30 September 2020

China is a major factor in Australia’s economic recovery because China buys more than a third of our exports. This is why global investors like to use the Australian dollar as a proxy for the Chinese economy – if China does well, Australia will benefit, so our dollar will rise (provided that the Australian government does not provoke any more trade retaliation).

August marked a sharp improvement in China’s economy. Exports leaped 9.5% year-on-year, after a 7.2% rise in July. The rapid resurgence is partly due to Western companies re-stocking their supply chains after the COVID-19 disruptions of the first half of the year. It is also due to Western consumers’ recent spending spree on electronic goods for entertainment or home offices… [read more]



15 September 2020

Twice a year we summarise the half-year and full-year results of the companies in the ALCE portfolio. Although the COVID-19 pandemic has affected some of the results for the June 2020 half year, the companies in the portfolio remain strong. Several – e.g. APA, Amcor, BWP, Spark NZ, Steadfast, and Waypoint – have not been materially affected by the pandemic. Others – e.g. ASX, Coles, and Wesfarmers – have done very well in recent months.

Power utility AGL unsettled investors with a net profit which was lower than expected, but it also promised dividends which were higher than expected. The main problem was that lower demand caused a drop in wholesale electricity prices, at the same time as the expiry of old gas contracts brought higher gas prices. AGL customer demand rose 1% despite the 2% decline in market demand. The 51c final dividend meant that the FY20 dividend was cut by 18% to 98c, but management indicated that for the next two years the company would pay a special dividend to top up the payout ratio from 75% at present to 100%… [read more]