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ASX 'poster child' Afterpay leapfrogs Telstra - The Australian Financial Review
Afterpay has cemented its status as growth star on the Australian sharemarket, overtaking Telstra to become the 13th-largest stock by market capitalisation.
"A lot of people see this is a market that can fund your growth and that's the story here. We've never been more confident about the Australian tech scene." The performance of Afterpay over the past 10 months has been extraordinary after shares dropped to a low of $8.01 on March 23, in the midst of the COVID-19 sell-off. Its strong rebound has been supported by its inclusion in both the S&P/ASX 50 and S&P/ASX 20 indices in December. Ophir Asset Management senior portfolio manager Andrew Mitchell. James Alcock "FOMO will no doubt be biting again for investors and fund managers alike that have been on the sidelines whilst the price has risen to now above $130," said Ophir Asset Management senior portfolio manager Andrew Mitchell. "Afterpay must now continue to execute though to justify its valuation, something it's done a stellar job of to date, as it's been one of the great Australian corporate success stories of the last few years." Overtaking Telstra is just the latest milestone for Afterpay, which has seen its value skyrocket since joining the bourse at $1 a share in May 2016. "It wasn't even a mid cap when it started," said Mr Cunningham. "Afterpay was a $150 million company and Xero was a $50 million company and now they're both north of $20 billion. It's just extraordinary." Mr Cunningham has long been an advocate for the ASX to be seen as a junior Nasdaq board and a well-regarded home for tech companies. The strategy has meant an increase in larger tech listings by companies looking to recreate the successes of Xero and Afterpay. ASX's Max Cunningham. Anthony Johnson "The fact Nuix was the largest liquidity event for a tech company at $975 million just highlights this is no longer just being played by the mid-cap funds. You can't do a deal like that without cheques being written by the large funds," said Mr Cunningham. "There is no doubt, as far as tech IPOs are concerned, they've been getting bigger. The distinctive feature is you're getting broader engagement than just the mid-cap funds and I think that's a really promising sign." The launch of the S&P/ASX All Technology Index has played a key role in supporting strong gains across the sector, helping to drive liquidity and elevate the profile of the companies within it. "This is a sector that even despite its performance, only makes up 3 to 4 per cent of the S&P/ASX 200. But it's actually turning over $1 billion a day now and the market as a whole turns over $8 billion a day. It's making up such a huge part of the liquidity of the underlying market," said Mr Cunningham. "Generating the liquidity is hard to achieve and when you've got more of these companies moving into the S&P/ASX 100 and the S&P/ASX 50, it's reflective that this is a changing paradigm, and not one that every capital market in the world has been able to benefit from." He said a number of Australian companies, such as newcomer Nuix, were now confident they could find a natural home on the local bourse and not need to list overseas to achieve their growth ambitions. "Outside the US, it's very hard to point to a market that's had the same quantum of success in attracting tech as Australia has," said Mr Cunningham. "You can't apply it to Canada, you can't apply it to Singapore and while the UK has had some success, it's been concentrated in local companies as opposed to internationally focused." The exchange has also been targeting New Zealand companies across all sectors, which may be looking to recreate the growth successes of Xero and A2 Milk. "We've had a very strong focus on attracting listing from New Zealand and 2020 has actually been our second-best year for New Zealand listings," said Mr Cunningham. "The early stage of getting NZ listings, we were actually just getting dual listings but now most Kiwi tech companies and boards think their natural home is listing on the ASX. They want to be on that tech index and they don't want to split their liquidity."
Signal app enjoys 'unprecedented' growth after WhatsApp privacy controversy - The Australian Financial Review
Along with another encrypted app, Telegram, Signal has been the main beneficiary of online outrage about Whatsapp privacy changes announced last week.
