Global markets were mixed overnight (S&P 500 Index +0.2%) as a jump in crude oil prices pushed the shares of energy companies higher.
Congressional efforts to pass additional coronavirus relief in the US crept ahead Tuesday as House Speaker Nancy Pelosi presented a fresh Democratic proposal and Senate Majority Leader Mitch McConnell floated a revision of his smaller plan to fellow Republicans. Pfizer climbed after its shot was cleared for deployment in the U.K. as soon as next week.
Summerset (SUM:NZX)
SUM held its investor day yesterday which was focused on strategy, development and Australia. There was limited news in the form of hard numbers, but there was a sense of confidence in SUM’s ability to scale up, make Australia work and monetize care.
Australia is progressing well albeit at relatively slow pace, and management expect first units to be delivered end of the 2021 calendar year. After five years of “looking seriously” and three years in the market, they are more convinced than ever that the model will work and that the opportunity is “bigger than we thought”. SUM stated that they are “ready to go to 600” units in NZ due to increased land bank, more efficient designs a better systems. Additionally, they believe they have balance sheet capacity to deliver 1 -2 villages a year in Australia.
Yesterday also saw the Commission for Financial Capability release a white paper on the Retirement Village sector, which includes, amongst other recommendations, “a full policy review of the framework”. This will likely create some uncertainty for the sector as a whole for some time to come, although it remains to be seen whether the report is just political posturing or something which will be implemented and have a real impact.
We continue to rate SUM as our top retirement sector pick.
Australia & New Zealand Market Movers
The Australian market was little changed on Wednesday (ASX 200 Index +0.0%). Australia has bounced out of recession after the economy expanded 3.3% in the September quarter, the strongest quarterly pace since March 1976, and a better result than the 2.5% outcome economists were looking for. That improves the year-on-year economic contraction to -3.8% from -6.4% in the previous quarter.
In stock news, Westpac agreed to sell Westpac General Insurance and Westpac General Insurance Services to Allianz for $725 million with an exclusive 20-year distribution arrangement. Mesoblast surged 7% as it has received fast-track designation from the US Food and Drug Administration for remestemcel-L in the treatment of COVID-19 illness.
The New Zealand market was flat yesterday (NZX 50 Index -0.0%) as a stronger kiwi dollar crimped interest in exporters such as Fisher & Paykel Healthcare, while other parts of the market rallied. Cancer diagnostics firm Pacific Edge took the biggest leap, up 7% after a major broker began analyst coverage with a bullish call and said the stock could double in value to $1.40 in the next 12 months.
3 Things Markets Will be Watching this Week
- COVID related news flow, including vaccines are likely to dominate headlines for another week.
- US economic data is due at the end of the week – including nonfarm payrolls and the ISM manufacturing survey.
- The latest decision from the RBA on its Cash rate target is due Tuesday.
Team