The Weekly | Market resilience, rate cuts and founder-led edge

In this week’s update, we explore the case for Australian government bonds, deep dive into key investment portfolio holdings including SEEK (ASX: SEK), Catapult (ASX: CAT), SAP (ETR: SAP) and Retail Zoo, and share insights from Superhero’s investing podcast, Sidekick, where small-mid cap Portfolio Manager Tobias Yao discussed the long-term outperformance of founder-led companies.

Market Updates

Following the RBA’s 25 basis point cut to the cash rate to 3.85% last Tuesday, the S&P/ASX 200 Accumulation Index ended the week up 0.3% driven by the communication services, information technology and real estate investment trusts (REIT) sectors, which increased 3.0%, 2.0% and 1.1% respectively. The S&P/ASX Small Ordinaries Accumulation Index also increased 0.3% in the week. In commodities, lithium fell 6.9% to its lowest level since 2021 while copper rose 5.3%, following an International Energy Agency forecast that the global copper deficit could reach 40% by 2035. Uranium stocks also rose on Friday after U.S. President Trump signed an executive order aimed at accelerating the expansion of nuclear energy in the U.S.

U.S. large caps (S&P 500) and small caps (Russell 2000) declined 2.6% and 3.4% respectively over the week, with the MSCI World Index (AUD) also falling 2.9%. The pullback followed weaker-than-expected U.S. Treasury bond auctions, which pushed longer-term yields higher, increasing the cost of future government debt. This was partly attributed to Moody’s recent downgrade of U.S. sovereign debt, citing concerns about rising federal debt and fiscal deficits. As part of his pro-growth agenda, Trump passed a tax bill last week through the US House of Representatives. Should this bill pass Congress it will remove a potential headwind for consumption from existing tax cuts expiring at the end of the calendar year. Over the weekend, trade tensions continued, with Trump threatening the European Union (EU) with 50% tariffs from 1 June 2025, stating that trade negotiations were “going nowhere”, while also suggesting Apple (NASDAQ: AAPL) could face 25% tariffs on any iPhones not manufactured in the U.S. By Monday morning, Trump had announced the start date of these potential EU tariffs would be delayed until 9th July.

WAM Global (ASX: WGB) Portfolio Manager Nick Healy recently discussed that these tactics employed by Trump are nothing new to us. You can read the article that explores how investors should navigate Trump’s second term here.

Stock Watch

Seek

The investment team attended SEEK’s Investor Day in Melbourne last week, where the leading online employment marketplace upgraded its FY2025 guidance to the top half of the range, underpinned by strong yield growth in Australia and New Zealand. The update was well received by investors, with second half FY2025 yields implying around 3% growth in FY2026, supported by new advertisement tiers and AI integration. The update eased concerns about SEEK’s Asia business, with the ‘freemium’ (a pricing strategy where a basic product or service is offered for free, while advanced services or features are offered at a premium price) rollout better than anticipated. SEEK’s strategy is expected to enhance product depth and yield, with management expressing confidence in reaching revenue neutrality in Asia within six to 12 months.

Held in: WAM Leaders (ASX: WLE) and WAM Active (ASX: WAA)

Catapult Group

Sports performance analytics company, Catapult, reported its full-year result last week ahead of expectations on the back of strong operational execution. A key highlight was improved margins, supported by both operating leverage and cost control. The solid free cash flow result also underscores Catapult’s scalability, with the company demonstrating the capacity to fund its own growth. We believe this positive momentum will continue and that the company is well positioned for future expansion. In the medium term, there is further upside should Catapult choose to adjust pricing. Since the result, the share price has risen 23.5%.

Held in: WAM Capital (ASX: WAM), WAM Active and Wilson Asset Management Founders Fund

SAP

German software company SAP, a global leader in enterprise applications and business AI, held its flagship Sapphire conference in the U.S. last week, bringing together customers, partners and industry experts to showcase its latest innovations. Partner feedback from the event was positive, particularly around SAP’s technology roadmap and AI capabilities. Despite a volatile macro environment, enterprise technology spending has remained resilient. SAP reaffirmed its 2025 guidance and expressed confidence in near-term demand, underpinned by accelerating revenue and margin growth. We remain positive on the outlook, with SAP well positioned to benefit from the next wave of agentic automation (AI systems that operate with a degree of autonomy, managing tasks on behalf of organisations). Management has built strong credibility, and we expect ongoing top-line growth through both cross-sell opportunities and new customer wins, with margin expansion supported by internal AI efficiencies.

