August portfolio update
August Portfolio update:
Australian markets have their six-monthly Reporting Season in August ; it follows the quarterly reports in the US markets. At the end of August, the Australian market was down, when US and China trade and currency tensions dominated the international tone and global markets, for most of the Reporting Season.
The greatest impact of these global political disputes is the economic distraction from productive means. It boils down to companies less willing to put on the extra staff member, buy the extra piece of equipment or open a new shop. These hesitations compound across the country and flow through to shrinking global growth which weighs on company share prices and share markets.
Within the top performing companies of 2019, August has seen a divide between the quality and expensive. The latter companies are falling and struggling to recover, whereas the quality companies continue to make new highs. Our focus is on lower volatility and strong dividends.
Bond proxies, or companies with strong and reliable yields, continue to perform. even more so where the companies earns internationally or benefit from the falling AUD. Property companies have been supported, with early indicators suggesting the AU property slow-down has bottomed. The risk in this space is not overpaying for unreliable dividend yields that are exposed to the cyclical parts of the economy. For property exposure, we prefer rent collectors rather than property developers.