- Three of the best-performing ETFs during the financial year ending June 2023 were Global X's 21 shares Ethereum ETF (EETH), FANG+ ETF (FANG), and 21 shares Bitcoin ETF (EBTC). It’s difficult to pinpoint the exact factors driving crypto ETF success, but it is possible that these speculators are less concerned about inflation due to rising interest rates and are instead focused on alternative investments. Another possible explanation is a mean reversion, where assets that experienced significant declines in 2022 are now bouncing back without any specific reason other than their previous rapid fall. Regarding FANG, Artificial Intelligence (AI) was a key thematic contributing to performance, boosted by Nvidia (leading AI hardware), along with Google and Microsoft (integrating AI into their search engines).??
- Rio Tinto, a global mining company, and Japan's Sumitomo Corporation have announced plans to construct a groundbreaking hydrogen plant at the Yarwun alumina refinery in Gladstone, with an investment of $111 million. The purpose of this plant is to reduce carbon emissions at the energy-intensive facility. Rio Tinto aims to evaluate the feasibility of utilising hydrogen instead of natural gas in the calcination process, estimating that emissions could be reduced by 500,000 tonnes per year – put in context, that’s the equivalent of removing 109,000 petrol cars from roads! This initiative not only contributes to the fight against climate change but also secures the future of the alumina industry in Australia. The move to reduce emissions from alumina refining aligns with Australia's position as the largest exporter of alumina globally. By taking steps to lower emissions in this sector, the mining industry can thrive in an economy that prioritises decarbonisation.
- The increase in short-term interest rates means Australian investors can now earn similar income from buying safe government bonds as they would from risky share market dividends (with significantly less risk). Why is this important? Because, for the first time since July 2011, the three-year bond rate rose to 4.2 percent (and has recently dropped to 3.9 percent) which is still in the same range as the nominal dividend yields on the benchmark S&P/ASX 200 Index. Numbers don’t lie, with inflows into fixed income and cash exceeding +$580M, bonds continue to provide a compelling investment opportunity and a viable alternative to equities. However, it’s worth noting that while there are now alternatives to equities, Australian equities are still relatively attractive compared to other equity markets around the world.?
- It is projected that the global supply of liquefied natural gas (LNG) will need to increase by 25 percent by 2030 to meet the expected levels of demand worldwide. This estimation already considers the upcoming production that will be initiated within the next two years. Typically, such a disparity between supply and demand leads to higher prices in the long run. So, who is demanding LNG? Demand stems from developing nations in Asia and unsurprisingly Europe, following the Russia/Ukraine conflict, highlighting the vulnerabilities and energy dependence Europe has on Russia. However, despite the predicted future surge in LNG demand, the costs associated with developing new projects are approximately 60 percent higher compared to pre-pandemic levels. Moreover, any new LNG projects will undoubtedly face scrutiny regarding the carbon emissions associated with development (from exploration/extraction, processing, liquefaction, transportation, and infrastructure development). Nevertheless, despite these obstacles, LNG prices remain significantly above their long-term averages - leading many investors to maintain a bullish outlook on LNG over the medium to long term.
All information is sourced from: Australian Bureau of Statistics, Goldman Sachs Research, Bloomberg, JP Morgan Research, US Census Bureau, US Bureau of Labour Statistics, Australian Financial Review, Wall Street Journal, Reserve Bank of Australia, Trading Economics, CommSec Market News.??
