Global markets were higher overnight, as the US market (S&P 500, +1.6%) climbed higher as data showed the services industry activity in June rebounded stronger than expected, and a revival in China’s economy boosted optimism – helping investors look past a surge in new covid-19 cases in the United States. Tech stocks continued to perform strongly with Amazon breaking past $3000 a share for the first time, accompanied by Netflix and Tesla both storming to new all-time highs.
The gains came despite a record surge in new covid-19 cases in 16 states in the United States this month that could further hamper reopening plans and create a risk to the economic recovery.
Metlifecare Limited (MET:NZX)
Shares in retirement village operator Metlifecare (MET) rose +10% yesterday, after EQT returned back to the table making a new takeover bid at $6.00 (with less conditions), a dollar less than the original offer but well above where MET has been trading at recently.
The return suggests there is value in the assets (despite covid-19), as well as the threat of litigation now less likely which could be costly for both parties. The news clearly appears to be more towards MET's favour. The offer requires 75% shareholder approval, with MET's largest shareholder NZ Super announced to be 'supportive' of the takeover offer as it fell within the prior valuation range of $5.80 to $6.90 per share.
We are pleased with the result given we were BUY rated, and enjoyed significant upside.
In saying that, we would not be buying at the current juncture as MET trades close to the takeover price, with the possible risk of the deal falling through again.
Australia & New Zealand Market Movers
The Australian market fell on Monday (ASX 200 -0.7%) as surging covid-19 infections in Victoria and across the world hit investor sentiment, compared with more positive trading across Asia, and following a strong lead from US futures. Technology was the only sector to report a minor gain, whilst all others lagged Afterpay Touch edged higher after reporting a new partnership with Qantas, to allow its frequent flyers to earn Qantas points on Afterpay’s buy now, pay later platform.
Ooh media shares climbed +9%, after OMA data confirmed a terrible June quarter with media revenue down -65%, however this was largely inline with markets low expectations, with consensus possibly pricing in worse.
The New Zealand market edged higher yesterday (NZX 50 Index +0.8%), largely led by Metlifecare, which also saw buying across other retirement village operators as a vote of confidence for the sector and long-term value for their assets. Trading was relatively quiet, but many big names were higher as investors reallocated their portfolios for the start of the quarter.
Auckland International Airport (-1.4%) and Air New Zealand (-0.3%) both fell as a spike in covid-19 cases in Victoria appear to delay the prospects of a trans Tasman bubble.
3 Things Markets Will be Watching this Week
- Covid-19 newsflow around a second wave and re-opening of economies remains top of mind.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday.
- Trade tensions with China remain a risk to keep an eye on.