Our Portfolio Manager and Partner Ray David discusses recent market events below. He explores:

1: The Australian Market

– The ASX200 is up significantly over the last 12 months.
-Technology has been the best-performing sector, mirroring the performance of US equity markets.
– Cyclical sectors, such as commodities, have underperformed.
– The three best-performing stocks for the ASX100 were Pro Medicus (PME) +119%, Altium (ALU) +86%, and Goodman Group (GMG) +75%.
– The worst performers were lithium stocks, with the bottom three being IGO, Liontown Resources (LTR), and Arcadium.

2: Why Investors Are Excited by Technology Stocks

– Artificial intelligence (AI) has been a strong thematic driving a new investment cycle.
– Most gains in ASX tech stocks have been due to PE re-rating, except for Goodman Group, which has seen earnings expectations increase by 210% since 2019.
– Goodman Group has positioned itself well by converting industrial property sites into ready sites for data centers, realizing significant gains.

3: What Else Is Driving Markets?

– Banks have been strong performers, increasing by 30% over 12 months, surprising many investors.
– The Commonwealth Bank of Australia (CBA) has re-rated to over 22x EPS, making it the most expensive bank in the world with a flat earnings profile.

“The best business is a royalty on the growth of others, requiring little capital itself.” – Warren Buffett

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