Are Australia's ASX listed Blue-Chip Stocks Benefitting from US-China Trade Scenarios

Introduction:

Trade war is an act of increasing the tariff rate or the import duty for importers in order to protect the interests of domestic suppliers. US imposed higher import duty on several Chinese goods which are imported to their nation in order to protect the interest of US manufacturers. Higher import duty causes rise in prices of imported products and hence price competition would lead to lower consumption of Chinese products.

Due to the trade war scenario, there has been price volatility across the world of prices such as in commodities, crude oil and other major imported goods. Apart from the commodity-oriented sectors there are several defensive sectors which were impacted (both positively and negatively) due to trade war. Investors relying on top banking and financial services companies for the investment purposes due to the defensive nature of the sector.

Let’s have a look at few banking and financial services stocks which have moved in the recent past.

Macquarie Group Limited (ASX: MQG)

Macquarie Group Limited:

As per the market update, MQG issued 354,376,467 number shares as at 31 October 2019. It also granted 6,826 unlisted Deferred Share Units during October 2019.

The stock of MQG closed at $136.350 with a market capital of $48.45 billion as on 13 November 2019. The stock has delivered a decent return of 4.18% during the last one-month. Annual dividend-yield of the stock stands at 4.46%. The stock is available at a price to earnings ratio (P/E) of 14.78x. 52-week trading range of the stock stood at $103.3 to $138.07 and currently the stock is trading in the upper half of its 52-weeks trading range.

National Australia Bank Limited (ASX: NAB)

National Australia Bank Limited reported its second half financial numbers for FY19 wherein the company reported net operating income at $8,347 million as compared to $8,874 million in the prior half-year. Underlying profit of the company came in at $3,509 million as compared to $4,699 million in H1FY19. Average interest earning assets stood at $763,383 million during 2H FY 19 compared to $754,261 million in the prior half-year.

The stock of NAB closed at $28.79, down 0.997% as on 13 November 2019. At current market price the stock has provided a return of 16.88% on an annualized basis. The stock has given return of 2.54% return in the last one month.

Suncorp Group Limited (ASX: SUN)

Suncorp Group Limited has reported a 2.3% top-line growth in FY19 followed by 83.5% decline in its bottom-line at $175 million. Total Capital ratio of the bank stood at 13.45% during FY19. The company reported ordinary dividend payout ratio of 81%, reflecting strong capital position.

At current market price the stock has given a dividend yield of 5.24% on an annualized basis. The stock closed at $13.13, down 1.795% as on 13 November 2019. The market capitalization of the stock stood at $16.86 billion. The stock has given returns of -0.74% in the last one month. On an YTD basis, the stock has given a return of 8.59%.

FY19 Financial Highlights (Source: Company Reports)

Insurance Australia Group Limited (ASX: IAG)

Insurance Australia Group Limited informed the appointment of Simon Allen for the post of independent non-executive director to the IAG Board. Mr Allen will also be appointed as the Chairman of IAG’s wholly owned subsidiary, IAG New Zealand Limited, where he has been a non-executive director since September 2015.

The stock of IAG closed at $7.73, down 1.654% as on 13 November 2019. At current market price the stock has given returns of 0.51% in the last one month. Annualized dividend yield of the stock at current market price stands at 4.07%. The stock is trading at the upper half of its 52-week trading range of $6.53 to $8.74.

QBE Insurance Group Limited (ASX: QBE)

As on 8 November 2019, QBE has bought back shares numbering 18,904,579 from the market.

The stock of QBE closed at $12.58, down 1.256% as on 13 November 2019. At current market price the stock has a dividend yield ratio of 4.16% on an annualized basis followed by a market capitalization of $16.7 billion. The stock has generated return of 3.16% in the last one month. At current market price, the stock is available at a P/E multiple of 23.17x.

Let’s have a look at a few companies which operate in the metals and mining segment.

BHP Group Limited (ASX: BHP)

BHP Group Limited has updated about the potential future of the business where he mentioned that company could generate robust EBITDA margins of more than 60% with an average Return on Capital Employed of 15% or more over the next decade. The management has guided for a production of 110-116 MMboe with a unit costs of US$10.5boe-11.5/boe for FY20. The business targets an average annual volume growth of up to 3% between the FY2020 and FY2030.

The stock of BHP closed at $36.79, down 0.836% as on 13 November 2019. The stock is available at a P/E multiple ratio of 16.23x. At current market price, the stock has generated a dividend yield of 5.17% on an annualized basis. The stock has generated returns of 1.56% during the last one month.

RIO Tinto Limited (ASX: RIO)

RIO Tinto Limited has reported average EBITDA margin of 42% during H12016 to H12019 followed by average ROCE of ~17%. The operating cash flow stood at $41 billion along with $12 billion of disinvestments during the time period.

The stock of RIO closed at $91.8, down 1.671% as on 13 November 2019. The stock is available at a P/E multiples ratio of 8.16x. The stock has delivered a return of 1.58% in the last one month.

Fortescue Metals Group Ltd (ASX: FMG)

The company has reported 167.7million tonnes of shipment during FY19 and an underlying EBITDA of US$6 billion.

Fortescue Metals Group Ltd closed at $8.67, down 2.144% as on 13 November 2019. At current market price, the stock has a dividend yield of 4.85% on an annualized basis. The stock has a market capitalization of $27.28 billion. It has provided a return of -1.01% in the last one month.

South32 Limited (ASX: S32)

The company has repurchased 386,091,419 shares as part of ongoing share buyback program as on 11^th November 2019.

South32 Limited closed at $2.71, down 1.095% as on 13 November 2019. The price to earnings ratio of the stock stands at 24.95x. At current market price the stock has generated a dividend yield of 4.12% on an annualized basis. The stock has generated a return of 9.60% during the last one month. The market capitalization of the stock stands at ~$13.54 billion.

Bluescope Steel Limited (ASX: BSL)

As per recent market update BlueScope informed that legal proceedings in New Zealand against one of its subsidiaries named Toward Industries Limited (Toward), were discontinued on 11 November 2019.

Bluescope Steel Limited closed at $14.41 with a market capitalization of $7.43 billion on 13 November 2019. At current price the stock provides an annualized dividend yield of 0.96%. The stock has given return of ~19.32% during the last one month.

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