Jarden Brief: Gamestop decline continues after wild ride

Gamestop dropped a futher 20 per cent yesterday. Photo / AP

Jarden

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

New Zealand

The S&P NZ50 finished the day down 1.0 per cent. Smaller companies outperformed as the S&P NZ Small Cap Index was down only 0.6 per cent.

The best performing sectors on the day were Energy and Financials, respectively up 1.1 and 0.4 per cent. The worst performing sector on the day was Information Technology, falling 2.1 per cent, followed by Health Care, which retreated 1.8 per cent.

Packaging and shipping company Freightways, which rose 4.2 per cent, took the top spot in the day's trading while satellite television provider Sky Network Television, up 2.7 per cent, continued its recent momentum.

The third best performing company was office focussed real estate investment trust Precinct Properties, which climbed 2.7 per cent after reporting a revaluation gain on its properties of $149 million, up 5.1 per cent for the half year ended 31 December 2020.

The announcement also confirmed more details around the previously expected disposal of Precinct's half share in the ANZ Centre on Albert Street. Post transaction the company's net tangible assets per share were at $1.44, up 11 cents from June.

The worst performing company on the day was corporate travel company Serko, which fell 3.5 per cent. Retailer generator Mercury Energy and dairy company Synlait Milk, respectively down 3.2 and 2.9 per cent, rounded out the worst performers on the day.

Homeware retailer Briscoes group (up 1.8 per cent) released its fourth quarter results and unaudited full-year earnings guidance. Highlights included fourth quarter sales of $248.1 million (up 18.3 per cent quarter on quarter) representing quarter on quarter same-store, same-day sales growth of 11.9 per cent. Full-year net profit after tax is expected to exceed $70 million.

Retirement village operator Arvida group* (flat on the day) yesterday provided additional information in relation to its issue of up to $125 million in seven-year (maturing February 2028) bonds*. The indicative issue margin for the bonds will be 1.8 to 2.0 per cent higher than the underlying per annum swap rate. The bonds will feature a minimum rate of 2.8 per cent.

International
US Markets:

At time of writing, US markets were flat with the S&P 500 and DJIA both flat while the NASDAQ advanced 0.3 per cent.

Most sectors were muted in correlation with the wider index, although the Energy sector dipped 1.3 per cent.

Big moves were seen in the video game space overnight, with Electronic Arts up 3.5 per cent after announcing its acquisition of Glu Mobile for US$12.50 per share. The deal is expected to give the industry titan a bigger foothold in the mobile gaming space.

Meanwhile, Glu Mobile, which previously traded at US$9.39 per share, climbed 34.7 per cent to US$12.65 – even above its offer price.

Media outlets have continued to herald an end for the Reddit short squeeze of '21, with GameStop dropping another 20 per cent to US$47.81 – despite reaching US$483 a share at its peak. AMC Entertainment was down another 11.7 per cent, while Koss dropped 5.9 per cent. GameStop is still to almost triple its price at the beginning of the year – and it remains to be seen whether the stock price will continue to fall.

Shares in medical cannabis manufacturer Tilray surged almost 40 per cent after announcing a deal with Grow Pharma to import and distribute its products in the UK. The UK allows medical marijuana on a prescription basis, and Tilray expects its products to be available next month.

Asian markets:

Asian markets built on Monday's momentum, with the Shanghai index rising 2.0 per cent, the Nikkei up 0.4 per cent and the Hangseng advancing 0.5 per cent.

Commodities:

Gold prices continued to build on Monday night's momentum, up to US$1,839.10 per ounce. Oil prices were also up another 0.6 per cent to US$58.32.

Australia

The S&P ASX200 finished the day down 0.9 per cent, with no sectors in the black. Materials lost the least ground as the best performing sector on the day, down 0.4 per cent while the worst performing sector on the day was Real Estate, dropping 2.1 per cent.

Investment bank Macquarie Group, which jumped 6.6 per cent, was the top performer on the day while commodity storage and distribution company Graincorp (+4.7 per cent) and automotive retailer Eagers Automotive (+4.3 per cent) rounded out the top performers.

Investment managers Challenger, down 14.8 per cent, had a poor day after the release of disappointing half year results. Building materials company Boral (down 7.4 per cent) and cement manufacturer ADBRI Limited (down 5.9 per cent) rounded out the worst performers for the day.

The Australian government yesterday released its national strategy on electric vehicles. Some consumers are concerned that while other countries have offered specific targets for the phasing out of petrol cars, Australia has offered only a vague intention to "create the environment that enables consumer choice, stimulates industry development and reduces emissions." Prime Minister Scott Morrison, who has not yet set a target for net-zero emissions, countered that the government should not "force people out of the cars the love".

Sales of electric vehicles, including hybrids, account for just 0.75 per cent of car sales in Australia. Much broader market penetration has been achieved in countries that provide tax incentives. Six per cent of new cars sold in France and 54 per cent of new cars sold in Norway are electric. Such policy considerations have implications for investments in electric vehicle manufactures as well as for the environment more broadly.

A report has been published on Crown Casino's (flat on the day) ability to operate the Barangaroo casino in Sydney. The company has been judged "not suitable" after it was found to have enabled money laundering, partnered with junket operators connected to Chinese triad gangs and failed to protect staff arrested in China.

The author of the report, ex-NSW supreme Court Justice Patricia Bergin, said the company could become suitable if it were to clear out its executive team – specifically, Chief executive Ken Barton, director Michael Johnston and independent director Andrew Demetriou. It also needs to overhaul its company culture and its risk management and compliance systems.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: This Morning Brief has been prepared in good faith and reflects opinions and views at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. This Morning Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm, a broker disclosure statement is available free of charge at www.jarden.co.nz. Jarden is not a registered bank in New Zealand. Full disclaimer available at: https://www.jarden.co.nz/limitations-and-disclaimer

*Jarden Securities Limited is one of the Joint Lead Managers of the Arvida bond offer.