December Quarter Review
The December quarter largely traded sideways until a late Christmas rally again challenged record ASX200 highs closing 1.53% higher at 7,445 for the period. The quarter and year have been and will continue to be dominated by pandemic events for some time to come. Central Banks the world over are grappling with how to manage through the next phase of the pandemic, living with Covid. Economies are reopening to pent up consumer demand causing supply chain pressures and ongoing debates on inflation and its momentum.
State of Australia
The Australian economy is in good shape heading into 2022. Key economic metrics of unemployment 4.6%, inflation 2.1% and annual wages growth 2.2% are all trending slowly in the right directions to generate a lift in interest rates from historic lows. When this movement is likely to occur is the cause of much debate with the Reserve Bank of Australia not expecting to move until 2023, the market is predicting an increase in rates late 2022.
Portfolio Positioning
The Quarter has been extremely busy with companies raising funds to shore up balance sheets and pursue new opportunities presented by dynamic Covid markets. Limberg Asset Management has been busy building broker relationships to provide access to as many good opportunities as possible. With increase corporate activity historically being an indication of high valuations, we are again looking to seize the opportunity to tighten and focus portfolios on quality assets. It is our intention to build defensive portfolio holdings awaiting the next buying opportunity.
It has been a challenging quarter most notably for the return of price volatility. The main detractors of performance for the quarter were previous stars Dubber (DUB) and Wisr (WZR). However, we remain confident that both these stock prices will recover in time as there has been no news or change in underlying trends driving the businesses. There has been no news with respect to either stock to justify the share price movement. When speaking to management it would seem that performance for each continues to be favourable and the expectation it for strong growth in 2022.
COVID
Despite the Australian fully vaccinated rate of 80% and administered boosters around 10% the Omicron wave rolls on. Looking to international markets and the behaviour of the Covid virus it is our expectation that this is likely to be one of many virus waves. We continue to monitor markets and assess the risks in these volatile times with a view to preserve capital.
We would like to take the opportunity to thank you for your enduring trust and continued support over what has been extraordinary period in markets. We are, as always, here to help and happy to discuss our investment principles with anyone that could benefit from our services.