Today's ASX Share Market Comment: Blue Chip ASX Shares

Richard Hemming

ASX Share investors: Don't panic

Unlike the Financial Crisis of 2007-9 there have been no runs on financial institutions and the financial sector’s starting point overall is very different to the start of the last crisis. The financial sector should be much more resilient to withstand bad debts.
 
In other words, the banks are the boiler room in any economy and they’re better capitalised now than they’ve ever been.

This doesn't mean all ASX Shares that have fallen are worth buying. As ASX Share investors we are looking for companies with strong balance sheets and whose cash flow has not dried up or is not in the process of rapidly drying up.
 

Opportunities for ASX Share investors with 3-5 year return time horizon

The S&P/ASX All Ordinaries has fallen almost a third since mid-February, which reflects that investors are rebasing their expectations for future earnings.
 
As we have been consistently saying, this fall provides opportunities for investors with 3 to 5 year return time horizons. But once again, we emphasise to buy in small parcels and to not chase stocks. Certainly, we are doing this, and we are taking a breather, having spent 20-25% of our available capital.
 

The risk

Governments had two relatively simple jobs in the Financial Crisis: bail out and support national banks and inject fiscal stimulus. Of course, this was on top of central banks cutting interest rates.
 
This time, the decision variables are much more complicated. It depends on the politicians’ decisions, but also, and more crucially, on the decisions of politicians in other nations, and on the behaviour and responsibility of your fellow citizens. We are all socialists in this fight.
 
There is no point going hard if other countries don’t do the same! The authorities' ability to “flatten the curve” is limited. No government is going to tell its citizens they can’t come home. All politicians can do is ensure as many people as possible get tested, until there is a vaccine, which as we keep hearing, won’t be for 12 months or longer.
 

Getting back to ASX Shares and Stocks to Buy

Today we list six stocks that we believe can keep paying dividends through the current shut down. This is an exceptional trait when a lot of industry is temporarily closing in this period of coronavirus induced distress.

The market overall is getting its head around how long we’ll be in a zero to negative growth environment.
 
But as we are finding there are companies that are doing better than others and have less financial risk. Those are the stocks Under the Radar is focusing on.


Is it time to buy ASX shares yet?

Equity markets look further forward than any other. We think we are close to peak uncertainty, which should mean that there are opportunities to buy small positions in stocks to capitalise on a rebound.
 

6 Blue Chip ASX Shares to Buy

Today we list six stocks for subscribers that we believe can keep paying dividends through the current shut down. This is an exceptional trait when a lot of industry is temporarily closing in this period of coronavirus induced distress.

Our focus will be heavily on dividends. Dividends are at risk of being cut or suspended in the current half and we identify those that can maintain them and even grow earnings during these times of distress.

Use our Portfolios as a guide on which ASX shares to own and the weight we place on those shares. This will guide you no matter how much you are investing in the ASX share market.
 

About the Author

Richard Hemming

Investment analyst and Editor of Under the Radar Report

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