Global markets were generally higher overnight, with gains on Wall Street being led by small-cap companies (S&P 500 Index +0.6%).
Gains were driven by news that AstraZeneca became the latest firm to deliver positive vaccine developments. AstraZeneca reported pooled 70% efficacy from the pooled UK and Brazilian trials looks underwhelming compared with PFE and Moderna mRNA data. However, its ability to be stored for 6 months plus in a standard refrigerator (2-8 degrees) and very low price still likely assures significant global use, especially in less developed countries.
Kiwi Property Group (KPG:NZX)
Kiwi Property Group shares were a touch higher yesterday after it reported a valuation gain of $11.8 million on investment properties helped the firm to boost first half profit by 47.5%. However, its underlying rental income declined -5.3% due to rent relief.
Overall, the 2020 financial year result was a miss versus expectations with slightly lower net rental income and higher interest expense partially offset by lower tax. While KPG's office portfolio showed resilience in a difficult period, this was overshadowed by significant rental abatements and large negative releasing spreads in its retail portfolio. KPG also provided soft guidance for 2021 given the impact of tenant distress on rental reversion, and the risk to retail assets on any further lockdown constraints that makes the conservative approach around potential 2nd half rental abatements, vacancy and receivable provisioning understandable.
Since our BUY rating, KPG shares have re-rated higher and we are re-assessing our recommendation, which will be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market was in the green yesterday (ASX 200 Index +0.3%) extending its nine-month high, spurred by a strong advance from the major iron ore miners. The major miners led the gains as iron ore prices rose on strong steel demand and the first decline in port stocks since mid-September.
Investors also piled into locally listed lithium miners. Galaxy Resources rose 14%, while Pilbara Minerals climbed 11% and Orocobre added 8%.
Ampol shares advanced 4% as it announced a $300 million off-market buyback after completing a $635 million sale of its convenience retail property portfolio. The company had originally been expecting to pocket $612 million from the sale.
The reopening of the New South Wales and Victoria border was a boon for travel stocks, with Qantas and Jetstar resuming regular flights between Sydney and Melbourne on Monday.
The New Zealand market started the week on a positive note on Monday (NZX 50 Index +0.5%) as local retail data showed the largest quarterly rise since 1995, with investors taking the rebounding sales as a sign of ongoing economic recovery – which saw retail stocks make gains. Other stocks making gains included Air NZ and Z Energy, driven by covid vaccines being rapidly progressed through development stages.
In stock specific news, A Goodman Property Trust n in line cash earnings result from with limited Coivd-19 impacts and strong demand with vacancy at record lows. Metro Performance Glass shares were lower even as the company announced it has navigated the 1st half of the 2021 financial year well, posting normalised operating earnings of NZ$12.8m vs $14.5m in the prior year despite losing a full month of trading in April due to the COVID019 lockdown.
3 Things Markets Will be Watching this Week
- In a shortened trading week in the US for Thanksgiving, the re-introduction of COVID restrictions and second wave news will remain at the top of headlines.
- At the same time, vaccines are also front of mind with growing speculation that a vaccine will be rolled out this year.
- In New Zealand results season continues with Kiwi Property and Goodman results today and Fisher & Paykel Healthcare due later this week.