Apple Concerns | Metro Performance Glass

20 November 2018

Global markets once again sold off heavily overnight, as a slide in Apple’s shares on concerns about iPhone demand hit its suppliers and the US technology sector, with mixed signals over the state of play between the United States and China trade dispute adding to the weakness.

Comments by US vice president Mike Pence at the APEC leaders' meeting over the weekend kept investors nervous about the protracted trade dispute between the US and China. Also hurting sentiment was the uncertainty about Theresa May's political future amid the heightened prospect of Britain leaving the EU without a deal even though a draft accord could be reviewed and approved by European leaders this pending weekend.

 

Stock in Focus: Metro Performance Glass (MPG:NZ / MPP:AX)

Shares in Metro Performance Glass tumbled to new all-time lows yesterday as the company said a new entrant to the local market was likely to emerge in the next 18 months.

MPG said the new competitive threat in New Zealand glass processing was expected from mid-2020, with a new plant near Hamilton. The greenfield development is expected to be of a broadly similar scale to Metroglass' Highbrook plant – which implies it will likely be a significant operation.

MPG also said that overall the market penetration of advanced glass products continues to increase and "our largest competitor is currently undergoing a sale process and additional glass processing capacity is being added in New Zealand and Australia alongside the continuing strong levels of construction activity”. MPG is due to release its half-year result next Monday and said it will provide more information then. The uncertainty has clearly surprised the market, and given the large share price reaction and lack of clarity, we would not panic sell.

We currently have a BUY (High-Risk) rating on MPG. We have seen MPG as a turnaround play, although we are waiting until further information is released on Monday before potentially changing our recommendation.  

 
 

Australia & New Zealand Market Movers

The Australian share market started the week by selling-off (ASX 200 index -0.64%) as the latest round of the banking royal commission weighed on the finance sector. Shares in retailer Myer fell sharply after its shares traded after being halted following the leak of weak sales data. In stock news, Medibank Private shares as the company announced it had lost its contract with Garrisson Health Services to provide private health insurance to 80,000 members of Australia's armed forces. Fairfax Media shareholders overwhelmingly voted in favour of a merger with Nine Entertainment at a meeting on Monday.

 

The New Zealand market continued to trend lower on Monday (NZX 50 index -0.19%) for a fifth day as investors cautious. In stock news, Heartland Group shares slipped after lifting first-quarter profit 8.7% on growth at its reverse mortgage business and in small business and auto lending. Kiwi Property Group also fell after reporting a small decline in first-half underlying earnings after asset sales provided a smaller income stream.

 

3 Things Markets Will be Watching this Week

1.              Trade relations between China and the US ahead of the G20 talks later this month.

2.              UK politics and whether Theresa May will face a vote of no confidence and then, what happens if she loses.

3.              Minutes from the last reserve Bank of Australia meeting are released on Tuesday.

 

Have a Great Day

Global markets once again sold off heavily overnight, as a slide in Apple’s shares on concerns about iPhone demand hit its suppliers and the US technology sector, with mixed signals over the state of play between the United States and China trade dispute

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