For super funds and their advisers

ASX flat as value rotation continues

14.1.21

ASX flat as value rotation continues, Premier (ASX:PMV) hits record 

The ASX200 (ASX:XJO) eked out a 0.1% gain for the day, with the ‘value’ rotation in full swing.

The strengthening oil price combined with a weaker USD sent the sector 4.2% higher, Origin Energy (ASX:ORG) and OilSearch Ltd (ASX:OSH) were the key beneficiaries, up 3.0% and 6.0% respectively.

ORG has been further supported by an incredible spike in the price of exported gas as Asian markets experience cooler than expected wealth.

Most weakness is coming from the defensive sectors like groceries and healthcare, with Woolworths (ASX:WOW) down 1.5% as investors position for the recovery.

The Solomon Lew-backed Premier Investments (ASX:PMV) hit a record high jumping 12.7% after flagging an 85% increase in earnings for the first half of 2021; a stunning result given the pandemic. 

The upgrade was driven by a 5% increase in global sales and a 26% increase in Australian like-for-like sales and the continued shift online. 

Management reported a 60% increase in online sales to $146.2m across their SmigglePeter Alexander, and Just Group brands, which still represent just 20.4% of their total. 

Job market recovery continues, Praemium (ASX:PPS) powers up

The ABS has reported a strong recovery in job vacancies across Australia, with available positions growing 23% in the three months ending in November to 254,400.

The result reflects the growing confidence in the business sector and the huge shortage of employees across various industries. There is hope this will support the so-called Job Keeper cliff when it is cut off later this year.

Investment platform Praemium (ASX:PPS) which acquired smaller competitor Power Wrap Ltd (ASX:PWL) in 2020 continues to benefit from a flood of advisers leaving major financial institutions, reporting a record quarter of investment inflows, $1.1 billion. That represents an increase of 128% in the same period in 2020. 

Management has flagged strong growth in all three business units, the Australian platform growing 10% for the quarter, International 9%, and the managed discretionary account solution, 9%.

The acquisition of PWL has seen total assets under administration hit $34 billion, 69% higher than 2020 an important milestone for a business model that requires scale to deliver consistent profitability. Shares finished 15.6% higher.

US markets rally, new CEO for Intel Corp (NYSE:INTC), Trump releases China strategy

US markets were buoyed by dual comments from the Federal Reserve and European Central Bank, with the Fed confirming they did not intend to taper QE purchases any time soon and the latter taking an ‘easy stance’ for as long as is needed by the economy.

This sent bond rates lower with the technology sector the biggest beneficiaries with AppleAmazonNetflix, and Microsoft all gaining on the news. The S&P500 finished 0.2% higher and the Nasdaq 0.4%. 

Struggling chip manufacturer Intel Corp (NYSE:INTC) jumped over 8% after announcing that 20-year employee Pat Gelsinger would return to lead the business through a difficult transformation.

Markets were buoyed by his extensive engineering experience which comes at a time when Intel has lost market share to companies including Taiwan Semiconductor (2330:TPE) and Nvidia (NASDAQ:NVDA) and the likes of Apple Inc. (NUSE:AAPL) deciding to begin manufacturing their own chips.

Data provider IHS Markit (NYSE:INFO) which produces a significant amount of economic data including the leading PMI indicators, reported weaker than expected sales, down 1% to USD$1.11 billion with shares falling a similar amount on the news.

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