This article is from 4 February 2022. Interesting numbers...

This article is from 4 February 2022. Interesting numbers highlighted below.

Money Talks is *’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.

Today we hear from TAMIM Asset Management head of Australian equities Ron Shamgar.

What’s hot right now?

“2022 didn’t kick off like most people were hoping,” Shamgar said.

“January was at one stage the worst start to a year on record with S&P500 down -11%.

“The 10 largest stocks on the index were down -20% at one point and the average Nasdaq stock was down -50%.”

In Australia, the tech index hit an intra-month low of -25% and the Small Ords was down -13% at one point.

Although there has been a bounce back in equity markets this week, Shamgar said one could argue we are in bear market territory based on some of those figures above.

“In our view this is all caused by inflation concerns which will lead to higher interest rates this year and next,” he said.

“We are of the view that rates going to 2-2.5% won’t tip us into a recession and inflation will ease in 12 months as COVID related supply bottlenecks and labour shortages ease up.”

Some companies are significant beneficiaries from inflationary environments and higher interest rate – here are three stocks Shamgar reckons will benefit.

Top picks

EML PAYMENTS (ASX:EML)

Shamgar believes EML is the number one ASX beneficiary from rising rates.

“As an e-money issuer globally, they currently hold a growing balance of customer card funds worth $2 billion.

“EML gets to invest those funds but at the moment, with rates at zero, aren’t making any return.

“Going forward investors should think about that for every 1% rise in rates across US/UK/Euro, EML earns $20m of incremental profit.

“Hence if rates rise 2-3% next couple of years, EML will earn an incremental $40-60m of profit – which is 2-3x their current profitability.

“We don’t believe investors have fully grasped this and this is why EML is our top pick for 2022.