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Sell in May: shares stay true to script

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Original article by David Rogers
The Australian – Page: 17 & 28 : 30-May-17

The S&P/ASX 200 has underperformed in the last month, reducing its gain so far in the 2016-17 financial year from 13.8 per cent to just 9.1 per cent. May 2017 is shaping up to be the worst month for the local bourse since January 2016, and the benchmark index is now well off the 6,000-point level that seemed within reach early in the month. Meanwhile, the uncertain economic outlook may weigh on investors in the near-term, with upcoming data expected to show GDP growth stalled in the March quarter.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, PERPETUAL INVESTMENTS, RESERVE BANK OF AUSTRALIA, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Expect more shareholder activism Down Under, warns Credit Suisse

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 19 : 23-May-17

Chris Young of Credit Suisse says it was inevitable that activist hedge funds would target Australian companies. He adds that the investment bank’s research suggests that BHP Billiton will not be the only Australian company to attract the interest of activists. Young says the best defence against activists is for a company to ensure that it has the support of key shareholders. He also notes that the relatively small size of the Australian market means activist funds may get less traction than in the much larger US market.

CORPORATES
CREDIT SUISSE AG, BHP BILLITON LIMITED – ASX BHP, ELLIOTT ASSOCIATES LIMITED PARTNERSHIP, ELLIOTT MANAGEMENT CORPORATION, SAMSUNG ELECTRONICS COMPANY LIMITED, CANADIAN PACIFIC LIMITED, PERSHING SQUARE CAPITAL MANAGEMENT LP

Amazon effect puts IPOs under a cloud

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Original article by Sue Mitchell
The Australian Financial Review – Page: 13 : 16-May-17

The pending arrival of Amazon in Australia, along with reduced consumer spending, has made it less likely that three proposed IPOs in the retail sector will proceed. The IPOs in question are Retail Apparel Group, Quick Service Restaurant Holdings and Officeworks, with their combined value being put at $A2.4 billion. The lead managers behind Officeworks, which is a unit of Wesfarmers, have valued its IPO at between $A1.124 billion and $A1.5 billion, but the consensus of fund managers is that $A1.2 billion is as much as they would be willing to pay.

CORPORATES
AMAZON.COM INCORPORATED, RETAIL APPAREL GROUP PTY LTD, QUICK SERVICE RESTAURANTS HOLDINGS PTY LTD, OFFICEWORKS SUPERSTORES PTY LTD, WESFARMERS LIMITED – ASX WES, ARCHER CAPITAL PTY LTD, NAVIS CAPITAL PARTNERS LIMITED, YARRA CAPITAL GROUP PTY LTD, ARNHEM INVESTMENT MANAGEMENT PTY LTD, MACQUARIE CAPITAL PTY LTD, JP MORGAN AUSTRALIA LIMITED, UBS HOLDINGS PTY LTD, BENNELONG AUSTRALIAN EQUITY PARTNERS PTY LTD, BINGO INDUSTRIES LIMITED – ASX BIN, ZIP INDUSTRIES AUSTRALIA, TAROCASH PTY LTD, YD PTY LTD, JOHNNY BIGG, CONNOR

Bumps in the road: no straightforward path to 6000

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Original article by David Rogers
The Australian – Page: 31 : 5-May-17

The S&P/ASX 200 Index retreated below the 5,900-point level on 4 May 2017, after closing within sight of 6,000 points earlier in the week. The consensus of market analysts is that it will rise to around 6,000 in the next year, while Bloomberg’s consensus target has been increased to 6,026.8 points. However, the local sharemarket faces a number of headwinds, including the prospect of interest rate rises in both Australia and the US at some point, while Tim Baker of Deutsche Bank anticipates an eventual correction of five per cent of more.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, BLOOMBERG LP, DEUTSCHE BANK AG, CITIGROUP PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, FORTESCUE METALS GROUP LIMITED – ASX FMG, UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, GENWORTH MORTGAGE INSURANCE AUSTRALIA LIMITED – ASX GMA, CHICAGO BOARD OPTIONS EXCHANGE VOLATILITY INDEX, PACT GROUP HOLDINGS LIMITED – ASX PGH, COCA-COLA AMATIL LIMITED – ASX CCL, VOCUS GROUP LIMITED – ASX VOC, THE STAR ENTERTAINMENT GROUP LIMITED – ASX SGR, AGL ENERGY LIMITED – ASX AGL, APA GROUP – ASX APA, SUNCORP GROUP LIMITED – ASX SUN, WOOLWORTHS LIMITED – ASX WOW, CREDIT SUISSE (AUSTRALIA) LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, ECLIPX GROUP LIMITED – ASX ECX, LEND LEASE GROUP LIMITED – ASX LLC, GRAINCORP LIMITED – ASX GNC

PE floats sag in 2016, but not over 3 years

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 19 : 4-May-17

Rothschild and the Australian Private Equity & Venture Capital Association have produced a report which shows that IPOs backed by private equity firms underperformed the broader IPO market in 2016. The former delivered an average share price gain of 2.8 per cent, compared with a gain of 10.5 per cent for other floats. However, there were just five private equity-backed IPOs in Australian during the calendar year, and analysis shows that such IPOs have outperformed since 2013.