He also said Signal was working to improve its video and group chat functions, allowing it to compete better with WhatsApp, Microsoft Teams and other conferencing apps that have become vital to day-to-day life over the past year. Signal was downloaded by 17.8 million users over the past seven days, a 62-fold rise from the previous week, according to data from Sensor Tower. WhatsApp was downloaded by 10.6 million users during the same period, a 17 per cent decline. Privacy advocates have jumped on the WhatsApp changes, pointing to what they say is Facebook's poor track record of supporting consumers' interests when handling their data. Many suggested users migrate to other platforms. The non-profit Signal Foundation based in Silicon Valley, which now oversees the app, was launched in February 2018 with Acton providing initial funding of $US50 million. It has existed on donations since Tesla chief executive officer Elon Musk among supporters and Acton said there were no plans to seek different sources of funding. "Millions of people value privacy enough to sustain it and we're trying to demonstrate that there is an alternative to the ad-based business models that exploit user privacy," Acton said, adding donations were "pouring in". Reuters
ASX to edge up, Wall St modestly higher on techs - The Australian Financial Review
Australian shares appear set to start the day somewhat muted, with techs providing a modest boost to the Nasdaq. $A slips.
LPL Financial's Ryan Detrick said investors should not be too concerned about the market's fluctuations. "History would say after an about 70 per cent rally, some choppy action for a few months would be perfectly normal." Today's agenda No local data Overseas data: Japan machinery orders November; US import price index December Market highlights ASX futures up 10 points or 0.2 per cent to 6625 near 7am AEDT
- AUD -0.4% to 77.41 US cents
- On Wall St near 3.10pm: Dow flat S&P 500 +0.4% Nasdaq +0.5%
- In New York: BHP -1% Rio -2.7% Atlassian -1.6%
- Tesla +0.5% Apple +1.7% Amazon +1.8% Netflix +3%
- In Europe: Stoxx 50 +0.1% FTSE -0.1% CAC +0.2% DAX +0.1%
- Spot gold +0.2% to $US1858.32/oz at 1.16pm New York time
- Brent crude -1% to $US56.03 a barrel
- US oil -0.6% to $US52.92 a barrel
- Iron ore -1.5% to $US170.11 a tonne
- 2-year yield: US 0.14% Australia 0.09%
- 5-year yield: US 0.48% Australia 0.42%
- 10-year yield: US 1.09% Australia 1.10% Germany -0.52%
- US prices as of 3.07pm in New York
Labor ratchets up pressure on Premier to repay JobKeeper - The Australian Financial Review
The Solomon Lew-backed retailer of brands such as Smiggle and Just Jeans is expecting record first-half retail earnings, but not everyone is impressed.
The company flagged record first-half pre-tax retail earnings on Wednesdayas digital sales surged through the pandemic. Sales and gross margin growth were "outstanding" in brands Peter Alexander, Just Jeans and Jay Jays in Australia and New Zealand in the 24 weeks ended January 9, it said. Investors welcomed the news, sending the stock up $2.86, or 12.72 per cent, to $25.35- more than double its March low of $8.95. While many retailers cancelled stock orders as they faced great uncertainty amid COVID-19 last year, Premier's stock bet paid off as it enjoyed a 60 per cent surge in online spending to $146.2 million in the period. Online now makes up 20.4 per cent of group sales. Strong cost controls including agreements with key landlords on COVID-19 rent reductions underpinned the partial first-half results. Mr Lew, the chairman, said the challenges posed by COVID-19 were the "greatest set of risks" he had seen in more than six decades in retailing. "During the first half we have had rolling lockdowns and shutdowns in multiple countries, all at a moments notice," he said. "The entire Premier Retail team, led by our CEO, Mark McInnes, and his outstanding executives, have led the incredible women and men in our stores, our support offices and our distribution centre to deliver for Premiers customers and shareholders. "Their dedication, skill and commitment are evident in the record-breaking results we have announced today. I have always said the numbers dont lie, and these numbers prove that the nearly 10,000-strong Premier Retail team is simply the best. Earnings before interest and tax (EBIT) will total between $221 