FNArena’s Weekly Insights – August 31 2020

Dear time-conscious investor: August reporting season has been a positive experience, with multiple new trends and highlights

August 2020 Fits The Post-2013 Narrative

By Rudi Filapek-Vandyck, Editor FNArena

As we leave August 2020 behind us, dominated by a domestic reporting season that on multiple levels proved better-than-feared, it is my personal observation that investors in Australia now can be clearly divided in two opposing groups:

-those who are elated and chuffed as exposure to the sharp rebound in equities has paid off in spades, or at least it has seriously mitigated the losses incurred earlier in the year;

-those who feel deeply frustrated as most of their money is not in the share market, or it is in equities that have not fully participated in the strong recovery off the late-March low.

Probably the stock that illustrates the 2020 share market narrative the best in Australia is Afterpay ((APT)), a local payments facilitator that only started life as a publicly listed company in mid-2017.

Who could ever have imagined that a little over three years later, this company is now the global leader in a newly emerging online segment of the global payment processing industry, one that now has everybody’s attention, with Afterpay’s market capitalisation rallying into the local Top20?

The Afterpay story is two-fold: on the one hand we have an increasing number of newly listed technology disruptors who start from humble beginnings but potentially have a great future ahead of them.

On the other hand, the covid-19 pandemic and global lockdowns have pushed newly emerging societal shifts and trends into acceleration, with the unexpected result there are companies and business models out there that are not just benefiting, they are thriving.

When I met up with an old mate of mine recently, who’s a mortgage broker, I was perplexed to hear many of his customers who run a café or restaurant are, post the initial scare from lockdowns, currently experiencing extreme boom-time conditions.

Lockdowns are bad news. The human instinct is to focus on the sad stories that emerge. Many cafes and restaurants in my neighbourhood are still closed, or have vacated the premises.

But those re-opening in the right place and with the right adjustments and operational costs are meeting huge pent-up demand.

Every crisis shares that same common core characteristic: the strong will become stronger.

This time around, the global pandemic has created a separate group of “lucky winners”, so to speak, and their growth potential has been turbo-charged.

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