Investor Insights

As we monitor the behavior of the Australian consumer, it’s crucial to acknowledge that consumption constitutes approximately 50 per cent of Australia’s GDP, significantly influencing decisions related to interest rates. The robust trading update presented during the annual general meeting (AGM) by Temple & Webster Group (ASX: TPW), an online retailer specialising in furniture and homewares, prompts thoughtful consideration.

As China reflated its economy in 2015, we saw a massive five-to-six-year tailwind assisting the property boom. Speculation and strong property prices led to over-supply, and the eventual carnage experienced by most highly levered Chinese property developers over the past two years.

Unsurprisingly, consumer spending dominates all other categories and contributors to economic growth in a consumption-based economy such as Australia’s. Australia’s private consumption accounted for 49. 8 per cent of nominal gross domestic product (GDP) in the June 2023 quarter.

Central banks across the globe find themselves in a challenging predicament, and our own Reserve Bank of Australia (RBA) faces a particularly delicate situation.

I believe REA Group (ASX:REA), is one of Australia’s highest-quality businesses. REA Group’s online portal – realestate. com. au – is the go-to destination for people wanting to buy, sell or rent property. Price rises in all property related areas have led to substantial revenue and earnings growth and have turbo-charged REA Group’s share price.

Last week the team attended the Australian Securitisation Forum. The event is held annually and brings together the leading industry bodies, representing participants in the securitisation and covered bonds markets. We had the opportunity to hear from a wide range of market leaders and competition. Each provided valuable insights into their own current views and outlook on the market.

I have had my fair share of bad calls. After more than three decades of investing, it’s safe for me to predict that there is next to no advantage in making predictions.

As a result of the corporatisation of restaurants, there’s a plethora of them. The emergence of the Restaurant Group – Merrivale, Bentley, and The Speakeasy Group are examples which offer a business solution to the cost of independence through bulk buying power (for food and fit-outs) and merged accounting and marketing functions.

Those wondering about Australia’s interminable house price rises may have read our blog post explaining immigration is one of the leading reasons prices remain elevated despite the fastest increase in interest rates in Australia’s history. But the flavour of that immigration should be drawing the ire of home buyers who find prices unaffordable.

Just 48 hours after the Reserve Bank of Australia (RBA) lifted rates for the 13th time by 25 basis points to 4. 35 per cent, the U. S. Federal Reserve’s Chair Jerome Powell said at a conference in Washington that “we are not confident” the Fed has tightened enough to bring inflation down to its 2 per cent goal.

In this video insight, David Buckland and Gary Rollo discuss the underperformance of small-cap stocks compared to large-cap stocks since the beginning of 2022. Gary explains that economic uncertainty has contributed to the recent underperformance, as investors tend to shift from small, less liquid investments to larger ones during such periods. However, he views this as a temporary condition, anticipating that once economic uncertainty diminishes, the longer-term performance characteristics of small caps may come into play.

In this week’s video insight, I delve into the events of mid-October, specifically focusing on the collaborative proposal by ARN Media and Anchorage Capital Partners for a non-binding, indicative acquisition of Southern Cross Media. The merger sparked concerns about market dominance, particularly in the commercial radio sector in metropolitan Australia, leading to scrutiny from the ACCC. Notably, over the weekend, Kerry Stokes’ Seven West Media strategically acquired a 20 per cent stake in ARN Media, raising questions about his broader interests across Australia. The developments add layers of intrigue to the future of Australia’s commercial radio sector, making it a captivating subject to observe.