Why ASX shares are in awesome shape vs overseas markets

Australian shares are in strong shape compared to northern hemisphere markets, according to two fund managers.

First Sentier Investors deputy head of Australian growth equities David Wilson said that this is because local funding is “in pretty good order” to see them through to post-COVID recovery.

“Australian companies raised equity very quickly and put their balance sheets in a good place,” he said in a Livewire video.

“They did the same thing in 2009… Just the whole equity capital market seen in Australia means that you don’t have the balance sheet pressures in Australia that you have in a lot of northern-hemisphere countries.”

TMS Capital portfolio manager Ben Clark agreed.

“We’re lucky we’ve got a great system here. Investors were happy to stump up quite significant amounts of cash in a pretty scary period. It allowed companies to get through,” he said.

“You’d almost say some companies were probably a bit conservative, but I don’t think you could really point fingers at them. No one knew what the future held in March and in April.”

Some companies raised in excess of a billion dollars this year, including National Australia Bank Ltd (ASX: NAB), Lendlease Group (ASX: LLC) and QBE Insurance Group Ltd (ASX: QBE).

Travel companies understandably had to get cash quickly to survive a period of near-zero revenue. Webjet Limited (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN) all grabbed much-needed funds during the pandemic.

It hasn’t been all beer-and-skittles though, with Qantas sacking thousands of workers and Flight Centre forced to close more than 400 stores.

No massive COVID-19 disasters in Australia, phew

Australia as a society has managed the pandemic relatively well compared to other western nations.

And Clark said this also applied to Australian shares.

“We really haven’t seen any big disasters come out of COVID,” he said.

“Even the obvious ones – your Webjets, your travel stocks – managed to get through, and hopefully they will catch the resurgence in travel that we’ll see.”

With the prospect of multiple vaccines coming soon, Clark has bought up a particular sector to take advantage.

“We’ve liked the infrastructure stocks, like Atlas Arteria Group (ASX: ALX), the airports, and Transurban Group (ASX: TCL). Stocks where we think you can be wrong by six months or a year, but ultimately you’ll still be right,” he said.

“You’re not going to get tapped for more equity… The businesses ultimately will normalise – it’s just a question of when.”