Global markets were mixed overnight, as US markets were higher (S&P 500 Index +0.3%) on speculation that talks about a new round of economic stimulus will resume amid growing concern over a resurgence in coronavirus cases around the world
There has been speculation House Democrats have started drafting stimulus proposal of roughly $2.4 trillion as House Speaker Nancy Pelosi said she spoke with Treasury Secretary Steven Mnuchin yesterday and expressed hope that there would be another round of negotiations. Earlier Thursday, Mnuchin said that a targeted pandemic relief package is “still needed”.
Meanwhile, Republican lawmakers vowed that the presidential transition after November’s election will occur without disruption, in a rebuke to President Donald Trump’s refusal to commit to a peaceful transfer of power. Finally, very strong US housing data also fuelled gains, outweighing disappointing jobless claims data.
Kiwi Property Group (KPG:NZX)
Kiwi Property Group has announced it will open the 20,000-square-metre extension of Sylvia Park in mid-October. Kiwi Property chief executive Clive Mackenzie said the extra space would allow existing tenants to open flagship stores as well as introduce new brands to the shopping centre’s stable of retailers.
Post lockdown foot traffic has returned and KPG’s malls are performing better than anticipated. Hence KPG announced it will recommence paying a dividend (sooner than anticipated). While likely to be lower than the recent years to take into account rental abatement offered to tenants to support their businesses, KPG shares are now priced at a yield of circa 6%, attractive for patient income investors. Further, KPG owns top tier assets and still trades at a significant discount to Net Asset Value – which could close in the event of a sustained economic recovery or vaccine, in our view.
We remain BUY rated on KPG.
Australia & New Zealand Market Movers
he Australian market (ASX 200 Index -0.8%) finished in the red after a new sell-off on Wall Street and after Westpac agreed to pay a record penalty for breaking money laundering laws. Nearly all sectors fell, as big banks, miners and oil stocks weighed on the market and technology stocks tracked Wall Street lower.
Westpac shares were down only -0.1% after it agreed to pay $1.3 billion to settle allegations that it breached anti-money laundering and counterterrorism financing laws more than 23 million times. The bank had set aside around $900 million for a penalty in its first-half results, meaning it will have to stump up an extra $400 million from its full-year profits. However, some bank analysts said the penalty was smaller than they expected.
The New Zealand market was a touch lower on Thursday (NZX 50 Index -0.1%) in a quiet day for stock specific news flow, with Pushpay the best index performer up +4%.
Mortgage lending in NZ remains hot with August home borrowing of NZ$6.8bn up 26% year on year and the highest August on record. First home buyers repeated their record borrowing during the month, while investor demand also remained strong.
3 Things Markets Will be Watching this Week
- COVID-19 related -flow remains key, with second wave and lockdown headlines, while US Congress debate what an extension of stimulus will look like.
- Locally, the RBNZ OCR meeting is the key event on Wednesday.
- There will also be earnings from Nufarm, Kathmandu, Premier Investments and Hallenstein Glasson. AGM’s are scheduled for Turners Automotive, Mercury, Oceania Healthcare and Vector.
Team
