Global markets rallied overnight with the US stock markets hitting new record highs as investor concerns over US-China trade spat cleared away and focus shifted to the strength of the economy. There were reports China could ease the average tariffs on imports from a majority of its trading partners next month.
Stock in Focus: Tegel (TGH:NZ / TGH:AX)
Shares in Tegel have been rangebound as the market awaits the decision from the Overseas Investment Office (OIO) around allowing the takeover by Philippines based Bounty holdings at $1.23 per share, which has been accepted by shareholders.
Every Friday Jeremy Medlin releases an episode of the Stock Market Movers podcast. This week he discusses with Hamesh Sharma the takeover situations with Tegel and Tilt Renewables, looking specifically at the history of the offer, the response of the various boards and the likely outcomes.
Going forward the podcast can be found on the member's area of the website, by clicking the link below or by searching Stock Market Movers wherever you get your podcasts:
Click here to listen to the podcast.
In summary, we believe the takeover going through is more or less a 50/50 call based on past precedent. We would expect to hear more around the takeover in the next week, when Bounty’s original offer expires (and will likely be extended – in our view).
Australia & New Zealand Market Movers
The Australian share market was in negative territory on Thursday (ASX 200 index -0.33%) on a volatile day of trading as the supermarkets and banks wiped gains made by the materials sector. It was a positive day for the materials sector as industrial and precious metal prices advanced during the previous night's trading. In stock news, Rio Tinto revealed a share buyback as the mechanism by which it will return $US3.2 billion ($4.4 billion) to shareholders from the recent sale of Australian coal assets
The New Zealand market was slightly higher yesterday (NZX 50 index +0.17%) as Tourism Holdings snapped a seven-day slide, jumping on a broker upgrade. In stock news, Briscoe Group shares increased slightly as the retailer increased first-half profit 2.7% and raised its interim dividend for an 11th straight year.
In economic news, stronger-than-expected 1% GDP growth for the second quarter was published (implying +2.8% annual growth), pushing the New Zealand dollar higher. The move comes as the market reassessed the chances of an interest rate cut by the Reserve Bank. Going forward we point out however that business and consumer confidence has weakened significantly of late.
3 Things Markets Will be Watching this Week
1. Trade is expected to be a keen focus this week as Trump directed advisers to proceed with plans to impose tariffs on $US200 billion of Chinese goods even as the US opened the door to further talks with China.
2. Minutes from the last RBA meeting are published on Tuesday.
3. NZ economic growth (GDP) data is released on Thursday.
Have a Great Day,
Team