3 profitable October ASX 200 trends

October ASX 200 trends will be defined by access to credit. Nonetheless, many ASX 200 companies stand to gain from these investing trends.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The overwhelming trend of October trading will be defined by access to credit. Since March, the Federal Government has intervened many times in the economy. This has included loan payment deferrals, wage subsidies, rent deferrals, and bankruptcy protection. The S&P/ASX 200 Index (ASX: XJO) is likely to be rocked as the Government looks to reduce dependence on government funding. 

For example, Federal Treasurer Josh Frydenberg has made two dramatic changes in the past few weeks. First, bankruptcy laws have changed to help companies trade out of insolvency. The changes to responsible lending are, of course, the second. Consequently, I expect to see higher levels of credit and spending. Furthermore, and likely to be the biggest impact, is the reduction to wage subsidies and JobSeeker payments. 

Wage subsidies

Reductions in government payments will have many impacts. For example, revenue for ASX 200 discretionary retail companies like Premier Investments Limited (ASX: PMV) is likely to be lower. Nevertheless, buy now, pay later transactions through companies like Zip Co Ltd (ASX: Z1P) will increase as people use BNPL companies to extend their purchasing power.

One of the companies that I believe will see higher activity is Credit Corp Group Limited (ASX: CCP). On one side, the company is likely to see higher loan volumes through its series of payday lending companies. On the other hand, it will see a further rise in companies looking to sell bad debts. 

Easier credit

The big ASX 200 winners here will be those directly involved in the mortgage or car sales markets. Starting in October with ASX 200 shares like Westpac Banking Corp (ASX: WBC) potentially seeing a rise in share price. Moreover, companies like Carsales.Com Ltd (ASX: CAR), and REA Group Limited (ASX: REA) should also see increased sales volumes. Lastly, building materials firms like Boral Limited (ASX: BLD) or James Hardie Industries plc (ASX: JHX) will see sales start to ramp up as housing starts to turn.

ASX 200 bankruptcy protection

Treasurer Frydenberg has flagged a change in bankruptcy laws. This provides companies with debts less than $1 million 20 days to restructure debts, followed by 15 days for approval. During this period, the business owner would also have protection from unsecured and some secured creditors. This is likely to impact ASX 200 shopping mall operators such as Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX).

It means a second opportunity for many of their tenants, thus saving money on re-tenanting, shop repairs, as well as keeping vacancies low.

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended carsales.com Limited and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A few gold nullets sit on an old-fashioned gold scale, representing ASX gold shares.
Broker Notes

This ASX 200 gold stock could shine bright, says top broker

Poised to soar?

Read more »

Three miners looking at a tablet.
Resources Shares

3 ASX mining shares to sell today: experts

These iron ore, coal, and lithium miners have attracted sell ratings from brokers.

Read more »

Five different piggy banks, indicating a diverse share portfolio.
Bank Shares

Investing in ASX 200 banks: Which macroeconomic variables matter according to Macquarie

The majority of absolute bank performance can be explained by four key factors.

Read more »

Happy miner giving ok sign in front of a mine.
Broker Notes

Macquarie forecasts 40% upside for this ASX mining stock

Ready to rock.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why DroneShield, EOS, Larvotto, and Life360 shares are racing higher today

These shares are having a strong session. But why?

Read more »

A man holds his head in his hands after seeing bad news on his laptop screen.
Share Fallers

Why Beach Energy, Cettire, Flight Centre, and Pilbara Minerals shares are sinking today

These shares are having a tough time on Thursday. But why?

Read more »

Red arrow going downwards in front of oil pumpjacks.
Energy Shares

Why did this $2.7 billion ASX 200 energy share just crash 11%?

Investors are fleeing the ASX 200 energy stock today. But why?

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX 200 shares could rise 12% to 60%

Analysts think investors should be buying these shares while they are cheap.

Read more »