Morningstar runs the numbers

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 26 February.

Lex Hall

01 March 2021

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 26 February.

20 per cent-plus returns

Given the crippling effects of covid-19 on economies all over the world in 2020, one would expect to see negative stock-market returns in most countries. Happily, this was not the case, Morningstar analysts note. China and the US were able to recover from their early losses and ended the year with 20 per cent-plus returns. Much of Europe and South America was not so lucky. With vaccination programs now beginning in most countries, there is hope that the recovery will pick up in 2021.

1.8 per cent

Where the US 10-year bond yield will be by year-end, according to Westpac chief economist Bill Evans. It may then climb to 2.4 per cent in 2022 on the back of accelerating global growth, Evans says. In Australia, inflation bounced back in the December quarter, Morningstar’s Peter Warnes notes, with the consumer price index rising by 0.9 per cent, led by alcohol and tobacco and childcare. However, “underlying” inflation was just 1.3 per cent, well within the Reserve Bank of Australia’s 2 to 3 per cent target band.

31 per cent

The year-on-year jump in the total value of new loan commitments for housing, according to the Reserve Bank of Australia. There have been few signs of a deterioration in lending standards with housing price rises reported across most of Australia, writes Nicki Bourlioufas. This has returned the national housing price index to levels reached around four years earlier, with record low interest rates pushing people into the property market. “Reflecting that, the total value of new loan commitments for housing reached a record high in December 2020, rising 8.6 per cent to $26 billion, a 31.2 per cent increase on December 2019. The value of new owner-occupier home loan commitments rose 8.7 per cent to a high of $19.9 billion, 38.9 per cent higher than December 2019, the Australian Bureau of Statistics reported.”

173 per cent

With an average of 173 per cent, Afterpay was the most profitable trade for new nabtrade investors in 2020, writes nabtrade’s director of SMSF and investor behaviour Gemma Dale. At nabtrade, total accounts increased over 30 per cent following the collapse of the market in March 2020, as new investors flocked to share investing. “Analysis has revealed that all of the top 10 stocks bought by new investors have generated a positive return since they were purchased,” Dale writes. “NAB shares generated the next best return, with 38 per cent, and NAB was bought by 25 per cent more accounts than the next most popular, Qantas.”

28 per cent

The jump in first-half profit for supermarket giant Woolworths (ASX: WOW). The profit jump, to $1.14 billion, allowed the company to boost its interim dividend payout. “Most results through this February earnings season have led investors to believe that profit growth is on the rebound for corporate Australia,” writes Prashant Mehra. “Strong numbers announced in the fourth week only reinforced that confidence. Morningstar analysts this week served up a reality check, though, laying out contributing factors that led to the growth bounce after the COVID-induced recession but also reasons why these will not persist over the longer term.”