Global markets continue in a period of uncertainty riding on US elections, second and third wave of COVID risks and realistic timelines around an effective vaccine becoming available. Markets tend to do better with certainty and as these factors reach clarity we should see strong trends on the ASX.
The ASX 200 tested 6,200 points following the federal budget measures and then followed the US markets sell off, heading back down towards the 6,000 level.
Folio and company updates for members are at the end of this post.
On to the latest CEO insights.
CEO Insights
Healthcare
“I have some discussions with some people in different hospitals around the world. I mean, when the lockdown came and people postpone surgeries, etc, what actually happened is that a lot of those hospitals were then empty. So, they didn’t have anything to do. So they acted, but maybe they acted a bit too harsh at that point in time.…and I don’t think that we will have a situation that we will lock down the hospitals that quickly [again]”
Thomas Schinecker, CEO, Roche Diagnostics
Food & Beverage
“The reality is it’s just more expensive to operate in the coronavirus world that we’re living in now”
Richard Allison, CEO, Domino’s Pizza Inc
“We think this will be the biggest Christmas ever by far, given the circumstances”
Steve Cain, CEO, Coles Group Ltd
“I think as an industry we have been supply constrained [in addressing online shoppers] for at least the last two years, and what happened, the e-commerce was increasing demand and in this case ourselves and many of our competitors all responded with an increasing supply and that is what has really led to acceleration”
Brad Banducci, CEO, Woolworths Group Ltd
“The agriculture sector and food…it’s an area of natural advantage for us as a country [to export] and I think that the COVID situation probably only amplifies that. We’ve always had the opportunity to do a lot more and continue to grow”
Alison Watkins, CEO, Coca-Cola Amatil Ltd
Automotive
“The automotive aftermarket is a resilient industry and historically has performed strongly in difficult economic circumstances. Recent trading is another example of its resilience assisted by the increase in sales of second-hand cars, reduction in use of public and shared transport modes as well as government stimulus”
Darryl Abotomey, CEO, Bapcor Ltd
“I look at the market for self-driving and the progress that we’ve seen there I have to say that it’s disappointing. I think there are two things playing a role here. First is the complexity of self-driving technology, and I think that has been underestimated…The second one is the justification of the system cost; the total bill of materials for self-driving seems to be higher than originally anticipated”
Harold Goddijn, CEO, TomTom N.V.
“We do not see retail momentum for RVs [recreational vehicle] and boats slowing anytime soon”
Michael Happe, CEO, Winnebago Industries Inc
“A lot of the automobile guys and the battery guys are talking to us about nickel [a key input in electric vehicle batteries]”
Ivan Glasenberg, CEO, Glencore plc
Retail
“It’s not category specific – e-commerce is becoming mainstream. In the first years it was price hunters and early adopters. Now we’re seeing the convenience customer coming online – the convenience customer is a big part of what’s driving ecommerce”
Ruslan Kogan, CEO, Kogan.com
“We believe the premium audio [product market] uptick is sustainable for a number of reasons. First the entire industry has seen a gain. COVID certainly impacted sales to the upside and it seems consumers have rediscovered quality audio and not just for listening to a stereo system but for movies where we’ve seen growth in home theatre and high-end sound bars but also home gyms, outdoor, gaming”
Patrick Lavelle, CEO, Voxx International Corp [global consumer electronics company]
“The outdoor apparel [once in a lifetime] moment, we absolutely see…There is a trend towards outdoors and people’s desire to get outside linked to health and wellness”
Steve Rendle, CEO, V.F. Corporation [footwear & outdoor/action sports apparel conglomerate]
“Demand [for hand sanitiser] has subsequently dissipated and the supply base for such products has become much more competitive, resulting in excess quantities of hand sanitiser inventory”
Market Announcement, McPherson’s Ltd
Defence
“Many Australians don’t see the significant investment that is being made by the government and industry in the development of world-leading defence technologies. This investment is both supporting the security of the nation and is a catalyst for economic growth”
Gabby Costigan, CEO, BAE Systems Australia [multinational defence, security & aerospace company]
Travel & Leisure
“Brisbane is currently the busiest airport in the nation due to strong intrastate travel and an increase in domestic tourism”
James Goodwin, CEO, Australian Airports Association
“We are seeing signs of life”
Geoff Culbert, CEO, Sydney Airport Holdings
“Yes, I’m fairly confident the worst is over. You do see people are traveling, just nowhere near the rate they were traveling last year”
Glenn Fogel, CEO, Booking Holdings Inc [conglomerate of online travel agencies]
