Investor Insights

Given the sell-off in bond yields so far this year, rising inflationary expectations, and the collapse of the Evergrande Group in China, it is unsurprising many global share market indices took a breather and recorded a lacklustre September 2021 quarter in terms of performance. Of the major markets, the Hong Kong Hang Seng Index was down 14.

Last week, Scott Phillips and I held a webinar introducing the proposed Polen Capital Global Small and Mid Cap Fund. We were joined by three members from Polen Capital, Paul Williams, Troy Renauld CFA  and Rob Forker.

  Our domestic equities Portfolio Managers presented a live webinar for our clients this week discussing several themes that emerged during the recent reporting season. The Retail, Insurance and Bank sectors delivered a positive surprise, while Health, Staples and Utilities disappointed versus consensus.

  IMDEX (ASX:IMD) delivered an impressive set of results for the financial year to 30 June 2021, which materially beat expectations and led to broker forecast upgrades. The two key points from the update include revenue growth of 11 per cent and EBITDA was up 39 per cent.

One of the most exciting parts of the market is the small and mid-cap space, where you can find companies that have grown their average annual earnings per share by a sustained 20 per cent. In the cases where these companies can also internally fund their growth, strong long-term investment returns typically follow.

Over the past 12 months, the All Ordinaries index and the S&P 500 have risen around 26 and 35 per cent, respectively.   Not bad when you consider the economic ravages of the COVID-19 lockdowns. But despite these strong performances, there are three good reasons to believe sharemarkets will continue to climb over the coming year.

Macquarie Telecom (ASX:MAQ) is a data centre owner/operator with facilities in Sydney’s CBD, Macquarie Park in Sydney’s north, and Canberra. MAQ’s cloud services generated 46 per cent of the company’s revenues in FY21, while telecom services, in which it competes with Telstra, Optus, TPG and Vocus, and includes data, voice, mobile and colocation generated 47 per cent of revenues.

The COVID-19 pandemic has dented the profits of Ramsay Health Care (ASX: RHC), Australia’s multinational healthcare provider and hospital network. The good news is that earnings are growing again across key regions as lockdowns and restrictions start to ease. And an increased final dividend signals that the company expects a better year ahead.

The MSCI (Morgan Stanley Capital International) organisation is arguably the best know provider of global equity indexes and provide an excellent insight into the investable equity markets around the world. The MSCI indexes are market cap-weighted indexes, which means stocks are weighted according to their market capitalisation—calculated as stock price multiplied by the total number of shares outstanding.

Mastercard (NYSE:MA) is the second largest processor of debit and credit transactions globally behind Visa. It has a market capitalisation of US$354 billion and is a top 10 holding in the Polen Capital Global Growth Fund.

In March 2020, during the COVID-19 sell-off, the share price of shopping mall company, Scentre Group (ASX:SCG), hit a low of $1. 51. It’s been a bumpy ride since then, with more lockdowns, but the share price has recovered nicely.

As with many other discretionary retailers, FY21 proved to be a bumper year for homewares and online furniture retailer, Adairs (ASX: ADH). The company enjoyed record sales growth and operating margins. But there are already signs that FY22 will not be as easy.