Adding to inflation pressures, the bank said, “Some retailers expected to apply further large increases in their prices in coming quarters, in part reflecting the pass-through of earlier rises in input costs.”

While petrol prices fell in August, the RBA cautioned, “The expiration of the fuel excise cut would boost headline inflation in the December quarter.”

Longer term, the bank’s inflation expectations generally remain within its 2% to 3% target range.

Household spending supports ASX 200 retail shares

Helping support ASX 200 shares in the retail sector, the RBA noted that household spending in the September quarter to date remains solid, with retail sales increasing strongly in July.

Households have received some relief from rising rates and inflation through strong labour market conditions and income growth.

On the housing front the board noted:

Declines in housing prices had broadened out to most capital cities and regional areas, alongside weaker housing sales activity, rising interest rates and the expectation of further interest rate increases.

The bank expects mortgage interest payments to increase to around 4.5% of household disposable income over the coming months, and to almost 5% by the end of 2022.

Renters are still feeling the pinch as well, with vacancy rates falling across the capital cities.

The outlook for business investment

ASX 200 investors can take some heart from the RBA’s positive outlook for business investment.

As reported in the minutes:

The June quarter ABS Capital Expenditure Survey, conducted in July and August, indicated that non-mining firms expected to increase investment in the 2022/23 financial year, driven by investment in machinery and equipment. Capacity utilisation remained high across industries, with non-mining capacity utilisation at its highest level in over three decades.

Now what for ASX 200 shares?

Higher rates have put a brake on the strong run ASX 200 shares enjoyed in the rebound from the pandemic sell-off. The high water mark for those rates will, inevitably, be determined by how sticky inflation gets.

The RBA’s central forecast is for CPI inflation to be around 7.75% over 2022, “a little above” 4% over 2023, and around 3% over 2024.

As you’re likely aware, the RBA opted to raise the official cash rate by 0.5% on 6 September, bringing the rate to 2.35%.

The board will announce its next rate decision on 4 October. While the September minutes don’t reveal what size hike ASX 200 investors can expect, the members did say they expect to increase interest rates further over the months ahead.

The minutes note that further rate hikes are “not on a pre-set path given the uncertainties surrounding the outlook for inflation and growth”.

Highlighting that uncertainty, the RBA said, “The board is seeking to return inflation to target while keeping the economy on an even keel. The path to achieving this balance remains a narrow one and clouded in uncertainty.”

The post Investing in ASX 200 shares? Here’s the latest interest rate outlook from the RBA appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Scott Phillips.

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