Global markets started the week lower as Washington’s restrictions on China’s Huawei Technologies stoked fears about a hit to the broader technology sector and ratcheted up trade tensions between the world’s two largest economies. US footwear companies, including Nike and Under Armour, urged US President Donald Trump to remove footwear from the proposed tariffs list on goods imported from China.
Australian shares soared to an 11-year high on Monday, as investors welcomed the surprise re-election of the Coalition, adding an extra $32.8 billion to the ASX market index value. Australian bank stocks were buoyed by the Liberal-National coalition's electoral win over the weekend, removing the threat of tax changes. Westpac led the charge, up 9%, while ANZ was up nearly 8%.
Stock in Focus: Kiwi Property Group (KPG:NZX)
Kiwi Property Group was flat yesterday as it announced annual net profit rose 15 percent, driven mainly by the rising values of its properties. KPG's net profit for the year ended March rose to $138.1 million from $120.1 million the previous year.
We have been positive on KPG due to its stable dividend and valuation (which has moved higher this year) – and KPG has been our preferred option for investors seeking exposure to the NZ commercial property market. While there are risks facing retail assets, KPG has high quality tenants and assets with malls such as Silvia Park being seen as a shopper “destination”, which should allow them to outperform retail peers, in our view.
We currently have a BUY recommendation on KPG.
Australia & New Zealand Market Movers
The Australian share market (ASX 200 index +1.74%) powered higher following a surge in financial stocks. The Australian lenders were under pressure from the prospect of a Labor government, which wanted to remove franking credits on dividends and limit negative gearing to new investment properties. Private health insurers and hospital operators were also much firmer following the election result.
In stock news, Sydney Airport shares slid after reporting disappointing domestic numbers last month. Agribusiness Elders' first-half profit slumped 34 per cent to $27.4 million due to hot and dry weather across the nation, but a return to average winter cropping conditions is cause for some optimism.
The New Zealand market started the week higher (NZX 50 index +0.52%) following gains across the Tasman. Scales Corp posted the biggest decline on the day, down after flagging its new business structure may lift annual earnings by up to 13 percent which was below expectations. Outside the benchmark index, Steel & Tube Holdings sank 13% after downgrading its earnings outlook due to tighter margins. The downgrade was accentuated by the restatement of year-earlier normalised earnings which gave the firm a lower starting point.
3 Things Markets Will be Watching this Week
- Mini reporting season across Australasia sees a number of Aussie & Kiwi stocks make earnings announcements next week.
- Trade War headlines between the US & China are likely to remain in focus.
- Minutes from the last RBA meeting are released on Tuesday.
Have a Great Day,