Don’t be fooled into thinking the good times are back with today’s market bounce. But a top broker reckons there are two ASX 200 shares that will do well in this volatile climate.
The S&P/ASX 200 Index (ASX: XJO) is rallying over 1% in midday trading. This marks the first time that the index is gaining ground in the last eight trading sessions!
Given that the headwinds hitting global equity markets are still in play, it is probably too early to call the bounce a turning point.
Two ASX 200 shares to weather the storm
Nonetheless, there are two ASX 200 shares that Morgans has bought more of for its core model portfolio.
Never mind the fact that the outlook for shares is still highly uncertain across capital markets. Investors are still on edge with the faster-than-expected interest rate hikes and geopolitical conflict.
Sentiment has been made worse by the crypto bear market that’s dragging on risk assets here and around the world.
Fundamentals look better than sentiment
Morgans is telling investors not to get too caught up in the negativity.
The broker explained:
We think investors can take comfort that recent volatility looks disconnected from strong corporate fundamentals and a solid outlook for the Australian economy.
Betting on this ASX 200 share
On the back of this belief, Morgans has increased its holdings in Lottery Corporation Ltd (ASX: TLC) in its equities-only model portfolio.
The key objective of this portfolio is to beat the ASX 200 Accumulation Index. It aims to do this with a balance of income (dividend) returns and capital growth.
To that end, the Lottery Corporation ticks the boxes. The company demerged from Tabcorp Holdings Limited (ASX: TAH) last month.
The broker said:
TLC is one of the highest performing lotteries businesses in the world, with long duration and exclusive licences to operate lotteries all over Australia (except for WA).
Filling up on Woodside shares
Another ASX 200 share that Morgans has upped its holdings of is Woodside Energy Group Ltd (ASX: WDS).
This was a conscious decision to lift our energy sector exposure, partially as a hedge against the inflationary forces affecting other parts of the portfolio, and because WDS looks abnormally cheap post de-merger.
How cheap is cheap?
Well, the broker noted that the Woodside share price trades at a significant discount to its US peers. It’s also sitting at around a 7% dividend yield.
Even in a rising interest rate environment, that represents a relatively attractive yield.