NESTOR Australia - Quarterly Report 3/2020

Nestor Australia had another excellent quarter, with a performance of 15.6%, outperforming the S&P ASX 200 Index on a euro basis by 14.2%.

Driven by low interest rates and massive fiscal support, the underlying sentiment in the equity markets remained positive, although towards the end of the period a second wave of corona infections, particularly in Europe, dampened market sentiment. In Australia, the corona problem is no longer a real problem. With 20-25 new cases per day, almost all of which are attributable to returnees, the situation is well under control. Nevertheless, there are still strict restrictions on travel between the individual states. In Western Australia, where the majority of commodity stocks are located, there are NO restrictions except travel restrictions! The state is booming!

Australia's biggest trading partner is China - Corona is no longer a big issue there either! Especially the iron ore exports are at record levels at excellent prices! Western Australia has a budget surplus this year!

Of course this does not apply to Australia as a whole. Here too, the government has taken a lot of money ( = debts ! ) in hand to promote a quick recovery of the economy.

Due to the sustained high gold price, Australia is experiencing an exploration boom, which has led to very positive results. The whole segment has benefited from this - not only gold shares, but commodity shares in general. Companies in the fund such as Chalice Gold and Sheffield Resources were star performers, as was gas developer Strike Energy.

The fairly large position in Marley Spoon continued to benefit from the trend towards digitalisation and e-commerce, doubling again at the top. The position was sharply reduced. Companies such as Catapult Group, Macmahon, Ellex, Vulcan Energy and Venturex were completely sold into strong markets and with good price gains. The position in Caravel Minerals, which also doubled in value, was sharply reduced.

The large position in Nine Entertainement, which operates Australia's largest television station, also developed very positively and is now being reduced somewhat.

New positions were taken in Carnaby Resources, Evolution Mining, Apollo Consolidated, Probiotech and Secos Group, two packaging companies in the pharmaceutical and environmental sectors respectively.

The positive development continued in October and the fund currently leads the performance list of all Australian funds approved for distribution in Germany over 1 year and 5 years by some margin. Gold will remain an issue and as long as interest rates are low and the fiscal policy lights are green, Australia will continue to benefit as a commodity exporter! In this respect, there is little to prevent a further positive development. Nevertheless, with a high cash ratio of approx. 11%, the fund is well prepared for possible price corrections in the environment of the US elections or the further corona development.

Wilhelm Schöder, Schröder Equities GmbH