Please not that our regular daily market insights will be pausing this week and resuming in mid-Jan 2018.
Global markets continued to trade higher overnight with major US stock indexes hitting fresh record highs (with the Nasdaq Technology index passing the 7000 level for the first time) in a broad rally as the long-awaited bill to lower taxes looks set to be passed into law and following a flurry of deal-making.
Buoying investor sentiment was a tide of merger and acquisition activity in Europe, the US and even Australia which saw strong upward momentum yesterday provided by a takeover-inspired Aussie Technology sector. In terms of the news, US technology giant Oracle said it is buying ASX-listed construction software provider Aconex in an all-cash $1.6 billion deal as it expands further into the cloud computing market.
Stock in Focus: Aconex (ACX:AX)
Aconex shares jumped +44% yesterday following the announcement, and Tech stocks across Australia and NZ received a boost from investors yesterday.
Interestingly Aconex was the 9th most shorted stock on the ASX with 10% of its shares sold short (short sellers are essentially betting that the share price will fall) and the jump yesterday would have hit short-sellers hard. Since the start of the December there have been a number of days when more than 30% of the trades in Aconex stock were made by investors taking short positions.
There is clearly doubt among investors around the local Tech sector, with several software companies being standout performers of late. Software is one of the world's most profitable businesses given its large profit margins, particularly once scale is achieved.
While we do not have full research coverage on ACX, see software as a service as an interesting space to look for potential investments. We currently cover companies such as Xero (XRO:NZ/XRO:AX) and Wise Tech Global (WTC:AX), with Pushpay (PPH:NZ) being one stock also in our coverage pipeline.
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Australia & New Zealand Market Movers
The Australian share market made gains on Monday (ASX 200 index +0.70%) with further takeover activity and a strong day for miners and banks driving the market back above the 6000 index level. ANZ shares surged after announcing it will launch a $1.5 billion share buyback after selling its life insurance unit, its wealth business and a 20% stake in Shanghai Rural Commercial Bank.
The New Zealand market slipped yesterday (NZX 50 index -0.20%), led lower by Air New Zealand and Contact Energy while Scales Corp and Oceania Healthcare gained. Oceania Healthcare said it has agreed to buy a vacant lot in Auckland's St Heliers valued at $15.6 million for an undisclosed sum, which it plans to develop into a new retirement village.
3 Things Markets Will be Watching this Week
1. US Politics with Tax Reform taking centre stage.
2. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday.
3. NZ GDP data is published on Thursday.
Have a Great Day,
Team