Global markets traded in a tight range overnight, with light trading given the Thanksgiving holiday meant US markets were closed.
The price of iron ore (Australia’s largest export) has been volatile this year, although it has rallied with other commodities this month despite expectations that China's renewed effort to curb pollution levels will crimp demand for the steelmaking material. Investors looking for iron ore exposure can look to major miners such as Rio Tinto and Fortescue in Australia. Once again, our preference in the mining space is BHP Billiton given its diversified resource exposure.
Stock in Focus: Ryman Healthcare (RYM:NZ)
Ryman was the best performer on the NZX yesterday as the country's biggest retirement village operator and developer boosted first-half profit 8.4% to $202.6 million. Ryman also lifted its interim dividend, after reaping bigger margins on resales of existing units, even as the broader property market slowed.
The result was underpinned by a 12% increase in the sale of existing occupation rights with a 37% gain in the value of those sales to $201.8 million. "We are keeping an eye on the property market like everyone else," chair David Kerr said.
While it was a sound result, and we generally have a positive view towards the retirement sector given the ageing population investment theme, we continue to see Ryman as expensive in terms of valuation. Further, Ryman is aggressively expanding into Australia, which comes with execution risks associated with entering another market.
We currently have a HOLD rating on Ryman.
Members should look out for a full update on RYM to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was flat on Thursday (ASX 200 index +0.00%) with the ASX 200 slipping at the open and while it made a few attempts to bump back towards 6,000 points, it didn't have enough momentum. Utilities and consumer discretionary plays were the worst performing sectors, with financials not far behind. A lift in the oil price gave investors cause to pour into energy names and resources stocks. Coca-Cola Amatil was one of the worst performing companies on Thursday as investors fled after the soft drink manufacturer warned its $40 million spending program will impact earnings.
The New Zealand market was slightly lower yesterday (NZX 50 index -0.04%) led lower by A2 Milk and Kathmandu Holdings while Ryman Healthcare and Stride Property Group gained following their results. Stride Property Group, which spun out its retail portfolio into a separately listed vehicle last year, posted a 44% gain in first-half profit to $33.3 million as growth in management fees and lower costs made up for a decline in rental income.
3 Things Markets Will be Watching this Week
1. The US Federal Reserve Chair makes a speech on Wednesday, with minutes from the last meeting released on Thursday
2. US Politics with Tax Reform taking centre stage.
3. The Reserve Bank of Australia releases minutes from its last meeting on Tuesday
Have a Great Day,
Team