Jarden Brief: Retirement village stocks wobble on housing announcement

Ryman Healthcares shares dropped 1.8 per cent after the housing announcement. Photo / Ryman

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

New Zealand

The NZX 50 closed slightly higher at 12394.3 points, increasing 0.5 per cent.

Software company Pushpay Holdings increased by 10.2 per cent to $1.95, Kathmandu rose 8.9 per cent to $1.35, and Fisher & Paykel Healthcare was up 3.4 per cent to $30.80, making them the top performers of Tuesday's trading session.

Pushpay's uptake was due to the Huljich family selling its remaining shares to Sixth Street, a technology and growth investor based in the US, which manages more than US$50 billion in assets. This transaction would bring Sixth Street shareholdings to a 17.8 per cent stake in the company, making it the largest shareholder. Pushpay's chairman Graham Shaw emphasised the value that Sixth Street will bring to the firm with its reach around the globe and its experience investing in big tech names such as Spotify and Airbnb.

Kathmandu is profiting off its Rip Curl acquisition shown in its latest half-year results release yesterday. The total net profit for the group was $23.1 million over the six months until 31 January 2021, a 32.8 per cent increase compared to the same half last year. Group sales were up 12.9 per cent to $410.7 million with online sales representing 12.7 percent of direct-to-consumer sales, up from 8.8 per cent compared to last year. Dividends will resume with a $0.02 interim dividend paid out in the middle of the year. The company is considering a rebrand due to the strong position of Rip Curl within the group and the Oboz brand being part of Kathmandu Holdings.

The worst performers of the day are Summerset Group Holdings, decreasing 4 per cent to $12.23, Port of Tauranga, declining 2.3 per cent to $7.50, and Restaurant Brands NZ, down 2.2 per cent to $12.71.

The government announced its new housing policy which includes a $3.8 billion fund to boost housing supply and additionally increased the lending capacity to Kainga Ora by $2 billion. The policy is also set out to make First Home Grants and Loans more accessible to New Zealanders and it extended the bright-line test to 10 years with an exemption to incentivise new builds. Most importantly, the government removed the interest deductibility for future investors.

Residential property-exposed retirement villages, Summerset, Ryman Healthcare (-1.8 per cent to $15.41), and Arvida Group (-1.7 per cent to $1.70) fell following the Government's announcement – as uncertainty remains over how affected this sector will be by the law changes. Meanwhile, Oceania Healthcare was in halt while undertaking an $80 million placement to institutional investors to fund the acquisition and development of new sites.

Jarden is joint lead manager and underwriter for Oceania Healthcare's capital raise.

INTERNATIONAL
US Markets:

At time of writing, the S&P 500 was up 0.1 per cent, the DJIA was down 0.1 per cent and the NASDAQ had fallen 0.1 per cent.

The markets appeared to quiet with the United States' experiencing their second tragic mass shooting of the week in Colorado on Monday. US President Biden has since urged Congress to tighten gun control.

The best performing sector of the day was Utilities, rising 1.4 per cent. On the flip side, Industrials had declined 1.0 per cent.

Oil and gas company EOG Resources was the top performer of the day, up 4.4 per cent. This was followed by electrical power company, NextEra Energy, up 3.3 per cent.
The stocks performing the worst overnight were cruise operator Carnival Corp, down 6.6 per cent, and Western Digital Corp, which had fallen 6.5 per cent at the time of writing.

Asia Markets:

Asian markets were in the red yesterday with the Shanghai index down 0.9 per cent, the Nikkei down again today, falling 0.6 per cent, and the Hangseng down 1.3 per cent.
Chinese search engine Baidu had its market debut yesterday in Hong Kong. This was not considered a huge success with the share price closing the same as the price it began the session on.

Commodities:

Gold fell today, down 0.7 per cent, to US$1725.30 per ounce. Oil prices were in the red again today, falling a significant 4.4 per cent to US$58.90 a barrel. Of the crypto currencies, Bitcoin fell 0.5 per cent today and Ethereum had declined 1.9 per cent.

Lastly, US 10-year Treasury yields continued retreating today, falling another 0.1 per cent to 1.65 per cent.

In an attempt to reduce emissions in China, policymakers have announced plans to curb production for some steelmakers this year. The price of iron ore is currently US$157.50 a tonne after falling 2.6 per cent. These controls are unlikely to end the boom in iron ore prices, with high quality iron ore set to benefit from restrictions.

Australia

The ASX closed yesterday's trading down a slim 0.1 per cent.

Top performing sectors were Healthcare, up 1.0 per cent and Utilities increasing 0.7 per cent.

The ASX was host to a successful IPO yesterday for Technology company Airtasker Ltd which saw its shares close up 61.5 per cent. Volatility was present throughout the day with the stock trading up close to 80 per cent above its original list price, then eventually landing at A$1.05 - still a handsome 61.5 premium to the original listing value.

Joining Airtasker in the outperforming section was Energy company AGL Energy Ltd which traded up 5.1 per cent after filing an application for a new 200-MW hour battery to assist one of its Victorian coal fired power stations. Inclusion of the battery will accelerate AGL's movement toward net zero emissions by 2050 and was well received by investors.

The day's underperforming sectors were Energy and Consumer Cyclicals, down 1.3 and 1.0 per cent respectively.

The recent flooding in NSW continues to be a factor in the Australian equity market. Travel related companies had a tough day on the back of reduced travel volumes as many choose to stay home rather than travel in the extreme weather. Both Flight Centre Travel Group Ltd and Corporate Travel Management Ltd traded poorly, down 4.2 and 3.9 per cent respectively.

Rounding out the underperformers podium was Pilbara Minerals Ltd which continued to trade unfavourably on the back of falling iron ore prices.

Amongst the headlines yesterday, Commonwealth Bank were the first of the major Australian banks to make significant rate increases in a post COVID-19 environment, lifting its 4-year fixed rate by 20 basis points (1.99 per cent to 2.19 per cent).

This is a signal that the bank expects an increasing interest rate environment toward 2024, which is broadly in line with Reserve Bank of Australia (RBA) Governor Phillip Lowe's latest commentary.

• 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