Keeping you up to date with the latest market moves, in association with Investment firm Jarden
NZX Market Wrap-up: Chorus partial recovery; Metlifecare and gentailers traded heavily
The NZX 50 Index rose slightly yesterday, up 0.4 per cent with relatively subdued action. Retirement village operator Metlifecare, which received an updated takeover offer from Asia Pacific Village Group at $6.00 per share earlier last week, saw the highest trading volumes. While over 5 million shares changed hands, its share price rose only slightly (+0.68 per cent). Jarden is advising Metlifecare in relation to the offer.
Gentailers continued to be hot stocks as well, with Mercury as the most traded stock of the sector (-0.2 per cent). Of the other three major players Contact was the only one up (+0.5 per cent) while Meridian lost 0.2 per cent and Genesis was flat.
NZ's two largest communication services stocks Spark and Chorus both rose, up 2.8 per cent and 2.2 per cent, respectively. Chorus rallied to a high of $7.39 around noon but closed at a subdued $7.27. This represents a partial recovery after last week's negative announcement from the Commerce Commission.
To reiterate, the Commission is considering altering the financial loss asset valuation process by employing a discounted cash flow approach to valuation, rather than the building blocks approach proposed in November 2019 discussions.
Augusta Capital Board in favour of takeover
Property fund Augusta Capital's board of directors has unanimously recommended to shareholders that they accept the takeover offer from Australian specialist investment manager Centuria Capital in absence of a superior offer.
The recommendation was included in their Target Company Statement released yesterday, which also included a valuation from Calibre Partners for Augusta's shares at between $0.85 and $1.00 per share. Centuria had previously sought to buy the company at $2 per share, before retracting their offer on March 26 this year.
The updated offer proposes to give Augusta shareholders 20 cents cash and 0.392 Centuria stapled securities for each Augusta share, which combined make up an implied offer price of $1.00 per share. The deal has been supported by large Augusta shareholders including the current Chairman and founders. Augusta last closed at $0.90 a share.
Large number of NZ small businesses seeking rent relief
A Retail New Zealand survey has shown that one in eight NZ small businesses is negotiating for rent relief. With threats of guarantee calls and evictions, businesses are seeking government assisted arbitration. Coalition party disagreement has meant that the $6000 arbitration grant for small businesses, announced in June, has not made it passed the cabinet level.
As pressure builds, arbitration becomes an increasingly less effective measure. A recent survey revealed that 38 per cent of tourism businesses still need financial assistance with fixed costs. Going forward, political mishandling could exacerbate the economic fallout from Covid-19.
International Market Wrap-Up
Chinas SZSE Component index rose by 3.5 per cent, hitting record levels seen in 2015, flowing into a fast start for US markets. At time of writing Dow Jones up (1.38 per cent), S&P 500 up (0.57 per cent) and Nasdaq down late (0.08 per cent), with the S&P 500 closing in on pre Covid-19 levels: led by consumer discretionary and healthcare. With the second quarter earnings season about to kick off, investors pile into the market ignoring the continuing rise in Covid-19 cases. For context, on Sunday (US time) Florida had their highest one day rise of over 15,000 new cases.
Tesla's shares hit new highs once again Monday morning rising more than 16 per cent in early trading on the back of anticipation of the company soon joining the S&P500 index. By buying Tesla now, the front-runners are forcing the S&P indexes to give the stock a higher weighting. Therefore, Indexes will be forced to buy a greater proportion of shares, further fuelling the increase in price. However, gains were eroded in the afternoon session, hitting negative territory before settling at time of writing to be up 3.2 per cent.
Apple was up as much as 4 per cent in early trading on the back of a bullish analyst increasing their target price. With the launch of 5G fast approaching, there is thought of pent up demand for Apple products which could increase their market capitalisation significantly in 2021. At time of writing the share price was up 1.7 per cent.
Shares of Pfizer and BioNtech up at time of writing 5.3 per cent and 11.9 per cent respectively after being fast tracked by US Food and Drug Administration for a coronavirus vaccine. The companies will start another trial this month, subject to regulatory approval and believe if successful they can have 100 million doses available by end of year and 1.2 billion by end of 2021.
At time of writing WTI Oil was down (1.5 per cent) to a little under $40 per barrel while gold was up slightly (0.40 per cent) to $1805 per ounce. The US 10 year treasury is up (0.005 basis points) to 0.638.
ASX Market Wrap-up
The ASX200 index performed strongly to begin the week finishing the day on 5977.5 points, up 58.3 points from Friday. The leading sectors yesterday were Utilities, jumping 2.7 per cent and Materials, climbing up 1.8 per cent. Info Tech was the laggard on the day, falling 1.01 per cent, while Healthcare dropped 0.7 per cent.
Platinum Asset Management was the best performer of the day, spiking 6.8 per cent to A$3.95. Iron Miner Fortescue Metals was a Solid performer in the Materials sector, closing the day at A$15.36, a 3.4 per cent gain and a record-high for the stock. BHP Group and Rio Tinto rose 2.2 and 1.9 per cent respectively.
The worst performer was Avita Therapeutics, plunging 9.4 per cent. Technology One plummeted 6.4 per cent amid investor concerns over reports questioning some of its financial reporting.
As the number of Covid-19 cases continue to climb in Victoria and signs of transmission outside of the state begin to appear, the impact on equities may be large as already vulnerable businesses are likely to struggle to come back from a second wave.
Australia Today: ANZ and NAB both release Consumer Confidence/Conditions today. With Melbourne back in lockdown as Covid runs rife, the outcome of these results will be of interest.
International Today: The federal budget is announced in the US along with EU and UK industrial production numbers. PepsiCo release their second quarter earnings today. Many large U.S. banks will also report.
For more information on the latest market moves, get in touch with Jarden.
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.
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