From the Chairman of Wilson Asset Management: Is the Bull market Over?

  • Oct 29, 2018 AEDT
  • Team Kalkine
From the Chairman of Wilson Asset Management: Is the Bull market Over?

Central banks have driven an extraordinary level of liquidity into the economic system, in the last decade driving asset valuations to extremes and dropping interest rates to record levels. The 2018 calendar year gains in the US has been wiped out by the recent stock market collapse. From its peak earlier, this year Australia has entered a technical correction, while China’s equity market has fallen by nearly 30%.

All bear markets are extremely painful, and it is believed we are in the last stages of the longest US bull market in history. Patience is the key during this key period, if labor wins office the expectations are that the negative effects of the bear market will be significantly worse. It can result in the first economic recession in Australia for 27 years and Bowen and Shorten’s plans will have dramatic implications for the equity and property markets. 

To withstand increasing volatility and ensure necessary liquidity in the portfolios they (Wilson Asset Management) have steadily increased their listed investment companies’ (LIC) cash weightings which unfortunately may not be able to make them immune from the equity bear market. To scrap the current dividend imputation system and tax Australian shareholders twice, they have been fighting against Labor’s policy. From self-funded retirees with modest SMSF balances and low-income earners, the savings to be collected under Labor’s proposal will come. Many of the 80,000 shareholders fall into this category.

The takeover offer for Wealth Defender Equities (ASX: WDE) last Friday, WAM Capital succeeded with it. The issuance of 39.0 million WAM Capital shares at a premium to its pre-tax net tangible assets will be resulted by the bid. Of all WDE shares, WAM Capital now controls 95.26%, and will proceed with compulsory acquisition. currently conducting a strategic review of WDE is the WAM Capital Board of Directors.

To manage Blue Sky Alternatives Access Fund (ASX: BAF) the company lodged proposal, last Tuesday and it was selected by market-leading investment managers to reposition the LIC to provide investors with access to a diversified portfolio of alternative assets. Wilson Asset Management’s expertise in LICs would be provided with access to BAF shareholders as well as more favorable conditions than the other proposal announced to shareholders.

Chris Scott will soon retire from his role as CIO and has decided to spend more time with his young family and WAM Microcap Director and will continue to work with us as a WAM Capital. Martin Hickson (WAM Capital, WAM Active and WAM Microcap), Matthew Haupt (WAM Leaders), Oscar Oberg (WAM Capital, WAM Research and WAM Microcap) and Catriona Burns (WAM Global), are the LIC’s investment portfolio led by a team of 11 investment professionals. Equity Analysts Matthew Nicholas, Nick Healy and Sam Koch, and Dealer Cooper Rogers and Portfolio Managers Tobias Yao and John Ayoub, support the Lead Portfolio Managers.


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