Markets
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 11 September.
We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 11 September.
$275 billion
The global gaming industry was worth US$159 billion in 2019 and will grow to US$201 billion ($275 billion) by 2023, according to Newzoo, a specialist gaming market research firm. That’s a rate of 8.3 per cent per year. “How fast individual game publishers grow will depend on their [games] releases,” says Thomas Rice, portfolio manager of the Perpetual Global Innovation Share Fund. Investors can get exposure to gaming by buying shares directly, investing in a global managed fund that holds gaming companies or through a dedicated gaming ETF. “You might be surprised that many global funds largely ignore this theme despite the structural growth potential,” says Rice. VanEck has released a video game and esports ETF, which trades on the ASX under the ticker ESPO.
9 per cent
Australian and multi-sector responsible funds outperformed mainstream funds over every time horizon—one, three, five and 10 years. Within Australian share category, the average responsible investment fund delivered a return of 9 per cent over ten years to December 2019. The Morningstar Australia Fund Equity Large Blend category returned 6.8 per cent over the same period, while the S&P/ASX 300 Total Return index returned 7.8 per cent. The same goes for the multi-sector growth category. The average responsible investment fund returned 8.24 per cent over 10 years versus the average Morningstar Australia Fund Multisector Growth category return of 6.88 per cent.
48 per cent
That’s how much Nikola, a maker of electric vehicles, rose on news of its deal with General Motors. Under the deal, GM will make a new electric-pickup model with Nikola, contributing technology and manufacturing in exchange for an 11 per cent stake and the right to nominate a director. Morningstar equity strategist David Whiston applauded the deal and raised his fair value for GM by US$2 to US$50. The stock is trading at a 35 per cent discount to fair value. “We like the deal as Nikola needs GM’s battery and hydrogen technology, manufacturing abilities, and supply chain expertise, while GM gets an investment in a firm, for zero cash up front, with a long growth runway and a new battery and fuel cell customer,” Whiston said in a note following Tuesday’s announcement.
7 per cent
Australian equity small-cap active managers have consistently beaten their passive-peers over the past decade, thanks to opportunities to capitalise on under-researched companies and by avoiding small speculative stocks. Fidelity Future Leaders has achieved annualised outperformance of the S&P/ASX Small Ordinaries Index of 7 per cent per year and beat the equity Australia mid/small-blend Morningstar Category average by 3 per cent per year. Morningstar’s associate director, manager research, Michael Malseed praises the gold-rated fund's early investment in tech names such as Aconex, WiseTech, and Altium; infant formula manufacturer Bellamy’s Australia; and medical imaging software provider ProMedicus.
Less than US$4
The average hourly rate across China’s 14 regions in July was less than 20 yuan or below US$4, notes Morningstar’s Peter Warnes. By comparison, the US average hourly wage rate in July was US$24.80. Warnes mentions the disparity in the context of Donald Trump’s talk of a potential—and very expensive—the “decoupling” with China. “If the US decoupled from China, brought Chinese jobs back to America, replaced Chinese imported manufactured goods with domestically sourced goods, prices and inflation would resemble an Elon Musk SpaceX rocket after lift-off,” Warnes writes. “Bond yields would follow, and the US$ would likely slide. Ah, that’s how the record government and corporate debt will be repaid. The zombies will rejoice.”
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