Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
ASX flat, Sydney Airport up 34% to 17-month high
US Independence Day, mixed fortunes on the ASX, Sydney Airport takeover bid
It was a rough start to the week for the ASX 200 (ASX: XJO) which opened as much as 1% higher before finishing broadly flat.
Most sectors closed lower, IT and retailers were down around 1% with no overseas lead due to the US Independence Day holiday.
The highlight was the industrials sector which jumped 4.9% after Sydney Airport Holdings Pty Ltd (ASX: SYD) received an unsolicited takeover offer from a consortium of institutions and industry super funds. The share price jumped 33.9% to $7.78, slightly before the $8.25 per share offer.
The bid was lobbed by Industry Funds Management, the fund manager owned by Australia’s industry funds, QSuper and Global Infrastructure Management, with the SYD board initially suggesting no action be taken.
It seems to be an opportunistic move given the travel industry remains under the pressure of a pandemic and would see the transfer of ownership of another key infrastructure asset to private investors.
Shares in Auckland International Airport Limited (ASX: AIA) also jumped 5.5% on the expectation that the acquisitions may ramp up.
Tabcorp set to split, Qube finalises sale of Moorebank, building approvals down
Shares in Tabcorp Holdings Limited (ASX: TAH) dropped 4.4% after management announced plans to demerge the lotteries and Keno businesses to create two separate ASX-listed companies.
Management suggests the merger could cost around $225 to $275 million and a further $40 million in annual ongoing expenses.
This is another breakup aimed at extracting value from what appears to be underappreciated assets, for those comfortable investing in gambling companies at least.
In more positive news, Australian retail sales rose 0.4% in May, overcoming the Victorian lockdown to jump 7.7% on 2020 levels.
It was a busy day for the industry super fund sector, with AustralianSuper confirmed to be among the buyers of Qube Holdings Ltd (ASX: QUB) Moorebank Logistics Park. The final price was $1.67 billion with LOGOS Property Group the leader of the consortium.
Management also took the opportunity to announce a write-down on the IMEX Terminal of $150 to $215 million due to a delay in completion. Qube shares finished 0.6% lower.
Futures flat, oil price spikes, DiDi faces regulatory hurdle
US futures were broadly flat to open the week, with markets closed in observance of the July 4 holiday long weekend.
All eyes were on the OPEC+ meeting, which failed to deliver a clear agreement, sending the oil price higher and threatened to derail a frail economic recovery.
China’s version of Uber Technologies (NYSE: UBER), known as DiDi Global (NYSE: DIDI) is falling heavily after the Chinese regulator announced a crackdown on concerns over data security, which were seemingly flagged before last week’s IPO, but ignored by management.
