• Christopher Hall

The re-opening - is it the next market phase?


There will be companies that perform better on the other side of the CV19 lockdowns.

So far, we have seen the market respond to CV19 in phases which have impacted the market in the following ways:

Please One

The fall into March as we went into lock down. Groceries and online shopping boomed in April and May, especially those retailers who helped us set up work-from-home offices and DIY home renovations and gardening.

Energy shares had equally dramatic news with OPEC+ falling apart and oil prices turning negative. Click here for more about the energy situation.

Phase Two

Technology took hold of the market, rapidly picking up market share from bricks and mortar competitors.

Around the same time, car dealers went from their worst months ever in April to their best months in May and June as people who couldn’t travel outside of NSW, decided to be more comfortable in their day-to-day travel and buy nice new cars, especially luxury ones.

Growth companies on the ASX such as Buy Now Pay Later Shares (After Pay and Zip Money) ran rings around Value companies like banks, airports and traditional industrials.

Phase Three

Next, gold and inflation trades gained ground as raw materials were stuck in countries in lockdown. This saw iron ore and other commodities climb higher.

At the same time, Japan's Softbank trade gained momentum, with Robinhood traders chasing the same wicket.

The NASDAQ Tech market made new highs.

Phase Four

US markets gained exponentially and went to new highs from a technical perspective this was an over-shot of ‘the megaphone formation. This rise also coincided with technical levels squaring off markets as the market understood the implications of the Softbank trade.

Phase Five

This is where we are today.

Investors are looking through the growth and re-assessing value, asking what life will look like when we can travel again and what the new normal will look like.

New Zealand was the first country we saw ‘go back to normal', packing out rugby stadiums and confirming that humanity still likes to socialise.

The European and North American summer holidays confirmed that people still like to travel which bodes well for Australia when our borders re-open.

Casinos and hotels are still not doing well.

Travel companies like Flight Centre (FLT) and Webjet (WEB) have bounced off the higher lows of July/August.

Domestic holiday destinations like the Whitsundays are seeing +200% growth in enquiries from pre-CV19 levels.


Australians want to travel, and numbers reviewed earlier in the pandemic showed that Australians spend more money on travel than international travellers spend coming here. This is a positive for the Australian economy if the travel restrictions remain, because we know Aussies like to travel.

If you are sceptical about this comment - just try to book a holiday to Byron Bay!

The re-opening phase trades to watch

The companies to watch in the Australian space are:

Travel:

· Flight Centre (FLT)

· Webjet (WEB)

· Helloworld (HLO)

· Star Entertainment (SGR)

· Event Hospitality and Entertainment Ltd (EVT)

· Corporate travel

· Qantas (QAN)

· Sydney Airport (SYD)

· Seven West Media (SWM)

Entertainment shares:

· Ardent Leisure (ALG)

· Crown casinos (CWN)

· Experience Co Ltd (EXP)

Shopping centres:

· Unibail-Rodamco-Westfield CDI (URW)

· Scentre Group (SCG)

· Vicinity Centres (VCX)

Health:

· Ramsay Health Care Limited (RHC) (elective surgery)

Education:

· G8 Education Ltd (GEM)

· Idp Education Ltd (IDP)

Fashion retailers:

· Lovisa (LOV)

· Premier Investments Limited (PMV)

· Accent Group Ltd (AX1)

If you see a change of tide that switches Australia to re-open travel, expect a rapid short-squeeze which will push these share prices up by astronomical amounts. Note that some of the most shorted companies on the ASX are:


· Webjet (WEB)

· Myer Holdings Ltd (MYR)

· Flight Centre (FLT)

· Corporate Travel Management Ltd (CTD)

· Lovisa (LOV)

· Super Retail Group Ltd (SUL)

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