“It’s really hard to say when a recovery is going to be. This situation we are in now, it’s not sustainable. It’s really bad. You’ve got a lot of pressure on cash flow, and you can only do so much with eliminating expenses and cutting people. You still need revenues”
David Kong, CEO, Best Western Hotels & Resorts
Transport & Logistics
“Australia is experiencing substantial disruption to the importing of goods through the Asia shipping lane. This is due to several macro factors that are impacting shipping capacity with demand being greater than supply. These international delays have been further exacerbated by delays at Australian ports”
Andre Reich, CEO, The Reject Shop
“We are planning for a Christmas like no other. Our growth in parcels from July to September was more than the growth for the entire year just two years ago”
Christine Holgate, CEO, Australia Post
Energy & Resources
“Renewables can’t be sustained unless you firm it [turning a variable energy source into a guaranteed & consistent supply] so we’re heavily investing into firming. There’s no magic answer. Unless you’ve got firming on scale all the renewables in the world can’t be sustained”
Paul Broad, CEO, Snowy Hydro
“The energy market structure is also difficult at the moment when we’ve got all that variable renewable energy coming in…There are some market structure issues that have to be dealt with”
Rob Wheals, CEO, APA Group ltd
“I see solar becoming the new king of the world’s electricity markets. COVID-19 has catalysed a structural fall in global coal demand”
Faith Birol, Executive Director, International Energy Agency
“When it comes to the observed rebound in global aluminium demand, China is leading the way. Though the restart of the Chinese economy from COVID has been faster than other regions, we are [also] seeing improvements across the globe”
Roy Harvey, CEO, Alcoa Corporation [global aluminium producer]
“The [gold] sector needs to shrink to greatness by producing less gold at a higher margin and being a better investment opportunity”
Jake Klein, CEO, Evolution Mining Ltd
Telecommunications
“COVID has proven that change can be made and embraced quickly. It has also proven that digitisation of the economy is central to the recovery”
Andy Penn, CEO, Telstra Corporation Ltd
“Until now, most people have taken a wait-and-see approach to 5G. They’ve been waiting for 5G to get real…Well, today, with [the new] iPhone, the wait is over. 5G just got real”
Hans Vestberg, CEO, Verizon Communications
“4G drove the consumer app economy and China, the U.S. and the Nordics, they were the first countries to roll out 4G, and that allowed entrepreneurs in those regions actually to innovate on top of the network, building what has become the app economy. So it’s no surprise that we see the, call it, the consumer app economy today dominated by Chinese and American companies”
Börje Ekholm, CEO, Ericsson
“Much has been made of the technology transitions that have been accelerating by more per month. With these transitions, we believe many of the activities that are now virtual will remain virtual. And as such, this represents a significant change in the way people conduct their lives”
Patrick Lo, CEO, NETGEAR Inc
Banking & Lending
“Fintech innovation is changing banking in important ways and our new digital banking platform is part of our long-term strategy to support this trend and better respond to changing customer needs”
Peter King, CEO, Westpac Banking Corporation
“I think we are seeing a secular shift in getting more younger investors engaged in the market and I think that could create a more sustainably higher trading environment than what we saw in the 2017, 2018, 2019 timeframe”
Adena Friedman, CEO, Nasdaq Inc
Residential Property
“There’s an opinion it’s [current strong sales] a stimulus driven sugar hit…but what we’re seeing is strong growth in other markets internationally where there haven’t been the same levels of stimulus, which speaks of a structural shift in spending”
Blaine Callard, CEO, Freedom Furniture
“Customer feedback suggests orders for new homes remain robust into early 2021”
Theresa Mlikota, CFO, Adbri Ltd
“The housing market overall has been an area that has surprised us on the upside…Overall, housing volumes – in terms of applications and listings coming on the market – are much stronger than you’d expect, or certainly what we had expected. There is some cause for optimism compared to what we were expecting just a month or two ago”
Matt Comyn, Chief Executive, Commonwealth Bank of Australia Ltd
“The housing stimulus packages from both Federal and State Governments continue to have a positive impact on new house sales and will underpin some recovery in the residential building market”
Market Announcement, Capral Ltd [Australia’s largest manufacturer & distributor of aluminium products]
Employment & Workforce
“Some people will work from home, but really, the majority will come back to offices. You can’t run a business with people working from home”
Harry Triguboff, CEO, Meriton
“[Post the initial COVID downturn] we already even now are feeling that same structural scarcity in tech jobs, in educational jobs and in healthcare jobs”
Jacques van den Broek, CEO, Randstad NV [world’s largest staffing/recruitment company]
Members only updates follow below.
