RBNZ Rate to Record Low | Pushpay, TPG Telco Tumbles

9 May 2019

Global markets were mixed overnight as investors await the latest developments in US-China trade relations ahead of a crucial round of negotiations.
 
Closer to home, the Reserve Bank of New Zealand cut the OCR to a record low 1.50%. The RBNZ's rate cut immediately knocked the kiwi dollar down more than half a US cent, and lifted NZ shares, particularly stable dividend paying stocks such as Contact & Mercury (in a low interest rate environment, investors look for such stocks to provide a dividend yield income). The Banks responded by dropping deposit and lending rates. In its post-meeting statement, the central bank said it had decided to lower the rate because it was "necessary to support the outlook for employment and inflation consistent with its policy remit".
 

Stock in Focus: Pushpay (PPH:NZX / PPH:ASX)

​​​​​​​​Pushpay was lower after an annual profit announcement which failed to inspire the market.

The mobile payments system provider was cashflow positive​, as it delivered a 40% increase in revenue to US$98.4 million which was in line with its guidance .Pleasingly, management is confident of further growth in the 2020 financial year and has provided operating revenue guidance of between US$122.5 million and US$125.5 million. This represents year on year operating revenue growth of between 28% and 31%. This is expected to be driven by the execution of its strategy, increased efficiencies, and further market share gains in the US faith sector.

In what has come as a surprise to the market​ (and may have driven the negative share price reaction), chief executive and founder Chris Heaslip announced he was stepping back from the management team, while retaining his directorship. Chair Bruce Gordon will take over the CEO role, as an experienced leader to take the company to the next level.
 
We currently have a BUY (High-Risk) recommendation on Pushpay.
Members should look out for a full update on Pushpay to be released in our weekly report.

 
Australia & New Zealand Market Movers

​​​​​​​The Australian share market continued to slip yesterday (ASX 200 index -0.42%) following the prior sell-off on Wall Street, with local tech stocks experiencing the biggest drops.
The big stock news was TPG Telecom, which saw its shares tumble -13% after the Australian Competition and Consumer Commission blocked the proposed merger between the listed telco and Vodafone – a surprise decision with many commentators expecting the merger would be passed. Treasury Wine Estates also fell -6% after the company revealed chief executive Mike Clarke offloaded almost $7 million in shares last week.

 
The New Zealand market was higher on Wednesday (NZX 50 index +0.36%) as NZX shares staged a late rally as the Reserve Bank's cut to the official cash rate boosted the attraction of companies paying reliable dividends such as power generators Contact Energy and Mercury NZ. Outside the benchmark index, Evolve Education shares were halted at 23 cents for a $63.5 million capital raising.
 

3 Things Markets Will be Watching this Week

  1. ​​​​The US first-quarter reporting season gets into its final stages this week​, with some Aussie & Kiwi stocks also reporting​.
  2. The Reserve Bank of Australia makes an interest rate decision on Tuesday afternoon.         
  3. The ​Reserve Bank of NZ make an interest rate announcement on Wednesday.​
     

Have a Great Day,
 

Team

Closer to home, the Reserve Bank of New Zealand cut the OCR to a record low 1.50%.

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