million and $233 million for the 24 weeks ended January 9 up 75 per cent to 85 per cent compared with $126.1 million in the year-earlier period. The full 2021 first-half results are due in late March. Premier Investments' CEO Mark McInnes and chairman Solomon Lew. Paul Jeffers Total global sales in the period rose 5 per cent to $716.9 million, while same-store sales increased by 18 per cent. Australian like-for-like sales jumped 26.2 per cent. Blue Ocean Equities analyst Phil Pepe called the results "very impressive". He has a "buy" call on the stock with a strategic target of $30 a share and expects major upgrades to consensus full-year 2021 EBIT sitting around $199 million. Morgan Stanley analysts said while Premier's strong near-term momentum is likely to continue, EPS growth will decelerate into 2022 as conditions normalise and fiscal stimulus rolls off. In Australia, Premier received the initial JobKeeper wage subsidies through August and September, but was not eligible to receive JobKeeper 2. Mr Leigh said there had not been any talks about a repayment of the estimated $45 million Premier received from the Australian government. It also received handouts from the British and New Zealand governments, taking the total support it received to nearly $70 million which was passed to staff but helped to lower its wage bill. After unexpectedly strong sales for 2020, Japanese car maker Toyota announced it would hand back the more than $18 million it received in JobKeeper payments. Mr Leigh said it was a "basic question of corporate ethics" to repay such funds, given the record earnings Premier outlined on Wednesday, and on the back of dividends and executive bonuses paid at the end of fiscal 2020. He estimated that as the major shareholder in Premier, Mr Lew received $20 million-odd in dividends. "I think Solomon Lew would do well to not look only at shareholders, but to the wider community," Mr Leigh added. Mr Leigh suggested that a partial repayment of subsidies with the exception of Victoria would be well-received by Australians. The $4 billion company said the loss of gross profit in Victoria during the major second lockdown and store closures for most of the first quarter more than offset the wage subsidies paid. Mr Lew, who was a strong proponent of the JobKeeper program, declined to comment on Wednesday on repaying handouts, but has previously defended the company's decision to pay bonuses and dividends after receiving subsidies and not paying rent. The trading update relates to its wholly owned Premier Retail segment and does not include any results from its investment division.
ASX rises; Afterpay, banks lead gains; Iron ore miners slip - The Australian Financial Review
The Australian sharemarket is higher on strength in banks, CSL and Afterpay. Big miners retreat despite iron ore topping $US171 a tonne overnight.
Samsung Electronics Co Ltd said on Friday that fourth-quarter operating profit likely rose 26 per cent, in line with analysts' estimates, as pandemic-driven remote working fuelled sales of chips and display panels. The South Korean tech giant said operating profit was likely 9 trillion won ($10.6 billion) in the quarter ended December, offsetting weaker smartphone sales and a strong won versus the dollar. That was in line with the 9.1 trillion won analyst forecast by Refinitiv SmartEstimate. Samsung says chip sales are offsetting weaker smartphone sales. Bloomberg Revenue at the world's biggest memory chip supplier and maker of smartphones likely rose 1.9 per cent to 61 trillion won from a year earlier, the company said. Samsung provides only estimates of quarterly revenue and operating profit in its preliminary earnings release. The company is due to release detailed earnings later this month. Analysts said they expected Samsung to report a jump in memory chip shipments from the September quarter, offsetting the effect of lower prices. Memory chip prices will likely rebound in the first half of this year, analysts said, as data centre customers return to buying chips, as well as demand from 5G smartphones, notebooks, graphics and automotive.
COVID-19 survivors may be immune for over eight months - The Australian Financial Review
The good news about immunity following a natural infection with COVID-19, is also good news for the potential effectiveness of vaccines.
