Good afternoon,
On Friday we made the decision to sell our holding in Asciano Group for our Managed Discretionary Accounts, at a gross profit of 11% in just under four weeks. As the market nears our target range of 4650-4700, we are selling into the strength and taking profits where they are available. In our portfolio, only LLC is underperforming and we are happy with our other holdings for the time being.
Since purchase of AIO and GPT, the domestic market has been strong, as expected. At this point we see further upside running into the end of financial year as institutions window dress investment performance, which would allow us the opportunity to do some further selling.
There are other positive factors at play here which give us cause to be optimistic in the short term.
The Australian Dollar, after touching a low of 81c two weeks ago has now rallied back to nearly 88c. In terms of pure market analysis, sudden flows into or out of the Australian Dollar can be commonly attributed to changing investment flows and can and do accompany a corresponding move in the share market. While the AUD is strengthening the share market will probably follow suit.
European events took center stage over the past few weeks. The issues that had the world's focus have not gone away; these are serious economic concerns which we have outlined in the past. The big 'BUT' here is that the Euro has been strengthening against the US Dollar of late, reaching $1.24 from $1.19 two weeks ago. This suggests that the short-term focus of financial markets is no longer on the Sovereign debt problems of Europe but on more positive economic facts:
China is talking about dropping the Yuan peg against the US Dollar. This is due to the world economic recovery, and domestic Chinese economic strength. Importantly, that kind of talk (and action presumably) is positive for the Australian economy and by extension our currency and stock market.
End of financial year reporting. Any redemptions made out of large managed funds are likely to be paid out of cash reserves rather than selling stock into the market for the next week. Long-only fund managers want to show the best possible end of year performance, and this is a great way to assist this process along.
In the last two weeks, there has not been nearly as much written about the sovereign debt crisis as was written in the two weeks before. This issue is definitely taking a back seat to 'Global Recovery' stories. Read all about it - news in the US, Australia, China and even some European countries like Germany has not been all bad. Granted, it's not been especially good either but on balance the stability is positive for markets.
We're aware of the major headwinds to global growth, and the risks facing the economy. We certainly continue to have some concerns regarding the transfer of debt from the private sector to the public, and the 'quantitative easing' policies that brought this about. For the time being, though, our market is performing well.
On Friday we made the decision to sell our holding in Asciano Group for our Managed Discretionary Accounts, at a gross profit of 11% in just under four weeks. As the market nears our target range of 4650-4700, we are selling into the strength and taking profits where they are available. In our portfolio, only LLC is underperforming and we are happy with our other holdings for the time being.
Since purchase of AIO and GPT, the domestic market has been strong, as expected. At this point we see further upside running into the end of financial year as institutions window dress investment performance, which would allow us the opportunity to do some further selling.
There are other positive factors at play here which give us cause to be optimistic in the short term.
The Australian Dollar, after touching a low of 81c two weeks ago has now rallied back to nearly 88c. In terms of pure market analysis, sudden flows into or out of the Australian Dollar can be commonly attributed to changing investment flows and can and do accompany a corresponding move in the share market. While the AUD is strengthening the share market will probably follow suit.
European events took center stage over the past few weeks. The issues that had the world's focus have not gone away; these are serious economic concerns which we have outlined in the past. The big 'BUT' here is that the Euro has been strengthening against the US Dollar of late, reaching $1.24 from $1.19 two weeks ago. This suggests that the short-term focus of financial markets is no longer on the Sovereign debt problems of Europe but on more positive economic facts:
China is talking about dropping the Yuan peg against the US Dollar. This is due to the world economic recovery, and domestic Chinese economic strength. Importantly, that kind of talk (and action presumably) is positive for the Australian economy and by extension our currency and stock market.
End of financial year reporting. Any redemptions made out of large managed funds are likely to be paid out of cash reserves rather than selling stock into the market for the next week. Long-only fund managers want to show the best possible end of year performance, and this is a great way to assist this process along.
In the last two weeks, there has not been nearly as much written about the sovereign debt crisis as was written in the two weeks before. This issue is definitely taking a back seat to 'Global Recovery' stories. Read all about it - news in the US, Australia, China and even some European countries like Germany has not been all bad. Granted, it's not been especially good either but on balance the stability is positive for markets.
We're aware of the major headwinds to global growth, and the risks facing the economy. We certainly continue to have some concerns regarding the transfer of debt from the private sector to the public, and the 'quantitative easing' policies that brought this about. For the time being, though, our market is performing well.
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