Global markets and US equities have continued to ramp higher overnight (S&P 500 Index +1.6%) led by big tech mega-caps which soared higher for no obvious reason.
The market remains unperturbed by the lack of government fiscal support, seemingly taking the view that a clean sweep by the Democrats will see a large fiscal stimulus early next year anyway, which will more than offset any concern that higher taxes might play on earnings.
Kiwi Property Group (KPG:NZX)
Continuing on our property theme from yesterday, Kiwi Property Group held its investor briefing yesterday which coincided with the opening of Sylvia Park Galleria – a NZ$280m development with ~85% day 1 trading occupancy.
The Galleria expected to be fully trading around March 2021. Despite few financial metrics provided, KPG noted Galleria/South Park would have an initial yield of 5.1%. KPG reported its retail centres are trading well out of the second Auckland lockdown with very limited additional relief required. While there remains some uncertainty on valuation movements given what is still an uncertain macroeconomic backdrop, the update is encouraging.
Near-term, we see confirmation of dividend resumption level as a key catalyst for the stock to trade higher.
We currently have a BUY rating on KPG.
Australia & New Zealand Market Movers
The Australian market made gains on Monday (ASX 200 Index +0.5%) as a strong performance from banks and technology stocks helped lift the market index to its sixth consecutive positive close.
Australia’s biggest bank, CBA, provided an update on COVID-19 temporary loan repayment deferral data for the month of Sept 2020. Interestingly the total number of loan repayment deferrals now sits at 129,000, down from 210,000 in June. Further significant reductions are expected as initial temporary repayment deferrals continue to expire through October.
The New Zealand market started the week higher (NZX 50 Index +0.6%) led by Contact Energy as its possible inclusion in the MSCI Index (which means it will be bought by index following funds) continues to drive investors to buy the stock.
Heartland Bank has released the lowest home loan rate in New Zealand history with a one-year fixed loan rate at 1.9%.
Z Energy released operating statistics which showed a solid sales volume month in September. The recovery following Auckland moving down the Alert Levels is obvious with diesel volumes the driver of the increase. Low demand for jet fuel continues to weigh on numbers.
Abano Healthcare shares jumped +13% after it confirmed strong trading has continued and more importantly as there has been a lift to the takeover offer price to $4.75/share (+30cps), to ensure it is within the independent report draft valuation range. The Abano takeover is likely to conclude prior to Christmas with yet another NZX de-listing.
3 Things Markets Will be Watching this Week
- US election developments will be followed closely by markets as we move closer to elections both in the US and NZ.
- US quarterly earnings season kicks-off, with key names reporting this week including JPMorgan, BofA, Wells Fargo, Citi, Morgan Stanley, Goldman, Delta Air, United Air and J&J.
- In Australasia, AGM’s are scheduled for CBA, Telstra, Ebos, Sky Television, BHP, Cleanaway, CSL, Aurizon, Perpetual and SkyCity