Land of the rising prices



The market was slightly weaker in Australia on Monday, with the ASX200 ending the session off 7 points at 6021. The banks were lower as both ANZ and Westpac went ex-dividend. The diversified resource plays Rio and BHP were well bid though, with commodity prices remaining firm. A rebound in copper and nickel prices overnight should aid sentiment in the space further today.

We remain overweight the commodity sector, and this also includes soft commodities with a number of agricultural stocks across the portfolios. A similar tie binds with the world’s growing population, along with changing dietary habits underpinning the demand side, while supply is being challenged by changing global weather patterns along with competing uses for arable land. Inflationary forces will only add to the investment case over the medium term in our view.

Also in demand yesterday were shares in the financial service platform stocks, with OneVue and Praemium both up around 7%. Investors are waking up it seems to the operating leverage here as funds under administration continue to grow, and surpass key milestones. On Monday Praemium revealed that FUA has surpassed the $7 billion mark, with over $1 billion in inflows in the past six months.

Japanese property developer Mitsui Fudosan shares lost some ground yesterday and sold off 4.09% after the company reported half year numbers that were mildly disappointing. Net profit was down 33.3% on the previous year to ¥48.58 billion on an 11% fall in revenue to ¥721.79 billion. Operating profit was also down by 19.6% to ¥92.23 billion and was impacted by the large scale sales of logistics properties earlier in the year. While condo inventory decreased from 321 units to 171, office vacancy rates improved from 3.4% to 2.3% over the September quarter.

However, earnings are importantly trending in line with the company’s plan. 2017/18 profit is forecast to rise by 3.4% to ¥227 billion and management have maintained their dividend and share buyback policy.


Disclosure: The Fat Prophets Global Contrarian Fund declares a holding in BHP, Praemium, and Mitsui Fudosan.

Carpe Diem!

CEO | Fat Prophets
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