Stimulus Buoys Aussie Market | Kiwi Property Group

27 May 2020

Global markets were fairly timid overnight trading on light volumes with the US and UK markets both closed for public holidays (Memorial day and Spring Bank Holiday). European and Asian markets both traded higher as Japan announced it was easing its state of emergency around the pandemic.

The total number of covid-19 cases has reached 5.57m, with the US still reporting the most number of cases (with 1.7m reported) and deaths now nearing 100,000. Officials are trying to urge Americans to continue to venture out with caution, as they struggle to contain the virus in the US in certain states – which is creating a dilemma on how to safely reopen their economy. 
 

Kiwi Property Group (KPG:NZX )

Kiwi Property Group (KPG) shares were up +2% yesterday after reporting a net loss of $186.7m. This was already announced to the market and includes a $290m non-cash write down against their property values due to economic uncertainty created by covid-19.  Revenue was largely unaffected as the reporting period (31 March 2020) included less than one week of lock down and operations pre-covid through 2020 were solid. Since the return to level 2, foot traffic has returned and is down just -8% on the same time last year.


The economic outlook remains uncertain, and could hit retail sentiment. While we are wary of these risks, we believe most are largely reflected in the share price of KPG given it continues to trades below its net tangible asset per share of $1.26.

We currently have a High Risk BUY rating on KPG.

 

   
Australia & New Zealand Market Movers

The Australian market was up yesterday (ASX 200 Index +2.2%) closing at an 11-week high as local shares extend their rebound with gains experienced across all sectors. US and China tensions were ignored with a greater focus on a recovering local economy, spurred by more stimulus.
Travel and tourism stocks were amongst the better performers, as they are set to receive added government support, with Qantas jumping +7.2%,  Webjet up +15.6% and Flight Centre up +15.2%. QBE Insurance climbed +6%  after announcing its reinsurance contracts would limit its exposure to business interruption insurance claims by UK customers to $US75 million ($115 million).

The New Zealand market was closed higher on Monday (NZX 50 +1.1%), on lighter trade ahead of Public holidays in the US and UK while treading cautiously.  Infratil rose +1.3%, after Tilt Renewables, which is controlled by Infratil, edged higher after reporting a net profit of A$478.4 million as the wind farm developer benefited from the sale of a wind farm for a A$486 million gain. Sky TV shares halved (down -48%) after resuming trading on the news of the $119m capital raise, but are still comfortably above the 12 cents per share placement offer.

 

3 Things Markets Will be Watching this Week

  1. ​​Covid-19 and US-China trade tensions are likely to once again dominate headlines.
  2. 1st quarter GDP, Consumer confidence and housing data (new and pending home sales) in the US dominates the data flow this week.
  3. Locally, earnings are due from Mainfreight, Goodman Property, Sanford, Infratil, Gentrack, Tilt Renewables and Napier Port.

 

Have a Great Day,
 

Team

The Australian market was up yesterday (ASX 200 Index +2.2%) closing at an 11-week high as local shares extend their rebound with gains experienced across all sectors. US and China tensions were ignored with a greater focus on a recovering local economy,

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