The Budget is expected to be a big dampener on overall sentiment. But if the government’s obvious strategy of getting a lot of the bad news out there early, actually works, it may not meet all our negative expectations.
And that’s a good thing. The last thing we need right now is a restraint on consumer sentiment and spending, which is gradually starting to pick up. The rush of international brands coming to Australia’s stores is set to continue and if the queue outside Japanese giant Uniqlo’s pop-up store in Pitt St Mall yesterday is any kind of sign, then Australian consumers are definitely more willing to open their wallets. Uniqlo is owned by Fast Retailing Co. (TYO:9983), one of Asia’s biggest clothing retailers.
On Monday, Peter pointed out that not only had consumer confidence risen by 0.3% to 99.7 points in April but retail sales also rose for the tenth straight month, up by 0.2% in February. Annual spending growth eased from a four year high of 6.2% to 4.9%.
On Monday, James Dunn also discussed the proposed restructure of Westfield Retail Trust and Westfield Group, and just as he suggested, Westfield Group has come back with a slightly better offer.
“We think Westfield Group should sweeten the offer to WRT unitholders, and is likely to do so over the next fortnight to pre-empt an embarrassing rejection. As it stands, it’s not an attractive enough offer for WRT unitholders,” James said.
On Tuesday, Westfield Retail Trust and Westfield Group announced that in the formation of Scentre Group there would be a $300 million improvement in the merger terms that will benefit Westfield Retail Trust shareholders.
It’s not certain, however, if this will bring the majority of WRT holders across the line. We’re not convinced.
JB Hi-Fi has had a choppy time this year and constantly features in the list of stocks with large short positions. But Charlie believes this will work in its favour. He singled it out on 13 March, when he said: “Interestingly, JBH consensus earnings continue to be revised up, yet the short position remains large and analyst recommendations bearish.”
And then again on 17 April.
“I am of the view that stocks with large open short positions will outperform on forced covering by leveraged investors against other losing trades. Interestingly big open shorts broadly outperformed in Australia this week and I expect that to continue. My number one play on this theme remains the 13% shorted JB Hi-Fi (JBH).
JB Hi-Fi (JBH)
Charlie also has a great analysis of Crown today and Gary Stone provides a technical view of Woolworths in other retail news. Gary’s view is a little different to Paul Rickard’s, who pointed out last week that Wesfarmers (WES) is probably the better pick of the two supermarket giants right now.
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Also in the Switzer Super Report:
- Charlie Aitken: Crown Resorts (CWN) – a buy with a $21.30 target
- Staff Reporter: Buy, Sell, Hold – What the brokers say
- Ron Bewley: CBA and Westpac best dividend strategy picks
- Gary Stone: WOW, Woolies may be on its way
- Tony Negline: How to change from an individual trustee to a corporate trustee
- Questions of the Week: Letters of advice and international shares
