Today’s News

The Big Picture

• Treasurer argues Capital Gains Tax changes could make shares more attractive, not less. With much of the debate around CGT changes focused on housing, Treasurer Jim Chalmers answered questions that the reforms will make it harder for younger Australians to build wealth through shares. Chalmers argues the 1999 CGT discount actively shifted investment away from shares and toward property, and that removing it could have the opposite effect. (ABC)
  
  

• Start-ups sound alarm on CGT. Australia's start-up founders and investors warn the country risks losing its next generation of entrepreneurs if they aren't carved out from CGT changes. The proposed model would leaves founders, early employees and investors paying considerably higher taxes on profits when companies are sold. (AFR)
  
  

• Australia's CEOs deliver split verdict on budget. Finder co-founder Fred Schebesta called the governments tax-heavy budget "a death knell" for start-ups. Wesfarmers CEO Rob Scott said it made Australia less attractive for investment despite welcome red tape cuts. AustralianSuper's CEO was more positive, welcoming the focus on productivity and housing affordability. (AFR)
  
  

• Opposition to fight Labor's tax changes. Shadow Treasurer Tim Wilson has declared they will oppose Labor's housing tax reforms, arguing the changes will push up rents, reduce housing supply and make it harder for young people to enter the market. (ABC)
  
  

• Gold Coast Trump Tower deal collapses. Plans for a $1.5 billion Trump Tower on the Gold Coast have been abandoned less than three months after the deal was struck. The developer described the Trump brand as "increasingly toxic in Australia". Gold Coast Mayor Tom Tate believes the decision came down to finances rather than politics. (ABC)
  
  

• US inflation reaches highest level in 3 years. US consumer prices rose at their fastest rate since May 2023 in April, with the CPI climbing to 3.8%. Almost half of the rise was driven by surging energy costs, with gasoline and grocery prices also climbing sharply. (BBC)

Companies in the news

• CommBank sees largest single-day fall on record. CBA shares plunged 10.4%, after it set aside an additional $200m in provisions for Middle East conflict risks and investors digested the government's housing tax changes. ANZ, NAB and Westpac also saw falls as investors questioned whether mortgage credit growth could slow in the wake of budget night's tax reforms. (AFR)
  
  

• BHP hits all-time high as copper surges. BHP has reinforced its position as Australia's largest ASX-listed company after rallying to an all-time high, pushing its market cap to around $315bn and overtaking Commonwealth Bank. The surge has been driven by copper climbing above $14,000 a tonne on renewed Chinese demand. (AFR)
  
  

• Zip Co to rebrand after losing decade-long trademark battle. Zip Co has lost a High Court battle over its name to lender Firstmac, which registered the Zip trademark in 2004, almost a decade before the buy now, pay later company was founded. (AFR)
  
  

• Fortescue to pay largest native title compensation in Australian history. The Federal Court has ordered Fortescue to pay $150.1 million to the Yindjibarndi people after the company mined their lands without permission. Elders have expressed disappointment, with one describing the payout as "peanuts" compared to the billions Fortescue has made from its mines built on Yindjibarndi land. (ABC)
  
  

• eBay rejects GameStop's US$55.5bn bid. The online marketplace has rejected GameStop's takeover offer, with its board citing financing uncertainty and describing the approach as "neither credible nor attractive." The rejection was widely expected given GameStop's market cap sits well below eBay's value. (BBC)
  

What the…?

US$1 million ‘Gold Card’ visa yet to entice the worlds wealthiest. Donald Trump's Gold Card, a $1 million investment visa promising US residency in record time and touted as a way to attract tens of thousands of overseas millionaires, is yet to generate the interest initially hoped for.

Commerce Secretary Howard Lutnick had predicted 80,000 Gold Cards issued and more than $100 billion in revenue when the program launched in December. So far the program has drawn in just 338 applications, with only 165 people paying the $15,000 processing fee. (CNBC)

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Today’s Insight

How to Choose an ETF

With over 400 ETFs listed in Australia, knowing where to start can be very overwhelming. Jess sat down with Shani Jayamanne, investment specialist at Morningstar, to cut through the noise on a recent episode of Get Started Investing

Shani: "Really start from a point of what am I trying to achieve? And when you start from a point of what you're trying to achieve, you tend to eliminate the bulk of the ETFs that are there."

Most beginner investors only need to think about a handful of core building blocks: Australian shares, international shares, and possibly fixed income. Everything else, the niche sectors, the thematic plays, the leveraged products, you can ignore for now.

Once you know what you're trying to achieve, three things are worth paying attention to:

1. Fees. Shani ran the numbers on a 1% fee versus a 0.1% fee over a 20-year investment horizon. The difference? $125,000 paid to a fund manager versus $13,000. When two ETFs offer essentially the same exposure, the cheaper one wins.

2. What's actually inside it. ETF names can be misleading. A ‘global shares’ ETF like BGBL, for example, has more than 70% of its holdings in the US market. That's not necessarily a problem, but you should know what you own before markets get volatile and you're tempted to make a poor decision.

3. How many you actually need. Probably fewer than you think. Shani publishes a ‘three ETF portfolio’ framework each year based on John Bogle's approach: domestic equities, international equities, and fixed income. The allocations between them matter far more than the number of ETFs you hold.

Today in Equity Mates