The results do not suggest people wont get re-infected. Rather, they suggest their immune systems should be able to control that infection and protect them from getting seriously ill. This study, from The La Jolla Institute for Immunology, significantly expands the findings of an Australian study published in the sister journal, Science Immunology, last month. "The La Jolla study is beautiful, " says Associate Professor Menno van Zelm, from Monash Universitys Department of Immunology and Pathology, who lead the Australian research. "We looked at 25 patients and at antibodies and B cells. They did the same long-term follow up with 188 patients and looked at the whole breadth of the adaptive immune response and showed all aspects are quite long-lived. "I'm very relieved we came to the same conclusion. The work strengthens each study, has been performed independently and is exactly how science works." The La Jolla researchers analysed blood samples from patients mostly from San Diego who had been naturally infected with COVID-19 and had not been vaccinated. "We measured antibodies, memory B cells, helper T cells and killer T cells all at the same time," says co-leader of the study, Professor Shane Crotty. "As far as we know, this is the largest study ever, for any acute infection, that has measured all four of those components of immune memory." The immune response usually ramps up after infection and then decreases over time, until it reaches a stable state. The researchers found virus-specific antibodies persist in the bloodstream months after infection. Importantly the body also has immune cells, called memory B cells, at the ready. If a person encounters the virus again, these memory B cells could reactivate and produce antibodies to the virus to fight re-infection. The researchers say different parts of the adaptive immune system work together and seeing all the components in the blood more than eight months following infection is a good sign. They caution, however, that this protective immunity can vary greatly from person to person, noting they saw a 100-fold range in the magnitude of immune memory. People with a weak immune memory may be vulnerable to recurrent COVID-19 in the future, or may be more likely to infect others. That immune memory against the virus is possible, is a good sign for vaccine developers. It indicates at least some of the vaccine should be able to elicit immunity memory. This could be as long lasting after vaccination as it is after natural infection. The team will continue to analyse samples from these study participants to track their responses 12 to 18 months after the onset of symptoms.
ASX rebounds for best day in two months as BHP, Rio hit record highs - The Australian Financial Review
The Australian sharemarket soared higher on Thursday, rebounding from a heavy loss in the previous session, as investors bet a big-spending Democrat-controlled Congress would benefit equity markets.
While Democrats now have a majority in Congress, the margin is slim and the party could still face gridlock trying to legislate its agenda. "Investors will now be dusting off the blue-wave playbook that many toyed with in the run-up to the election in November 2020," said Mr O'Connor. "Still, given that implementing legislation in many of the areas will still require 60 votes to pass in the Senate, it seems right to expect a 'light blue' version of the Democrat policy program, rather than the most radical version." Miners lead the charge The major miners led the gains after the price of iron ore rose further, extending its strong start to the year. BHP Group advanced 6.1 per cent to a new record high of $46.90 and Rio Tinto firmed 8.6 per cent to a fresh record high of $125.66. Fortescue Metals Group climbed 3.5 per cent to $25.92 while Mineral Resources added 3.3 per cent to $39.76, record highs for both stocks. Broader strength in commodity prices supported gains across other miners, with copper trading at its highest level since February 2013. IGO climbed 7.4 per cent to $7.57, Lynas Rare Earths firmed 7.2 per cent to $4.59, South32 added 5.7 per cent to $2.62 and OZ Minerals advanced 6.2 per cent to $20.77. Rebound for banks The major banks also rebounded firmly following their heavy losses in the previous session after banks rose sharply on Wall Street on Wednesday. Commonwealth Bank advanced 2 per cent to $84.58, Westpac climbed 3.2 per cent to $19.99, ANZ added 3.8 per cent to $23.64 and NAB rose 2.8 per cent to $23.04. A number of other blue chip stocks also supported the gains, recouping their losses from Wednesday's sell-off. Wesfarmers