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DIRECTORS : CHRIS BURRELL ROGER BURREL ( Acting Chairman ) IAN DAVEY ROBERT CHAN ELAINE ANDERSON ALICIA KENDALL MARI ASHTED

ASSOCIATE DIRECTORS : LYNDA MYERS MICHAEL BURRELL

ASSOCIATES : JAMIE ELGAR ERIC HARRISON DYLAN KATZER BRUCE McLEARY SHAUN MINAHAN

SENIOR INDEPENDENT DIRECTOR : GREG VICKERY AO email : clientcare @ burrell . com . au internet : www . burrell . com . au

Australian equities delivered solid growth in the first quarter of 2021 , with the ASX 200 Index rising by 2 %. However , the strong market returns disguised divergent performance at the sector level , as investors rotated out of last years ’ winning growth stocks and into undervalued stocks . An example of this rotation is seen in the information technology sector , which rose 56 % during calendar 2020 , but fell by 12 % in the first quarter 2021 , whereas the energy sector , which was unloved during 2020 , falling some 30 %, rose by 3 % in the first quarter . Similarly , financials , which fell by 9 % in 2020 , was in demand in the 1 ^st quarter of 2021 , with the sector rising 11 % in the first quarter .

It is thought that sector rotation is being driven by : 1 . the ongoing economic recovery ; and

2 . optimism about the global COVID-19 vaccine rollout .

This optimism has pushed the 10-year Australian government bond yield up to 1.8 %, from around 1.0 % at the start of the year , despite the RBA continuing to insist its cash rate target will not increase from the current 0.1 % until 2024 at the earliest .

Building and construction materials stocks appear expensively with the resurgence in Australian residential construction activity in late 2020 restoring investor optimism . Much-needed earnings relief is occurring as the next Australian housing cycle has arrived , expedited by highly effective fiscal stimulus directed at residential construction . The cyclical benefit

MARCH QUARTER to earnings is already reflected in share prices of building and construction materials stocks .

Heightened at-home consumption of consumer staples categories , amid the ongoing coronavirus pandemic , is driving strong demand near-term for consumer packaging . Coronavirus vaccination programs are rolling out globally , although the positive impact on packaging demand is likely to be will be transitory , with a return toward population-linked volume growth longer-term . With consumer packaging names fairly valued on average , this is a view also shared by the market . Nonetheless , Amcor remains modestly undervalued . Chemicals firms , including Incitec , Nufarm and Orica , are materially undervalued . For Orica and Incitec we expect global mining volumes to improve as the COVID-19-related restrictions on supply ease and longer term , falling grades and deeper orebodies require more overburden removal . For Nufarm , margins are expected to improve as headwinds from raw materials costs , weather effects , and COVID- 19-related restrictions ease . Whilst some weeks away , 2 key dates are looming :

Participant of ASX Group and NSX ABN 82 088 958 481 ASFL No 247431

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Orica Limited ( ORI ) will report FY21 interim results on the 13 ^th of May , 2021 ; and

� Incitec Pivot Limited ( IPL ) will report FY21 interim results on the 17 ^th of May , 2021 .

Financial stocks were among the strongest performers in the first quarter , with the ASX 200 Financials ex- ARIET Index up around 11 percent . Australian major