Three members of the group of “Eight Income Wonders from Down Under” that made up the original Australian Edge Portfolio have posted five-year closing highs on the Australian Securities Exchange (ASX) this week. Five more Portfolio Holdings, including three recent additions, have also pushed out to new half-decade highs.
That’s 33 percent of current Holdings that have established post-Great Financial Crisis highs in the last couple days.
APA Group (ASX: APA, OTC: APAJF), Australia’s biggest pipeline operator, closed at AUD5.94 on Jan. 29, 2013, and has now generated a total return of 64.1 percent in Australian dollar terms and 76.1 percent in US dollar terms.
Natural gas transmission and distribution outfit Envestra Ltd (ASX: ENV, OTC: EVSRF), of which APA Group owns 32.8 percent, closed at AUD0.98 on Jan. 30, pushing its aussie total return to 66.3 percent and its greenback return to 78.4 percent.
Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY), our favorite among Australia’s Big Four banks, established its five-year closing high of AUD26.58 on Jan. 30, 2013. ANZ, which continues to execute on its plan to become a “super-regional” bank, is now up 56.1 percent, including dividends, in local terms, and has generated a US dollar total return of 67.4 percent since the Sept. 26, 2011, debut of AE.
CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY), which was one of our first additions to our original Portfolio collection of “Eight Income Wonders from Down Under,” established a five-year high on Jan. 30, 2013, of AUD55.40.
Since Oct. 14, 2011, through Jan. 30, 2013, the developer of vaccines and plasma protein biotherapies has generated a total return in Australian dollar terms of 86.9 percent. Accounting for the impact of a strengthening aussie versus the US dollar during this time frame the total return is 89.2 percent.
M2 Telecommunications Group Ltd (ASX: MTU, OTC: MTCZF), which we added to the Conservative Holdings on Dec. 16, 2011, notched a five-year closing high of AUD4.40 on Jan. 30, 2013. The stock has generated a total return in Australian dollar terms of 64.2 percent and a US dollar return of 72.1 percent.
Recent additions to the Portfolio have benefitted from the general bullishness that emerged late in 2012. Conservative Holding Ramsay Health Care Ltd (ASX: RHC, OTC: RMSYF) reached a half-decade high on Jan. 30, 2013, of AUD29.88.
Ramsay, which runs medical facilities in France and England in addition to being the largest private hospital operator in Australia, has generated a total return of 23.9 percent in local terms and 22.2 percent in US dollar terms since we added it to the Portfolio on Sept. 14, 2012.
Our two most recent additions, from the November 2012 issue have also posted double-digit total return numbers in Australian and US dollar terms.
Diversified conglomerate Wesfarmers Ltd’s (ASX: WES, OTC: WFAFF, ADR: WFAFY) run to a five-year high of AUD38.82 on Jan. 29, 2013, has pushed its Australian dollar total return since Nov. 16, 2012, to 12.1 percent. For US-based investors the total return is 13.2 percent.
Australia’s largest retailer, with grocery, office supply and home-improvement stores, also has coal and insurance interests. We detail Wesfarmers’ retail sales and revenue and coal production for the second quarter of fiscal 2013 (ended Dec. 31, 2012) in The Roundup, which is available to Australian Edge subscribers.
AE Portfolio Aggressive Holding Amalgamated Holdings Ltd (ASX: AHD), which we added in November, along with Wesfarmers, reached a five-year closing high of AUD7.67 on Jan. 30, 2013. In the two and a half months the cinema and hotel operator has been a member of the Portfolio it’s generated a local total return of 16.4 percent and a US dollar total return of 17.5 percent.
Manufacturing in the Middle Kingdom Expands (Again)
The HSBC Flash China Manufacturing Purchasing Managers Index (PMI) for January came in at a 24-month high of 51.9, better than analysts’ consensus expectations of 51.7 and up from 51.5 in December. It’s the fifth consecutive month the Flash PMI has risen.
The new exports component turned positive, coming in at 50.1, up from 49.2 in December. The output and the employment component rose to 22-month and 20-month highs, respectively. The data suggests that China will report a 2013 first-quarter gross domestic product (GDP) growth rate better than the 7.9 percent sequential expansion from the third quarter to of 2012 to the fourth quarter.
Qu Hongbin, Chief Economist, China & Co-Head of Asian Economic Research for HSBC, attributed January’s expansion “to the continuous gains in new business” that led manufacturers to accelerate production “by additional hiring and more purchases.”
“Despite the still-tepid external demand,” Mr. Qu noted, “the domestic-driven restocking process is likely to add steam to China’s ongoing recovery in the coming months.”
China’s official manufacturing PMI for January will be released on Feb. 1. The consensus expectation from 33 analysts surveyed by Bloomberg is for a reading of 51.0. That would be a fourth consecutive month of accelerating activity for the Middle Kingdom’s manufacturing sector and the highest reading in nine months.
(Another) Long Campaign, Aussie Style
Prime Minister Julia Gillard announced this week that the next general elections in Australia will be held on Sept. 14, 2013. The announcement caught pundits and politicians by surprise, as governments typically hold out until the last possible moment to declare elections.
In Australia federal election dates aren’t fixed. But the federal parliament can’t run for more than three years after the day it first meets. Although governments are free to call for elections earlier if they believe they’ll benefit, a minimum campaign period of 33 days must precede the day of voting.
The Australian said the move “blindsided” Ms. Gillard’s current cabinet, while members of parliament loyal to her predecessor as prime minister and Labor Party leader Kevin Rudd described the decision as “incomprehensible.”
Tony Abbott has declared the Liberal-National Party coalition that he leads ready for an election he says will be based on the issue of trust.
In 1984 then-Prime Minister Bob Hawke called for elections 10 weeks ahead of the vote, and that was considered an abnormally long interval. The upcoming vote will come after seven and a half months’ worth of promise-making and vote-grubbing. It will be the longest campaign in Australia’s history.
Ms. Gillard’s Labor Party is trailing the opposition Liberal-National Party coalition, though the gap has narrowed to around 3 percentage points.
We’ll have more on the coming elections in the February issue of Australian Edge, which will be published Feb. 15, 2013.