Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
COVID winners dumped from ASX200
The future of the S&P/ASX benchmark may well have been on show this week when Standard & Poor’s delivered the latest update to their key indices. There was little change at the top of the market, with neither the ASX20 or 50 seeing any new inclusions.
That said, there are a number of major events on the horizon as the decision to remove the dual listing of BHP (ASX:BHP) is set to see it’s weighting in the index almost double to 10 per cent, whilst investors wait with baited breath for Afterpay (ASX:APT) impending takeover by Square Payments (NYSE:SQ).
Moving down the market capitalisation spectrum and it starts to get interesting, in fact it may well provide some insights into why several companies have been performing so strongly (or poorly) in recent weeks.
Entering the ASX100 for the first time is combined lithium miner Orocobre (ASX:ORE) which has surged to market capitalisation of close to $6 billion after merging with Galaxy Resources (ASX:GXY) earlier in the year. The combination of surging flows into thematic ETFs and strong pricing of lithium as the electric vehicle production boom continues has benefited the group.
Link Administration (ASX:LNK) has been replaced by the surging new world stock, with Link clearly in the old-world camp. The company provides outsourced administration services to superannuation funds along with its share registry business. After knocking back an offer from private equity the share price fell significantly, only to see private equity return again; hopefully a better result for shareholders this time.
Looking at the ASX200 and it is a story of ‘what could have been’. Two companies that were the clear winners of the pandemic, being Kogan (ASX:KGN) and Redbubble (ASX:RBL) look to have fumbled the opportunity of a generation, with both down 63 and 47 per cent year to date respectively. Despite massive increases in sales and surging member numbers, one struggled with over stocking and the other an inability to cross sell products other than facemasks.
Two other beneficiaries at different ends o the spectrum are prospective uranium miner Paladin (ASX:PDN) who are seeking to restart operations after a close to a decade without revenue or income. Novonix (ASX:NVX) on the hand has given back some recent gains dropping 30 per cent overnight with the battery commodity miner struggling to keep up with expectations.
The index provides somewhat of a warning sign for those chasing momentum, or playing the small company sector of the market.
