Quay podcast: FORA - fear of renting again

Quay Global Investors

March 2023

Chris Bedingfield speaks with Bennelong's Holly Old about the future of house prices in Australia, the fear of renting again, and what history has taught us about the next global crisis.

"FOMO, fear of missing out, has changed to FORA, which is fear of renting again. And I think that's what's caused a bit of the supply strike that's happening. And there's a very bearish narrative in the residential commentary at the moment... but I think when you really look at it from a logical and a cool perspective, it's probably not as bad as people say."

• 0:36 - March madness - the rate height cycle, the big news on banks, and the outcome of reporting season
• 4:49 - The buyer versus seller strike, and the future of house prices in Australia
• 8:11 - Chris's new acronym, FORA
• 12:08 - Why we're not entering another global financial crisis

Funds operated by this manager:

Quay Global Real Estate Fund (AUD Hedged), Quay Global Real Estate Fund (Unhedged)

The content contained in this audio represents the opinions of the speakers. The speakers may hold either long or short positions in securities of various companies discussed in the audio. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely as an avenue for the speakers to express their personal views on investing and for the entertainment of the listener.

Why quality matters?

Magellan Asset Management

March 2023

Quality is a frequently used term in investing, but from Magellan's experience definition really does matter. Why, because not all company fundamentals are the same. Learn more.

Speaker: Elisa Di Marco, Portfolio Manager

Funds operated by this manager:

Magellan Global Fund (Hedged), Magellan Global Fund (Open Class Units) ASX:MGOC, Magellan High Conviction Fund, Magellan Infrastructure Fund, Magellan Infrastructure Fund (Unhedged), MFG Core Infrastructure Fund

The information contained in this podcast is for general information purposes and does not constitute investment advice. You should seek investment advice tailored to your circumstances before making any investment decision. Opinions stated are Ms. Kent's own and not to be considered reflective of any of the organizations with whom she affiliated.

The Lipstick Effect

Insync Fund Managers

March 2023

Beauty lasts....

...at least as far as products are concerned. A beauty revolution is fuelling the explosive growth of the cosmetics industry even with the threat of recession.

Premium cosmetics are part of Insync's Beautification & Wellbeing megatrend. Forecast growth is 8% pa over the next 5 years, 2x global GDP. Cosmetic businesses are some of the most enduring and profitable ones in the world.

Key drivers behind the secular and sustainable growth in cosmetics include the growing Emerging Market - middle class (+700m more people are entering this cohort by 2030).    

Increasing consumer preferences for higher-quality, natural/organic products, and changing consumer behaviours and lifestyles present premium pricing opportunities. These global brands often prioritize ethical and sustainable practices which appeal to consumers that prioritize social responsibility.

Demand for cosmetics may not be completely recession-proof, but it does tend to be relatively resilient during downturns. Cosmetic products are considered an affordable luxury, as many are relatively inexpensive compared to other luxury goods. Consumers are willing to spend a little extra on cosmetics as a way to treat themselves, even during difficult economic times.

This is called the Lipstick effect - and we wrote more about this back in 2021.

So regardless of whether we face a deflationary shock or a sustained period of inflation, the premium cosmetic industry is well-positioned to keep growing and provides a greater level of certainty for the uncertain near-term environment

Funds operated by this manager:

Insync Global Capital Aware Fund, Insync Global Quality Equity Fund

Disclaimer
Equity Trustees Limited ("EQT") (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Insync Global Quality Fund and the Insync Global Capital Aware Fund. EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) ("Insync"), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.

Hedge Clippings | 14 April 2023

Jim Chalmers headed off to Washington this week for meetings with the G20, the World Bank, and the International Monetary Fund (IMF) among others, and ahead of his first full federal budget in May. The Treasurer's visit coincided with the IMF's release of their latest economic outlook, which to say the least, was not rosy, predicting an uncertain global outlook driven by financial sector turmoil, high inflation, the ongoing effect of Russia's invasion of Ukraine, and three years of COVID.

The IMF's forecast included a downgrade for Australia's GDP growth to 1.6% this year, rising only slightly to 1.7% in 2024, although above the average of all Advanced Economies of 1.3% and 1.4% in 2023 and 2024 respectively. Australia's outlook may be subdued, particularly when compared to the important Asian powerhouses of China and India, but is positively buoyant when looking at the Euro Area, which is forecast to grow by 0.8% this year prior to rising to 1.4% in 2024. Spare a thought for Germany (-0.1% and 1.1%) and the UK (-0.3% and 1%).

Chalmers has been at pains to point out both the problems that the Australian economy faces, his budget challenges, and while also talking up the strength of Australia's financial system and our banks. Following the implosion of SVB and Credit Suisse he is naturally keen to ensure that confidence in Australia's financial system remains intact. The reality is that confidence is what keeps banks' doors open.

However well capitalised Australian banks are, if too many customers wanted their funds on deposit returned in a short space of time, as happened with SVB, the banking and financial system would fail. What added to the problems at SVB was the speed at which information travels in a wired world, plus the highly tech savvy nature of SVB's business, and their customers. Hence Chalmers' reassuring words.

On a more positive note, there may be light at the end of the tunnel in Australia's trade woes with China. In spite of Paul Keating's recent tirade against the government, and in particular his criticism of Penny Wong's performance as Foreign Minister, it would seem the "quietly-quietly- behind-the-scenes" approach (along with the potential threat of China coming off second best in the WTO's hearing over barley) is more effective than name calling. No one likes losing face, particularly the Chinese.

If, as seems likely, China lifts its tariffs on Australian barley as a result of the federal government suspending its complaint to the WTO, other agricultural sectors including wine, timber, and lobsters could be next.

News & Insights

Market Commentary - February | Glenmore Asset Management

March 2023 Performance News

Skerryvore Global Emerging Markets All-Cap Equity Fund

DS Capital Growth Fund

Bennelong Emerging Companies Fund

Delft Partners Global High Conviction Strategy

Bennelong Twenty20 Australian Equities Fund

Quay Global Real Estate Fund (Unhedged)

Bennelong Kardinia Absolute Return Fund

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