CORPORATES
NM ROTHSCHILD AUSTRALIA HOLDINGS PTY LTD, AUSTRALIAN PRIVATE EQUITY AND VENTURE CAPITAL ASSOCIATION LIMITED, ZIP INDUSTRIES AUSTRALIA, QUADRANT PRIVATE EQUITY PTY LTD, QUICK SERVICE RESTAURANTS HOLDINGS PTY LTD, OFFICEWORKS SUPERSTORES PTY LTD, WESFARMERS LIMITED – ASX WES, BINGO INDUSTRIES LIMITED – ASX BIN, TEGEL GROUP HOLDINGS LIMITED – ASX TGH, INGHAMS GROUP LIMITED – ASX ING, SCOTTISH PACIFIC GROUP LIMITED – ASX SCO, BRAVURA SOLUTIONS LIMITED.- ASX BVS, GTN LIMITED – ASX GTN, STANDARD AND POOR’S ASX SMALL INDUSTRIALS INDEX, SPOTLESS GROUP HOLDINGS LIMITED – ASX SPO, CYAN INVESTMENT MANAGEMENT PTY LTD, REGAL FUNDS MANAGEMENT PTY LTD, ALINTA ENERGY (AUSTRALIA) PTY LTD, ACCOLADE WINES LIMITED

US, Britain soak up cash

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Original article by David Uren
The Australian – Page: 28 : 27-Apr-17

Data shows that Australian foreign investment doubled in the 10 years to 2015, to $A534bn, and offshore investment now accounts for 32.4 per cent of GDP. The US tops the list of overseas investment destinations, at $A105bn, ahead of the UK ($A85bn). However, Andrew Parker of PwC notes that Asia accounts for only 10.9 per cent of Australia’s total foreign investment. A survey by PwC has found that Australia’s dividend imputation system is generally not regarded as a deterrent to investing in Asia.

CORPORATES
PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD, COMMITTEE FOR ECONOMIC DEVELOPMENT OF AUSTRALIA, STANDARD AND POOR’S ASX 200 INDEX, ASSOCIATION OF SOUTH-EAST ASIAN NATIONS

Active fundies struggle as passive index huggers deliver

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Original article by James Frost
The Australian Financial Review – Page: 1 & 8 : 26-Apr-17

Data from S&P Dow Jones Indices shows that more than 75 per cent of Australia’s actively-managed large-cap equity funds failed to match the performance of their benchmark index in 2016. Independent Asset Management and Hyperion Asset Management are among the active fund managers to have underperformed in recent years, as investors have increasingly embraced passively-managed index funds.

CORPORATES
S&P DOW JONES INDICES LLP, INDEPENDENT ASSET MANAGEMENT PTY LTD, HYPERION ASSET MANAGEMENT LIMITED, HYPERION AUSTRALIAN GROWTH COMPANIES FUND, MERCER INVESTMENTS PTY LTD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, STANDARD AND POOR’S ASX 200 ACCUMULATION INDEX, STANDARD AND POOR’S ASX 300 ACCUMULATION INDEX

External factors align for a ‘buying opportunity’

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Original article by David Rogers
The Australian – Page: 25 : 19-Apr-17

Australia’s benchmark S&P/ASX 200 Index remained above the technically important 5,830- point level on 18 April 2017, despite a further downturn in the iron ore price. However, the local sharemarket has fallen by just 2.2 per cent since its recent peak of 5,950.1, and it could still test the 6,000-point level for the first time since 2008. Meanwhile, Morgan Stanley remains bearish about the outlook for the local market, and the firm still expects the S&P/ASX 200 to fall to 5,450 by the end of the year.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, MORGAN STANLEY AUSTRALIA LIMITED, STANDARD AND POOR’S 500 INDEX, CITIGROUP PTY LTD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Traders pour into gold as tensions rise

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Original article by David Rogers
The Australian – Page: 32 : 13-Apr-17

The price of gold has rallied in recent weeks as growing geopolitical tensions prompt renewed investor support for "safe haven" assets. Meanwhile, the yield on 10-year US Treasuries recently reached a five-month low and it is again testing this level, while the VIX volatility index has risen to its highest level in five months. However, Joseph Capurso of the Commonwealth Bank says the continued strength of the US dollar suggests that recent financial market trends do not constitute a "global risk-off event".

CORPORATES
CHICAGO BOARD OPTIONS EXCHANGE VOLATILITY INDEX, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MORGAN STANLEY CAPITAL INTERNATIONAL ALL COUNTRY WORLD INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AMP CAPITAL INVESTORS LIMITED

Activism may explain ASX’s sprint to 6000

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Original article by Jessica Sier
The Australian Financial Review – Page: 25 : 12-Apr-17

Hasan Tevfik of Credit Suisse says international shareholder activists may increasingly target Australian shares, adding that it is surprising that they have not already done so. He suggests that activist investors may have contributed to the local sharemarket’s recent rally. Shareholder activism has come under scrutiny in the wake of a proposal by US hedge fund Elliott Management for BHP Billiton to undertake a major restructuring.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, BHP BILLITON LIMITED – ASX BHP, ELLIOTT MANAGEMENT CORPORATION, ELLIOTT ASSOCIATES LP, PERPETUAL INVESTMENTS, JP MORGAN ASSET MANAGEMENT INCORPORATED, JANA PARTNERS LLC, AMERICAN WHOLE FOODS