Retirement Sector Hit by NZ Election | Metlifecare

24 October 2017

Global markets traded in a narrow range overnight, with Wall Street selling off. In saying that, the US market indices remain near all-time highs on a steady stream of upbeat third-quarter earnings and hopes that President Donald Trump's tax plans may move forward after the Senate's approval of a budget resolution on Friday.

Closer to home, the ASX snapped its recent winning streak as the ASX 200 market index once again struggles to break the 6000 index level.

On the NZX, investors have identified potential winners & losers from last week’s surprise election outcome. Market moves largely played out as we expected, with the retirement sector coming under significant pressure, with the largest player Ryman Healthcare losing -4%. At the same time, NZ dollar sensitive stocks such as Fisher & Paykel Healthcare made strong gains on the prospect of currency weakness. 

Stock in Focus: Metlifecare (MET:NZ)


Retirement village operator Metlifecare was also caught up in the sector sell-off on Friday as it announced it plans to spend $240m developing a new retirement village in Auckland's Hobsonville with the acquisition of waterfront land in the city's northwestern suburb. The new village will have 300 living and care units, and  the conditions attached to the deal, which includes resource consent, will probably be met in the third quarter of next year.

While weakness in the property market is a negative for the retirement sector at the margins, over the medium-term the ageing population investment theme should continue to act as a tailwind, with rising demand for retirement village services. We have preferred MET over other retirement stocks, in particular Ryman Healthcare, which we believe has limited upside and at the upper end of valuations.

We are currently BUY rated on MET and it remains our top pick in the NZ retirement sector. Members can login to read our latest reports on MET. 
 

Australia & New Zealand Market Movers
The Australian share market retraced on Monday (ASX 200 index -0.22%). Banks were the primary drag on the bourse. In stock news ANZ Bank surprised the market by settling with the corporate regulator in its case for allegedly fixing the bank bill swap rate. NAB and Westpac are also under investigation by the regulator for rate-rigging. 

The New Zealand market was closed yesterday, and on Friday the market ended the day slightly higher NZX 50 index +0.07%) as investors identified possible winners & losers from the newly formed coalition government. Fisher & Paykel Healthcare led gains among companies that benefit from a weaker kiwi.

New Zealand First and Labour will form the new government with support from the Greens. Among points of agreement are to reduce net migration, a move likely to take some pressure off a housing market that is already showing signs of having come off its peak. Ryman Healthcare and Arvida Group led retirement village operators lower on concern the new government's policies may sap demand in the property sector. 

 

3 Things Markets Will be Watching this Week

1.                 Quarterly US corporate profit announcements, with the level of the market making the current earnings season as important as ever.

2.                 Australian inflation data is published on Wednesday.

3.                 The European Central Bank makes an interest rate decision on Friday.  

Have a Great Day,

Team

Global markets traded in a narrow range overnight, with Wall Street selling off. In saying that, the US market indices remain near all-time highs on a steady stream of upbeat third-quarter earnings and hopes that President Donald Trump's tax plans may mov

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