HK Violence Erupts | Elders Update

12 November 2019

Global markets were little changed overnight, although emerging market shares fell the most in more than two months as stocks tumbled in Hong Kong amid violent clashes after a protester was shot by police. 

Prospects of a quick resolution to the US-China trade war dimmed following comments from President Donald Trump, who played down an announcement by China last week that the sides had agreed to roll back tariffs on each others' goods.​ ​T​rump​ has been ​ signalling talks between the two economies ​ar​e going well and reports that officials in Washington were in discussions about where to sign the deal.​ ​​At the current juncture it is looking likely a deal will be reached, or at the least there will not be a further escalation of trade tensions. ​

Stock in Focus: Elders (ELD:ASX)

​Elders ​shares were higher yesterday even as the diversified agribusiness ​reported a 4​% ​drop in net profits after tax for the fiscal year ​yesterday.

A clear issue for the Australia agri sector at the moment is the prolonged drought conditions faced by Elders' customers, with chief executive Mark Allison saying the company was well positioned to weather the fall-out from the drought.​ ​Elders’ underlying net profit after tax came in at $63.6 million, which is consistent with the prior corresponding period. Elders generated operating cash flow of $11.2 million during the 12 months. This supported a final fully franked dividend of 9 cents per share, bringing its full year dividend to 18 cents per share. This was flat on the prior corresponding period.

We continue to see Elder’s as a key benefactor of our ‘dining boom’ investment thematic (we see multi-year demand for food from a growing Asian middle class) given its diverse agribusiness portfolio and strategic plan to seek further growth both organically and via acquisition.

​We currently have a BUY rating on Elders.
Members should look out for a full update on Elders to be released in our weekly report.​


Australia & New Zealand Market Movers

​​​The Australian market rallied on Monday (+0.72%) ​with the ASX 200 index ​closing just 72.6 points shy of its record high.
Monday's strong performance was driven by gains from a number of index heavyweights across the sectors​ and broker upgrades. CSL advanced ​to all-time highs after it was upgraded from "neutral" to "buy" at ​a major broker​, with the broker also increasing its price target to $295. The broker said broader immunoglobin price increases would flow directly to earnings and assist its Behring business's margin expansion.​ ​CSL led a broadly stronger healthcare sector while the major banks also advanced.​ ​Afterpay Touch shares rose ​after another major broker​ upgraded the stock from "neutral" to "buy", saying its analysis suggested October had been a strong month for the company in the US. It added its recent share price pullback had presented a good buying opportunity.​ The major miners dragged the market on Monday as iron ore prices slumped​.​
The New Zealand market ​stated the week higher​ ​(+0.39%)​ as retirement village operators extended their gains following signs of a recovery in the Auckland property market. Outside the benchmark index, Abano Healthcare rose 1​9%​ to $5.45 ​as the board agreed to a scheme of arrangement with Australian private equity firm BGH Capital and the Ontario Teachers' Pension Plan Board in a $5.70 per share takeover. While that's a premium to the $4.58 price the shares closed at last week, it only goes back to the price they were trading at in March when it warned of weaker trading conditions.


3 Things Markets Will be Watching this Week

  1. ​Trade related news-flow is likely to continue to sway investor sentiment.
  2. Global quarterly corporate earnings season enters its final stages.
  3. The Reserve Bank of New Zealand makes an interest rate decision on W​ednesday.


Have a Great Day,


Global markets were little changed overnight, although emerging market shares fell the most in more than two months as stocks tumbled in Hong Kong amid violent clashes after a protester was shot by police. 

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