Question 1: Do you think the Transurban (TCL) share purchase plan is good value buy for current shareholders?

Answer: Transurban is currently trading around $14.93, so on paper, buying it at a maximum of $14.70 looks like a good deal. In fact, you will pay a maximum of $14.70 or 2% below the ASX trading price during the last week of August. Applications close 30 August and there is probably a good chance it will be oversubscribed and subject to a scale back.

Is it a good long term investment? I am a huge fan of Transurban, but around $14.70, I am sensing it to be a little expensive. The forecast distribution of 62 cents next puts it on a yield of 4.2%. With 4c likely to be franked, it grosses up to 4.3% — interesting, pretty secure, but not particularly compelling. I also think there is a little more risk around ongoing traffic growth – so that the rate of distribution growth may slow from high single digit to low single digit.

Question 2: Is the AMP Share Purchase Plan worth considering?

Answer: The AMP Share Purchase plan is at a maximum price of $1.60, so on paper, it looks OK. It is being offered under the ASX rules for these plans so the maximum subscription is $15,000 (minimum is $1,000). There is probably a good chance that it will be scaled-back. Applications close on 5 September 2019.

Do I think AMP is a long-term buy? No, I am not a fan of the new strategy that the CEO has put together, which looks like a “back to the future” approach to wealth management. I really doubt that AMP can make “advice accessible to all” and make a return for shareholders at the same time. It doesn’t have the brand to do this.

That all said, AMP as a “sum of the pieces” is probably worth more than the current share price. AMP Bank and the funds management part (AMP Capital) are readily disposable assets. My prognosis for AMP is that the AMP Board will eventually respond to shareholder pressure and abandon the new wealth management strategy and execute a break-up plan.

Question 3:  Central banks have little room to move on interest rates and have asked the Government to do more to stimulate the economy by way spending on infrastructure. To do this, the Government would need to sell treasury bonds to pay for the spend. Is my logic correct and if so, how would this impact government and infrastructure ETFs?

Answer: I think your logic is correct. The sale of government bonds by the Government (to fund the deficit) could be offset by the central bank (e.g. the RBA) purchasing bonds and executing a quantitative easing style programme.

If interest rates stayed very low, I doubt there would be much impact on infrastructure stocks, including infrastructure ETFs.