Australian & New Zealand Market Movers
The New Zealand market (NZX 50 Index, -1.7%) finally had a chance to react to the strong US jobs data released on Friday. Healthcare (-2.2%), Utilities (-2.1%), and Real Estate (2.1%) were the largest drags on the market on Monday. Materials (+1.0%) was the only sector in the green.
Trading in Pushpay (+3.5%) was halted late in the trading session when it was revealed that another “non-binding” takeover bid was presented to the company. Pushpay are now assessing the bid, but no details have yet been released as to the attractiveness of the takeover proposal. The strength of the US dollar (the currency in which the company generates almost all its revenue) will surely be a factor in determining the premium the bidders offer on the NZ company’s market price of NZ $1.19 per share. Pushpay will resume trading this Tuesday morning.
Sky Network Television (-5.0%) tumbled even though it announced that it secured the rights for the rugby world cup through to 2029. Additionally, the broadcaster also sold its RugbyPass streaming platform for an undisclosed sum, although it was looking for offers in the vicinity of $11 million.
The Australian market (ASX 200 Index, -1.4%) fell on Monday with all sectors in the red. Energy (-1.1%) was let down by a cooling off in the price of Crude Oil (-1.7%) and profit taking after a stellar previous week.
The price of Gold (-1.5%) fell below US $1,700 an ounce and dragged down the Materials (-0.9%) sector. At the same time, Gold Road Resources (5.8%) was a notably decliner in the sector after it reported its average September production numbers.
Tabcorp (+1.6%) climbed on the day after the country’s largest gambling company took a 20% stake, worth AU $33 million, in the fast-growing social-betting platform Dabble Sports.
Europe and US Market Movers
European markets (Stoxx 600 Index, -0.3%) closed lower on Monday, again led lower by Technology (-1.7%).
US markets (S&P 500 Index –0.8%) were similarly dragged down by Technology (-1.6%) stocks on Monday trading.
Investors are cautious ahead of US inflation data due at the end this week that will shed light on the effectiveness of Federal Reserve tightening. Additionally, Citi (-1.4%), JPMorgan (-0.9%), Wells Fargo (-0.8%), and Morgan Stanley (-0.7%) are all reporting earnings this Friday.
The US dollar index (+0.3%) strengthened for the fourth consecutive day, while the Australian dollar (-1.0%) fell to a 2 ½-year low to $0.6302. The NZ dollar (-0.8%), pound (-0.4%), and euro (-0.4%) all moved lower on the day.
Kiwi Property (KPG: NZX)
Kiwi Property (-1.1%) fell after it noted that is expects an -5.8% fall in the value of its property portfolio (or NZ -$212.5m) since March. The total value of its mixed-use, office, retail and other properties are worth $3.4 billion at the close of the period.
The update from Kiwi Property will likely be a theme that reoccurs with other property stocks moving forward, hence the -2.1% fall in the sector on Monday. Precinct Property (-4.7%), Argosy Property (-3.2%), and Goodman Property (-1.9%) were some of the worst performers in the sector-wide selloff.
KPG’s earnings are not impacted by the decline in valuation and its FY23 cash dividend guidance of ~5.70 cents per share remains unchanged. As such, KPG provides an attractive dividend yield to investors who are willing to hold the stock, which should grow over the medium to long-term. KPG remains our top sector pick given its attractive valuation both relative to peers and in absolute terms, with a solid pipeline of activity – at its existing mixed-use sites and especially from its Drury site which looks set to create strong growth and leverage mixed-use property plans.
KPG’s NTA (net tangible asset) value is now $1.32 per share, so the stock is trading at an attractive -31%
discount to NTA, well ahead of peers, and commanding the highest dividend yield.
What Markets will be Watching this Week (UTC +13)
Monday
US NFIB Small Business Optimism
Tuesday
AU Westpac Consumer Confidence Index OCT
AU NAB Business Confidence SEP
Wednesday
GB BoE Gov Bailey Speech
Thursday
US PPI MoM SEP
US FOMC Minutes
NZ Food Inflation YoY SEP
Friday
US Inflation Rate YoY SEP
NZ Business NZ PMI SEP