climbed 0.9 per cent to $50.95, Woolworths added 1.4 per cent to $40.20, Coles Group advanced 1.6 per cent to $18.62 and Macquarie Group closed 1.9 per cent higher to $138.45. Energy continues its climb Energy stocks climbed for a second straight session. Crude oil prices extended their 10-month high on Thursday after the Energy Information Administration reported US crude inventories fell by 8.01 million barrels last week. Woodside Petroleum advanced 5.1 per cent to $24.35, Oil Search firmed 6.9 per cent to $4.16 and Santos climbed 7.4 per cent to $6.95 Industrial stocks also traded higher on Thursday, tipping the Democrats' election victory would mean increased spending on infrastructure. BlueScope Steel advanced 5.2 per cent to $18.64 and Sims climbed 6.4 per cent to $14.14. Downer EDI added 5.5 per cent to $5.72. Technology stocks dominated the losses on the local market, echoing a heavy fall in US stocks amid fears big tech would face more regulatory scrutiny from a Democrat-controlled Congress. Afterpay slid 4.2 per cent to $108.85, Xero fell 5.1 per cent to $140.53, Altium dropped 4.1 per cent to $31.71, EML Payments declined 2.8 per cent to $3.84, Zip Co. slipped 2.8 per cent to $5.21 and Nearmap dipped 2.7 per cent to $2.15. Healthcare stocks were also weaker. CSL dropped 1.2 per cent to $275, PolyNovo slid 3.8 per cent to $3.54, Clinuvel Pharmaceuticals fell 2.6 per cent to $20.67 and Cochlear lost 1.3 per cent to $182.50. Gold miners also fell. Silver Lake Resources dipped 4.3 per cent to $1.91, Evolution Mining slid 2.3 per cent to $5.05 and Northern Star Resources declined 1 per cent to $13.31.8
Bitcoin could hit $US146,000, says JPMorgan - The Australian Financial Review
The cryptocurrency's emergence as 'digital gold' for Millennials could put a rocket under its price, says the investment bank.
Bitcoin is likely to outshine gold as Millennials become a more important component of the investment market over time and given their preference for "digital gold" over traditional bullion, JPMorgan said. With a market capitalisation of $US575 billion, the bitcoin price would need a nearly fivefold jump to $US146,000 to match the value of private gold wealth held in gold bars, coins or exchange-traded funds, the bank's note added. JPMorgan strategists said the upside is conditional on the volatility of bitcoin converging with that of gold in the longer term. Though JPMorgan sees the possibility of "current speculative mania" propelling bitcoin to between $US50,000 and $US100,000, it warned that such levels would prove unsustainable until its volatility levels out. "We note that the spectacular bitcoin rally of the past few weeks has moved bitcoin into more challenging territory, not only in terms of its positioning backdrop, but also in terms of its valuation," the bank said. Reuters
Coronavirus Victoria: New COVID-19 cases linked to Sydney outbreak - afr.com
The discovery of three new COVID-19 cases has snapped Victoria's two-month streak without any local transmission.
27 December - Mentone/Parkdale Beach - 10am to 4.30pm 28 December Century City Walk and Mocha Jos, Glen Waverley - 1.30pm to 5pm 28 December Katialo restaurant, Eaton Mall, Oakleigh - 7pm to 8.15pm Victorias Commander of COVID-19 response Jeroen Weimar said the active cases were a concern but that everything was being done to ensure all relevant exposure sites and close contacts were identified. We are so thankful that these people did the right thing and got tested. We always knew this virus had us in a precarious position and we need to make sure we do everything we can to stamp out any further transmissions," he said. The news comes as the Victorian government tightens restrictions for people visiting NSW. Anyone who has been in or visited the Blue Mountains or Wollongong regions from 27 December will have until 11.59pm on 31 December to enter Victoria. Anyone intending to return to Victoria from these areas until 11.59pm on 31 December must apply for a new travel permit, get tested within 24 hours of returning to the state, and must self-quarantine at home for 14 days from when they last left the region. Nobody who has visited the Blue Mountains or Wollongong will be able to enter Victoria after December 31.
Rio Tinto appoints finance boss Jakob Stausholm as next chief executive - The Australian Financial Review
Rio Tinto has promoted its chief financial officer Jakob Stausholm to be its next chief executive, resisting pressure to appoint an Australian citizen as part of efforts to boost its engagement with the nation that provides the majority of its earnings.
