Miners Hit ASX | Sky TV’s Slide

6 September 2018

Global markets were mostly lower overnight with the technology sector selling off for a second trading session.  Investors sold off tech stocks on concerns stemming from US lawmakers grilling Twitter and Facebook executives over foreign efforts to tilt US politics.

Emerging markets led declines as investors positioned themselves more defensively while a deadline in the US-China trade conflict loomed. This also hit the Australian market, particularly given its ties to China.    

Against the backdrop of the most positive economic growth figures since 2012, Australian investors positioned themselves defensively on the local market, concerned that the US could impose further tariffs on China. Australian economic growth (GDP) figures came in at 3.4% annualised growth, well ahead of consensus expectations. However. the threat of a trade war escalation was felt particularly in the commodities market, with the fall hurting local mining stocks.

 

Stock on Focus: Sky Network Television (SKT:NZ / SKT:AX)
Sky TV led the NZ market lower yesterday as a downtrend continues after the company gave its annual earnings report last month.

The pay-TV operator wrote down its value by $360 million at the end of its financial year, resulting in a $240.7 million annual loss. What is concerning is the continued loss of subscribers as Sky looks to stem the flow of customers moving towards competitors. While Sky has done a decent job at taking costs out of the business, you can only cut costs so far and if revenues continue to decline, so will earnings.

We have a negative view on Sky TV as we see it continuing to struggle with the challenges of “digital disruption”.

We are currently have a SELL recommendation on SKY.

Members should look out for a full update on SKY to be released in our weekly report.

 

Australia & New Zealand Market Movers

The Australian share market sold off yesterday (ASX 200 index -1.00%), falling to a 1-month low. The major banks also closed lower, led by Westpac which was hit with a $35 million fine from the regulator on Tuesday over loans it issued between December 2011 and March 2015. In stock news, Suncorp shareholders are set for a windfall as the company has arranged the sale of its Australian life insurance business for about $725 million.

 

The New Zealand market retraced on Wednesday (NZX 50 index -0.69%) led lower by Sky Network Television on continued earnings worries and Fisher & Paykel Healthcare, while Chorus and Arvida Group gained. In stock news, Steel & Tube shares were halted from trade as it ran a $17.8 million shortfall bookbuild following its deeply discounted rights offer, where shareholders bought about $42.3 million of new shares at $1.05. Oceania Healthcare was also suspended from trade as cornerstone shareholder Macquarie Group began selling down some of its shares.

 

3 Things Markets Will be Watching this Week

1.             Locally, investors in Australia and NZ will be watching for the last few company profit announcements as earnings season winds up.  

2.             The Reserve Bank of Australia makes an interest rate decision on Tuesday.

3.             Important monthly US employment figures are released at the end of the week.
 

Have a Great Day,

Team

Emerging markets led declines as investors positioned themselves more defensively while a deadline in the US-China trade conflict loomed. This also hit the Australian market, particularly given its ties to China.    

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