Week Ahead | Infratil Bids for Vodafone

13 May 2019

Global markets manged to generally experience gains on Friday as US stocks rebounded from early losses to snap a four-day losing streak after Trump and Treasury Secretary Steven Mnuchin said trade talks between the United States and China were “constructive”​ – although no deal was reached.​
 
​US markets initially dropped sharply following the planned increase in US tariffs on $200 billion worth of Chinese goods by 25%, with ​China vowing to retaliate. A potential escalation of the trade dispute between the world’s two biggest economies remains a major threat for markets and will likely remain in headlines this week.
 

Stock in Focus: Infratil (IFT:NZX / IFT:ASX)

​​​​​​​​​​Infratil shares have been placed in a trading halt as the NZ infrastructure company prepares to make an announcement about the potential acquisition of Vodafone NZ.

​Infratil ​announced its interest in NZ's largest mobile provider after its manager Morrison & Co confirmed it was in talks with another firm to potentially buy Vodafone New Zealand. The trading halt will lift when an announcement is made or on Tuesday morning. Vodafone is the country's biggest mobile carrier and had been slated for a potential initial public offering in 2020 under new chief executive Jason Paris.
 
We have been positive on IFT for some time now as we believe there are strong tailwinds and growth potential for many of IFT’s businesses ​s​uch as Tourism, Aged care, and data centres​. We await further details around the potential Vodafone deal.​
 
We currently have a BUY recommendation on Infratil.
 

 
Australia & New Zealand Market Movers

​​​​​​​​​The Australian share market recovered late on Friday (ASX 200 index +0.25%) to end the session in positive territory. Investor sentiment lifted following the Reserve Bank of Australia’s (RBA) Statement on Monetary Policy (SoMP) indicated the RBA will be cutting interest rates. The RBA lowered its consumer price inflation forecast for 2019, conforming it has downgraded near-term economic growth forecasts, but kept its longer-term expectations unchanged. Weak household spending and deteriorating property prices have prompted the RBA, just eight days out from the Federal election.
 
In stock news, News Corp shares were up after it posted $US23 million ($A32.9 million) net income for the third quarter, with the consolidation of Foxtel and a strong performance by HarperCollins offsetting a decline in news and information earnings. The result compared to a net loss of $US1.1 billion a year ago – when the Rupert Murdoch-controlled media firm revalued its Foxtel and Fox Sports Australia operations.

 
The New Zealand market was a touch lower on Friday (NZX 50 index -0.05%) as shares in Pushpay continued to surge. Synlait Milk was under pressure as it said it is confident it can find a solution to the ownership problem now afflicting most of the land on which its new Pokeno factory stands because of an adverse Court of Appeal decision. Outside the benchmark index, Warehouse rose after reporting a 1.9 percent increase in third-quarter sales.
 
 

3 Things Markets Will be Watching this Week

  1. ​ Mini reporting season across Australasia sees a number of Aussie & Kiwi stocks make earnings announcements.
  2. Trade War headlines between the US & China are likely to remain a feature this week.
  3. The latest Aussie employment data is released Thursday.​
     

Have a Great Day,
 

Team

US markets initially dropped sharply following the planned increase in US tariffs on $200 billion worth of Chinese goods by 25%, with ​China vowing to retaliate.

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