The ASX200 Climbs to Post-Lockout Highs, Despite Contract Agreement Complaints As a low risk investment zone, the Australian share market remains quite attractive. Recently published employment figures may provide an answer as to why the ASX200 was able to climb to post-lockout highs despite some contract disputes.
As the major stock exchange index, the ASX has become a little more volatile recently, however, a further rise in the ASX200 is unlikely at this time. Despite concerns by a number of industrial groups regarding changes to the pension and health care legislation, this has not materially affected the outlook for the ASX200.
It seems to be saying that the argument of how much the legislation change will affect jobs and productivity are now irrelevant as the reforms come into force. This could prove to be one of the greatest benefits of the regulations which were passed by the parliament in mid-November 2020.
In the first half of this year, the ASX200 is up over six percent, despite almost 20 percent of all contracts being renegotiated, with many disputes involving non-core industries or job locations. Many problems could have been avoided if an improved health and safety legislation had been in place at the start of the year.
Whilst the legislation does add more clarity to processes and procedures that can assist with reducing the incidence of workplace accidents, the introduction of the Productivity Commission as an independent agency appears to have changed the culture of the industry. The result is that most of the contract disputes which resulted in the best deals selling to the market, were resolved fairly quickly.
For a company looking to invest in ASX200 stocks, the share contracts held by the management may be examined with a view to identifying those which have reasonable values, without having to sell off assets, and those which are likely to continue to underperform for the foreseeable future. This helps to identify the best investment opportunities. Individual companies often ask about what might be the impact on their business if they sell some or all of their shares. In most cases, it is possible to retain existing shareholders in place, thereby avoiding the disruption to the overall portfolio.
Changes to shareholder agreements could also pose as a constraint, as there would be no guarantees about how shares would trade. All companies must comply with the terms of the current agreements, so it is worth ensuring that shareholders understand their options.
Investors have a responsibility to investigate the various aspects of the agreements. When changing an agreement or altering the rights and responsibilities of a company, it is a good idea to seek advice from legal advisers.
In the case of the Australian Shareholders’ Association, the group represents the interests of shareholders, usually the largest of companies in the ASX200. They are usually shareholders of the biggest companies, such as CSR, UNIQLO, Pentair, Coles, AGL, Commodore, Adam, Express, Westpac, Suncorp, with representatives also found in the Australian Chamber of Commerce, the Productivity Commission and in the Treasury Chambers.
At the ASX200, the ASX200Lnvestment is the main organization for the registered shareholders, while the ASX200Choice provides assistance to non-registered shareholders, such as individuals or families. The ASX Class Fund is another organization, representing ASX200 investors in all classes, the Class Fund Management Steering Committee consisting of members of the ASX Class Fund, with its members including members of the ASX Exchange.
When examining contract agreements, investors need to consider whether the goals of the provisions are realistic or whether the clauses might restrict the ability of the company to move shares. Investors should seek legal advice when making investment decisions.