Super withdrawal boosts shares of consumer stocks
Consumer discretionary stocks are among share market winners this year as consumers “splurged” out with their superannuation withdrawals.
In an investor video, Daniel Moore, manager of the $2 billion IML Australian Share fund, said the consumer discretionary sector had been a “real winner” from the COVID-19 pandemic and consumers spending their Government stimulus payments.
There have been over 3.1 million applications to withdraw super with funds having paid out more than $32.2 billion.
The ASX 200 Consumer Discretionary sector returned 9.3% during August, second only to the Information Technology sector, and had returned 34% since the start of 2020.
Moore said: “There were some real winners and some real losers from COVID-19. Winners were supermarkets and consumer discretionary and, on the losing side, are those sectors which were effectively shut down by the Government such as travel, hospitality, casinos and shopping centres.
“The strong performance by the consumer discretionary sector was a bit of surprise as consumers really splurged out with the super money they withdrew and from JobKeeper payments. We saw incredible results from stocks like JB Hi-Fi, Nick Scali and Harvey Norman, people bought a lot of flat screen TVs and sofas so it will be interesting to see how that goes in the future.”
Technology retailer JB Hi-Fi shares had risen 38% since the start of the year to 31 August, 2020, while Nick Scali rose 30% and Harvey Norman rose 15% over the same period.
Share price of JB Hi-Fi, Nick Scali and Harvey Norman since start of the year to 31 August 2020
In its full-year results to 30 June, 2020, JB Hi-Fi said sales were up 11.6% to $7.9 billion, led by the Australian market, while online sales were up 134% in the three months to 30 June.
“Sales were up 11.6% to $7.9 billion with Australian sales accelerating from March as consumers spent more time working, learning and seeking entertainment at home.
“Total online sales across the Group grew by 48.8% to $59 million, representing 7.5% of total sales, with Q4 sales up 134%.”
According to FE Analytics, within the Australian Core Strategies universe, the IML Australian Share fund lost 11% over one year to 31 August, versus losses of 2.3% by the Australian equity sector.
Performance of IML Australian Share versus Australian equity sector over one year to 31 August 2020
AUTHOR
Laura Dew
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