Mr Stausholm has been encouraged to be a supportive coach type figure for Rios divisional bosses, rather than the hard task-master that Mr Jacques was rumoured to be internally. His blend of strategic and commercial expertise, strong values and a collaborative leadership style are the ideal qualities for our next chief executive, said Rio chairman Simon Thompson in a statement. Todd Warren from Tribeca Investment Partners Global Natural Resources Fund said he was not bothered by Rios decision to appoint a European boss, so long as Mr Stausholm was committed to having deep engagement in Australia. I dont need someone to be Australian citizen, I dont think that is necessary, I think having someone who spends a lot of time here in Australia is important, he told The Australian Financial Review on Thursday. He certainly doesnt have the profile that Chris Lynch had when he was in the (chief financial officer) role, but it was a difficult role to fill and if they have found someone internal then congratulations. Rio has been run from London since its 1995 merger with Australias CRA, despite Australia providing the vast majority of Rios profits and being home to the biggest number of its employees. Rio chairman Simon Thompson pledged in September to boost engagement with Australian investors and promoted Simon McKeon to become a senior independent director. Mr Stausholm said he was acutely aware of the need to restore trust with Traditional Owners in the wake of the Juukan Gorge debacle, in which 46,000 year old cultural heritage was destroyed as part of an iron ore mine expansion in WA. Mr Stausholm said rebuilding that trust was a key priority for the company. The ancestral lands of Western Australias indigenous people will deliver more than 90 per cent of Rios profits in 2020 when they are announced in February. The surprise appointment of an insider means work to reform the siloed Rio bureaucracy that facilitated destruction of Juukan Gorge through its failure to make joined up decisions, will be conducted by someone who is already familiar with internal structures. A desire for that work to be conducted by an insider with corporate knowledge was part of the reason the Rio board initially declared in August that Mr Jacques, iron ore boss Chris Salisbury and corporate affairs boss Simone Niven should be retained in the wake of the Juukan Gorge scandal. Within three weeks of that August statement of support for the three executives, they had been forced to resign on the back of a shareholder revolt. While Mr Stausholm is not a big name in the Australian market, Shaw and Partners analyst Peter OConnor said the Australian investment community had been given several opportunities to meet with Mr Stausholm over the past two years, and he had been impressed by the softly-spoken Dane. We have seen him down here a few times and he has always seemed decent, humble and genuine in his efforts to engage in Australia, said Mr OConnor. In his role to date he has been a capable, credible individual. Several of Rios divisional bosses, including copper boss Arnaud Soirat, aluminium boss Alf Barrios and energy and minerals boss Bold Baatar have been in their current roles for longer than Mr Stausholm has been with the company. Of that triumvirate, only Mr Baatar is viewed as having the potential to lead the company one day, with some believing his Mongolian background could be an asset in Rios efforts to repair relations with the Mongolian government. The choice of one of the newer executives to the company suggests there was a lack of depth in the current bench at Rio, which the market had broadly thought anyway, said Mr OConnor. At a time of great tension between the Australian and Chinese governments, Rio is delicately placed as Australias biggest supplier of iron ore but with a Chinese state-owned entity as its biggest shareholder. Mr Stausholm also faces a messy situation in Mongolia where Rios most important growth project, the $US6.75 billion Oyu Tolgoi copper expansion, is caught in a quagmire of problems with minority partners and the local government. Despite the difficult reputational and geopolitical situation, Mr Stausholm will inherit a company in rude financial health, meaning he will have the financial firepower to fix Rios woes. He will officially take the reins on January 1, 2021, meaning Australias two biggest mining companies have both changed chief executives within the space of one year, after Mike Henry become BHP chief on January 1, 2020. I am truly delighted and humbled to be given the opportunity to lead this tremendous company,said Mr Stausholm in a statement on Thursday. Mr Stausholms stint at Shell delivered Mr Stausholm a seat on the board of the Australian oil and gas company that Shell had a large stake in at the time; Woodside Petroleum. Mr Stausholms Woodside stint between 2006 and 2008 gave him front row seats to the first phase of the resources boom in Western Australia, and he shared that boardroom with Wesfarmers chairman Michael Chaney among others. Mr Stausholm also did a stint with Copenhagen based facilities provider ISS, which has operated many of the camps that house fly-in fly-out workers in Western Australias iron ore heartland, including some of Rios, although Rio has more typically worked with French facilities provider Sodexo.