Global markets were mixed overnight as US stocks continued to hover around all-time highs. Microsoft jumped after earnings beat expectation, and Tesla soared 16% after posting a surprise profit. US Vice President Mike Pence criticised China’s actions against protesters in Hong Kong while calling for greater engagement between the world’s two biggest economies, which rekindled worries ahead of trade talks.
This week's podcast is; Convention Centre Fire, Rio Tinto Attempts to Renegotiate & Share buy-backs, to listen CLICK HERE.
Stock in Focus: Metlifecare (MET:NZX)
Metlifecare was the biggest gainer on the NZX yesterday, as the retirement village operator announced a $30m share buy-back.
The company had previously resisted a buyback but was swayed by "robust feedback" from its major shareholders. Share buy-backs are seen as a positive as they indicate management believe a stock price is undervalued. Metlifecare said the buyback can be managed without compromising its ability to invest in its continuing development activities. As we have pointed out previously, Metlifecare is trading at a large discount to peers.
We believe the longer-term outlook remains robust for MET, and we have a positive view on the retirement industry given the theme of an aging population as the baby boomers enter retirement. At the same time, the property market looks to have stabilised, removing a near term risk.
We currently have a BUY rating on Metlifecare.
Australia & New Zealand Market Movers
The Australian market was in the green yesterday (ASX 200 Index +0.31%) buoyed by an overnight rise in oil prices which pushed local energy stocks higher and a positive performance from the financial sector. The most notable mover over the day was JB Hi-Fi. JV rose as it releaesed a positive trading update in trading conditions that have seen others retailers punished. Also in retail, Myer entered a trading halt pending an announcement related to the Federal Court of Australia’s judgement relating to a shareholder class action. Qantas shares took a hit after the company warned of difficult conditions ahead.
The New Zealand market was lower on Thursday (NZX 50 Index -0.21%) with mixed moves across the board. Power companies were generally flat on large volumes after taking a beating the day prior. SkyCity said it has started reopening some of its sites after a fire at the neighbouring international convention centre building site raged for several days. Serko has announced it will raise $45 million through a placement at $4.04 and share purchase plan. As part of the deal, Booking Holdings, the operator of booking.com, would take a cornerstone stake in Serko and help with the roll-out of the Zeno platform.
3 Things Markets Will be Watching this Week
- US earnings season for the 3rd quarter continues this week, and so far company announcements have generally beaten a low bar. Some of the higher profile results will come from Caterpillar, Microsoft, 3M, Amazon and Visa.
- The European Central Bank (ECB) meets this week, although no policy changes are expected given the range of initiatives that were announced in September.
- A number of AGM's and trading update from Australasian companies including Auckland Airport, Metlifecare, ResMed, and Qantas.
Have a Great Day,