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Talk about a bummer of a day. The ASX200 is back hovering around the 7,200pts level, meaning the XJO’s YTD performance is down -11.6%.
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This is on the back of a bear market on the NASDAQ and a terrible run for the S&P500 all sparked off by Trump’s Liberation Day tariffs, imposed only last week.
How things can change in the space of days. Now, with US futures set for another dismal Monday overnight session, it isn’t clear how much lower the Australian bourse can go.
But, as always, there are green shoots to look at while we idle down the River Styx. Here are three of them:
Abacus Storage King (ASX:ASK)
Abacus shares were up +11.8% at $.130/sh in the second hour of trades as the company received an offer from NYSE-listed Public Storage (alongside Ki Corporation Limited) to buy all Abacus shares not owned by the pair at $1.47 per security.
Self-storage REITs were one of the hottest plays in the COVID years and with a recessionary environment now tipped – there’s a 60% chance of a global recession, JP Morgan says – that value proposition could be back on the cards.
In times of economic downturn, the thinking goes, individuals may downsize homes or move back in with family, which leaves them with a whole lot of stuff still left over that needs a place to go.
Given that human nature is sentimental, people tend to hold onto things – and so self-storage units start to look tasty in a downturn environment. That could lead some shareholders to wonder if Abacus mightn’t be better on its own – but Ki already holds a hefty stake.
Challenger Ltd (ASX:CGF)
Challenger shares were up 11.+2% at $6.16 in the second hour of trades as Da-ichi Life Holdings, a Japanese insurance giant, moved to acquire a 15% stake.
That minority stake comes with shares valued at roughly A$8.46/ea – suggesting Dai-ichi Life Holdings is serious about staying invested in Challenger, and, implying that it believes shares could climb higher.
Dai-ichi has bought the stake via a sale of existing shares held in Challenger by another Japanese insurance giant, MS&AD Insurance Group Holdings.
Challenger management was also hopeful the relationship could replicate the same kind of value boost it saw when partnering up with MS Primary in 2016 in another “strategic reinsurance relationship.”
TPG Telecom (ASX:TPG)
Another classic defensive sector, TPG Telecom shares jumped on Monday morning trades.
TPG shares jumped 1.9% in the second hour of trades to $4.83/sh as the market appears to be looking for defensive stocks to swap into.
TPG issued no news on Monday but the telecomms sector is often seen as resilient in the face of economic downturns – if not full-blown ‘recessionary environments’ – given that, despite it all, people and businesses still need to communicate.
In the background, CBA shares had fallen -7.7% at 11.20am AEST, which is important because CBA is the key-non mining ‘safe-haven’ asset on the ASX (as well as its largest listed company.)
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If CBA is seen as too risky – and analysts have long been calling its performance of late irrational – then it’s likely other relatively smaller stocks in defensive sectors could see some uplift.
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