Volatility Jumps | Elders Up 20%, Healthscope Takeover

13 November 2018

Global markets were sharply lower overnight, following another session of heavy losses in the technology sector that washed through global markets

Apple was hit hard after two suppliers cut their forecasts, sparking a selloff in other iPhone component makers and weighing on technology stocks in general. Shares in investment banking giant Goldman Sachs weighed on the market as the bank's troubles surrounding billions of dollars of deals for Malaysian state fund 1MDB escalate.

Volatility has returned to markets in a big way since October, and we once again reiterate that it is important for medium-term investors to remain calm during periods of heightened volatility.


Stock in Focus: Elders (ELD:AX)

Elders shares soared yesterday on their 2018 result. We are pleased with the move as Elders has been one of our top agriculture picks on the ASX and we reiterated our BUY in July this year, as we felt the shares were oversold on the back of Australian drought worries. 

Elders managed to deliver underlying net profit after tax of $63.7m, which was up +9% from last year but more importantly ahead management’s guidance of between $59m and $63m. The result was driven by its retail division which continues to perform strongly year on year, however partially offset by weaker agency performance due to declining cattle prices.

Elder’s 2018 result managed to somewhat brush off the impacts of the drought and Elder’s CEO said the drought has created some attractive acquisition opportunities provided the price is right, which weren’t available earlier.

We are currently BUY rated on Elders.

Australia & New Zealand Market Movers

The Australian share market was higher on Monday (ASX 200 index +0.33%). The energy sector led the market gains on Monday as oil prices ended a record run of losses after Saudi Arabia's Energy Minister Khalid Al-Falih told reporters on Sunday in Abu Dhabi, that the Kingdom would reduce crude sales in December. Healthscope was among the market leaders, jumping +14% as it announced it had received a takeover offer worth up to $4.5 billion for Brookfield Capital Partners. The $2.455 a share offer bettered an offer from BGH Capital worth $2.36 a share. The company said it would now reject the due diligence request from BGH.


The New Zealand market started the week on a positive note (NZX 50 index +0.28%). Fletcher Building fell as it was announced that the New Zealand International Convention Centre the company is building for SkyCity in Auckland will not be completed by December 2019. Kiwifruit grower and marketer Seeka rose as it signalled a 14% increase in 2019 operating earnings.


3 Things Markets Will be Watching this Week

1.              Trade relations between China and the US ahead of the G20 talks later this month.

2.              The latest US inflation data will be published on Thursday morning AU/NZ time.

3.              Aussie employment data is also released on Thursday.


Have a Great Day

Global markets were sharply lower overnight, following another session of heavy losses in the technology sector that washed through global markets

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