Global markets were largely lower overnight, as the US market reopened lower after president's day to digest information regarding a slowdown in new cases of coronavirus, coupled with weak revenue forecast from Apple due to production and demand disruption in China due to the coronavirus. This caused the S&P to close a touch lower, as Apple's fall were offset by gains made by tech giants Amazon, Microsoft and Facebook.
Apple suppliers including Dialog Semiconductor and AMS AG helped drag down European stocks, while HSBC tumbled the most since 2009 after it said it will slash jobs in a restructuring, while also flagging risks from the virus. Asian markets were mixed, as Chinese markets were the only market managed to make gains while other major Asian markets were down as investors continue to judge the corporate and economic impact form the coronavirus.
Stock in Focus: Heartland Group (HGH:NZX / HGH:ASX)
Heartland Group (HGH) shares continued to climb higher, up another +2.3% yesterday after delivering a sound result for the first half of 2020 financial year, as its reported net profit after tax rose to $39.9m, up +20.7% from the same corresponding period last year.
The result was driven by strong growth in HGH’s net finance receivables (total loan book value) which grew to $4,585m, up +177m or +4% over the half, largely driven by lending growth in their reverse mortgages, motor and business lending divisions as well as lower impairment charges. The reported result was also helped by accounting changes for the treatment of reverse mortgages and one off fair value gain on investment of $2.1m.
These gains were partially offset by tightening net interest margins, which continue to remain challenging for all banks especially in a low interest rate environment, followed by heavy interest rate cuts over the past year or so by the reserve bank, and higher operating costs as HGH ramp up marketing activity.
Members should look out for a full update on HGH to be released in our weekly update.
Australia & New Zealand Market Movers
The Australian market declined for a second day in a row on Tuesday (ASX 200 Index -0.2%) dragged down by weaker earnings releases, which were partly offset by strong market momentum. Altium shares were the worst performers on the ASX (down -7.91%) after heavy revenue guidance downgrade because of the effects of coronavirus and the US-China trade war. Coles slipped (down -1%) after reporting a -33.7% fall in net profit for the December partly due to a $20m provision for wage underpayments. The major miners led the market gains, as mining giant BHP Group shares were up +0.8% when delivered a record interim dividend payout of US65¢ (97.16¢) per share, after reporting $US5.18 billion underlying profit which came in slightly below analysts expectations.
The New Zealand market rose slightly yesterday (NZX50 +0.5%) led by Mainfreight (up +3.2%) and Synlait (up +2.5%) which attracted some value investors after heavy falls last week. Property for Industry rose (+2%) after reporting a 60% increase in annual profit yesterday driven by its Auckland based industrial properties, lifting property sector. The major power generators continue to edge higher as they remain unaffected by the coronavirus.
3 Things Markets Will be Watching this Week
- Local earnings season continues across Australia & New Zealand this week.
- Minutes from the last US Federal Reserve meeting are released.
- US housing data and the latest employment picture in Australia.
Have a Great Day,