​​​​​​Held in: WAM Global

Retail Zoo (Adamantem Capital)

Retail Zoo is an Australian market leader in the fast refreshment and casual dining categories, with iconic brands such as Boost Juice and Betty’s Burgers. Our private equity investment partner Adamantem Capital acquired Retail Zoo in March 2023, and has accelerated growth for the company, opening new stores, driving product innovation and optimising in-store operations. Retail Zoo now has over 900 stores in Australia and overseas and continues to build a strong market position.

Held in: WAM Alternative Assets (ASX: WMA)

Reassessing Australian bonds amid global uncertainty

We are noticing a consistent bid for Australian Dollar (AUD) denominated assets during this period of heightened trade uncertainty. For now, investors appear to be treating Australia as a safe haven. There is now considerable debate as to the most appropriate expression of “Australian exceptionalism” in equities. In debt markets though, there is a strong case that long-duration Australian government bonds have scope to revalue upwards relative to peers. Looking across countries, there is a strong, negative relationship between “real” bond yields (government bond yields net of inflation expectations), and net international investment positions (NIIPs). The more a country exports capital to the broader world, the lower their real yields are, and vice versa. Presumably, this is because countries that export capital have an abundance of domestic money supply relative to domestic bonds to invest in, forcing them to bid up these bonds in value (lowering their yields), before deploying surplus funds abroad. In equity markets, lower real yields can be a powerful catalyst for multiple (e.g. price to earnings) expansion. Australia is in a unique position, where real yields are above where they should be for its NIIP. Importantly, Australia is increasingly becoming a capital exporter through time, meaning that fundamentally, real yields should be falling.

Index returns performance table

Tobias Yao on Superhero’s Sidekick Podcast

In the latest Sidekick podcast episode, hosted by Equity Mates, small to mid-cap and Wilson Asset Management Founders Fund Portfolio Manager Tobias Yao explores how founder-led companies on the ASX have consistently outperformed the broader market by 10% annually. Tobias shares insights into the traits that drive their success—obsession, simplicity, and strong team culture—and how these characteristics create a unique edge. He also outlines practical strategies for identifying high-potential businesses and avoiding common pitfalls. You can watch the full episode on YouTube, or listen on Spotify or Apple Podcasts.

Superannuation tax on unrealised

Chairman and Chief Investment Officer Geoff Wilson AO, has been quoted across multiple media outlets in the past week on the proposed tax on unrealised gains by the Labor government. You can view the coverage in The Australian, The Daily Telegraph
and Sky News. For more coverage visit our dedicated page for superannuation tax media here.

To stay informed with our regular updates and market insights from the team follow our LinkedIn, X and Facebook accounts.

You can also follow Wilson Asset Management Founder and Chairman Geoff Wilson AO on X and  LinkedIn.

If you have any feedback you would like to share or wish to speak to a member of the Wilson Asset Management team, please respond to this email or call Christopher Ball on 02 9247 6755. You can also email us at [email protected]​​​​​.

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^*All Australian S&P indexes in this table are accumulation indexes, meaning they account for both price changes and the reinvestment of dividends, providing a measure of total return.

^#MSCI World (MSCI Daily Total Return Net World) and MSCI World SMID (MSCI WORLD SMID CAP Net Return) are both in AUD and are total return indexes i.e. include share prices and dividends. S&P 500 Index and Russell 2000 Index are similarly total return indexes.

^{^}Corporate bond yields represent the return investors receive for holding debt securities issued by companies. These yields vary based on factors such as the issuer’s credit rating, economic conditions, and market interest rates, serving as a key benchmark for corporate borrowing costs.

^**Australian long-term government bond yields represent the interest rates on government debt securities with extended maturities, typically 10 years or more. These yields reflect investor expectations for inflation, economic growth, and monetary policy, serving as a key benchmark for long-term borrowing costs in the economy.

^##The RBA cash rate refers to the interest rate set by the Reserve Bank of Australia (RBA) for overnight loans between banks. It serves as a benchmark for borrowing costs across the economy, influencing interest rates on mortgages, savings accounts, and business loans.