March 2017
March 2017
Share registry business, Computershare (ASX:CPU), continued its rally from the fourth quarter of last year into 2017, adding value to Ralton’s Australian Shares portfolio.
The key driver of the rise has been the steepening of yield curves globally since the election of Donald Trump caused investors to refocus on the outlook for inflation.
Computershare earns interest on the cash balances it holds for companies to pay dividends to investors, the proceeds of rights issues and IPOs etc. It also benefits as rising long rates will reduce the incentive for mortgagees to refinance their home loans for which Computershare holds the mortgage servicing rights (i.e. it earns a fee for processing payments etc., on these loans).
Finally, we continue to like CPU given its positive drivers in the current environment including its productivity agenda, improved capital allocation, growth businesses such as mortgage processing services and the benefits accruing from rising interest rates. Read more