27 Nov 19 -MSCI Re-Weight Lifts NZX | Caltex Takeover Offer

30 November 2019

​Global markets ​continued to edge higher overnight, as Wall Street’s three main indexes hit all-time highs on Tuesday, as comments by President Donald Trump on trade as well as gains for Disney and Best Buy countered weak consumer confidence data​.​

​Closer to home, ​Reserve Bank of Australia governor Philip Lowe last night hosed down the prospect of quantitative easing until the official interest rate dropped to 0.25 per cent​ (if the level is reached, which could be a while away in any case)​. 
 

Stock in Focus: Caltex (CTX:ASX)

​Caltex shares jumped +13% yesterday after Canadian convenience store operator Alimentation Couche-Tard lobbed an $8.6 billion takeover offer at Caltex Australia. The ​board said discussions were at a preliminary stage and there was no certainty the talks would result in a transaction.

​Earlier, ​Caltex shares were higher after the firm proposed an initial public offering of up to 49% of 250 core convenience retail freehold sites. In a separate profit update, Caltex said it expects second-half earnings before interest and tax at its retail business of between $190 million and $210 million, which would represent an increase of $20 million to $40 million from the first half of 2019. 

We currently have a HOLD rating on Caltex.

 

 

   
Australia & New Zealand Market Movers

​​The Australian market ​continued to trend higher on Tuesday (ASX 200 index +0.​8​2%) ​f​or a third straight session​, ​as Westpac rebounded following a four-day slide in its share price, during which it lost $7.5 billion of its valuation.​ Westpac​ chief executive Brian Hartzer would step down within a week as it sought to stem the reputational damage from the AUSTRAC scandal.​ CSL lifted the market higher, ​while Bank of Queensland shares were hit hard, sliding after it completed a $250 million institutional share placement to improve its capital position.

The New Zealand market ​rallied yesterday​ (NZX 50 index +0.​83​%)​ with the NZX 50 index once again moving above the 11,000 level, ​as the official MSCI New Zealand Index re-weightings drove more than half a billion dollars of activity in the market's busiest day for almost a year-and-a-half. 

A significant amount of institutional and passive money (mainly ETFS) track the MSCI index weights, which saw a large bounce in the likes of Tourism Holdings, Pushpay, Z Energy, and Metlifecare in particular. Interestingly, Tourism Chair Rob Campbell bought shares on market yesterday at $3.05 a share. Outside the benchmark index, Green Cross Health dropped after it reported a ​-​3​%​ decline in first-half profit and weaker revenue.

 

3 Things Markets Will be Watching this Week

  1. ​Trade deal prospects between the US & China remain at the forefront of investor attention.
  2. RBA governor Philip Lowe makes a speech on Tuesday.
  3. The RBNZ releases its financial stability report on Wednesday.

 

Have a Great Day,
 

Team

The NZX 50 index once again moved above the 11,000 level, ​as the official MSCI New Zealand Index re-weightings drove more than half a billion dollars of activity in the market's busiest day for almost a year-and-a-half. 

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