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March has delivered for investors – is it time to take profits?

January’s wobbles are all but forgotten as the market rewards its faithful. The ASX200 closed up more than 6% for March. What are investors like you buying?

The ASX200 closed up more than 6% for the month of March, the market’s best month in 16 months. The final day of the month saw the market close down 0.2%, but overall the local exchange has shrugged off fears of higher inflation and rising interest rates, war in Ukraine and still-high oil prices to deliver a great return for those who held their nerve through the volatility earlier in the year. 

Financials have had an exceptional month, with the financials index (XFJ) adding more than 8% in March. Former laggard National Australia Bank (NAB) is up 12% year to date and is at five year highs; nabtrade holders have been trimming to lock in profits. Commonwealth Bank (CBA) is also a sell above $106, but the big trimming has been coming from Westpac (WBC), which has been the most bought of the big four banks since its disappointing annual results in October. Westpac (WBC) fell to a post Covid low in January, and was a huge buy with bargain hungry investors, many of whom were topping up already large positions from the Covid lows. The stock’s recent bounce has seen widescale selling. Macquarie Group (MQG) remains a high conviction stock, held in large quantities by a small group of investors. Despite (or perhaps due to) its recent bounce above $205, it has been bought. 

 

Westpac (WBC) share price over twelve months

Source: nabtrade

 

Materials have performed even more strongly than the banks thanks to surging commodity prices. Australia’s largest company, BHP (BHP), was up more than 10% in March alone, and has delivered excellent returns for the many investors who picked it up around $36 back in November. As it trades above $50, even the faithful are being tempted to lock in some profits. Rio Tinto (RIO) is trading below its 2022 highs but is also a sell. Fortescue Metals Group (FMG) remains the hot favourite with high value traders; it surged over 4% on Thursday and was sold.

Core Lithium (CXO) shares continue their astonishing run, closing up 8.7% following the release of an exploration and drilling update for its Finnis Lithium project on Thursday. The stock is now up over 550% over twelve months, and while numerous other lithium players feature in nabtrade’s books, CXO is currently the favourite. Hopeful investors are also looking at Lake Resources (LKE), Sayona Mining (SYA) and Tempest Minerals (formerly Lithium Consolidated Ltd, TEM). The latter spiked 265% on Tuesday after announcing a ‘significant discovery’ of copper at its Meleya Project in Western Australia.

 

Core Lithium (CXO) shares over twelve months

Source: nabtrade

 

Beyond mining and financials, trading activity is relatively quiet, but these two sectors account for sufficient volume to keep overall volumes high. Harvey Norman (HVN) closed down 6% on Thursday after going ex dividend, and the tech sector, including Block (SQ2), Zip Co (Z1P) and Xero (XRO) all fell, but buyers showed no interest.

On international markets, GameStop (GME.US) and AMC Entertainment (AMC.US), the two ‘meme stocks’ that most captured the Reddit ‘WallStreetBets’ crowd in late 2020 and early 2021 have recently found sellers after bouncing 35% and 36% respectively over the last month. Despite the cynicism of traditional investors, many have done very nicely.

 

GameStop (GME) shares over five years

 

Source: nabtrade

 

 

Analysis as at 31 March 2022. This information has been provided by WealthHub Securities Ltd the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). Whilst all reasonable care has been taken by WealthHub Securities in reviewing this material, this content does not represent the view or opinions of WealthHub Securities. Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances. 


About the Author
Gemma Dale , nabtrade

Gemma Dale is Director of SMSF and Investor Behaviour at nabtrade. She is the host of the Your Wealth podcast, a fortnightly podcast for investors, featuring insights and updates from markets and finance experts across a range of topics. She provides regular market and finance commentary on ausbiz and in other media including AFR, the Australian, ABC and commercial tv and radio. Gemma was previously the Head of SMSF Solutions for nab, and the Head of Technical Services for MLC, where she led a team of specialists providing advice to advisers and their clients on SMSF, super, tax, social security and aged care.